For better or worse, providers in healthcare accept price controls in return for the contracts with PPOs and other such arrangements. Medicare and Medicaid, of course, are price controls set through the budget process in Congress and the individual states. Everyone is paid the same.
The first problem is that Medicare fees have been flat for several years, and that is only after last ditch efforts got Congress to reverse the cuts required by an earlier “balanced budget” law.
The problem is not so much that Medicare only pays a fixed amount to everyone – there is a simplicity in this system and it removes the threat of individual lobbying which would certainly occur in other scenarios. The problem is that we also want to reward good quality care – and, short of baking cookies of making illegal “gifts”, there isn’t a way for a patient to do that.
The top physicians and hospitals are in demand, and with limited time, there are only so many people they can see. It’s not even a matter of screening patients for the most need – akin to a college admission process, there are lots of people who could be helped. The college admission process is admittedly imperfect as a school builds a class to meet several of their goals and is supposed to be blind to financial need (save major donors and families identified as major donors, at least in some schools).
In health care, of course, there is a whole lot more at stake – a person’s life. I have a friend who was diagnosed with prostate cancer, and after some searching around, elected to go to Johns Hopkins, and was able to get an appointment there. As it was, he had to wait several months. This is not the fault of the physicians – if these physicians were doing something different than others, and were having success, should they be paid more? Should there be a means within the third party payment system (my friend has employer insurance) to pay more?
And this is where I am – unsure if there is one way. Some insurance plans have had “centers of excellence” where there funnel certain patients for specialized care regardless of where they live. We have friends whose young child was diagnosed with leukemia, and their plan gave them the option of going to Johns Hopkins,
The debate on health financing is coming to a head, and many of possible solutions are not only imperfect, but may be contradictory. That said – that’s where we are now.