President Obama Moving US Towards YugoCare

In April, lawmakers and experts focused on sweeping changes to Medicare declaring it should become the “test lab for making the entire health care system less wasteful.” Sen. Max Baucus, D-Mont, the Finance Committee chairmen heading this share your feelings meeting declared, “Medicare is going to be the driver to achieve quality reforms.” Health care is wasteful and quality challenged because of Medicare purchasing power and win/lose strategies. Sen. Bauscus's committee is delusional if it thinks larger injections of the virus, Medicare, is the cure. As this blog has argued previously, if Medicare rewards operation inefficiencies and preventable medical errors, then expect growth in wastefulness and deterioration in quality.

Historically, Medicare focuses on price controls and shifting costs to private insurers at the sacrifice of patient outcomes. Remember the 1999 Institute of Medicine report that declared the nation’s hospitals kill 98,000 patients annually due to preventable errors. The same data reviewed by HealthGrades upped the estimate to 200,000 preventable deaths. It took ten years and two million preventable deaths before Medicare on October 1, 2008 took action against preventable medical errors. That is if you call Medicare’s policy to not pay for one hundredth of one percent of the cost of preventable medical errors action.

When Congress talks of wasteful spending, it does not mean operational inefficiencies. It means paying less for more which is exactly what the proposed (FY) 2010 Inpatient Prospective Payment System (IPPS) plans to do for hospitals. IPPS gives advocates of a government single payer system an insight to how Medicare gives an increase of 2.1% to hospitals then takes 1.9% back through a phased-in documentation and coding adjustment (DCA) with no regard whether revenue cuts will impact patient outcomes.

It is my anticipation that this anti-free market Congress thinks that more price controls inflicted on all health care suppliers and physicians who happen to be in politically incorrect specialties or products will be the strategy for eliminating “waste.” This strategy brought the world the Yugo automobile which was a socialistic government's attempt to set prices so Yugoslavia could achieve universal automobile ownership. Sound familiar. The Yugo’s use of price controls failed because it was cheap to buy but unaffordable to maintain. Meanwhile, Toyota was pursuing a strategy to inspire employees to be in the constant pursuit of excellence giving it world dominance in affordable, reliable automobiles. Inspired humans will always trump command/control governments.

The disdain the Obama administration has for free markets drives it to pursue the Yugo strategy of price control pain moving the US health care system to YugoCare. This will result in great costs and human suffering. It will take extraordinary failure before the country will adopt the cheaper, quicker, self-sustaining strategy of paying for excellence and never failure in a manner that inspires health care professionals to be in the constant pursuit of excellence. Remember, Adam Smith's free market concept grew from government controlled economies that caused massive famine.