Medicare spends billions of dollars each year on products and
services that are available at far lower prices from retail pharmacies
and online stores, according to an analysis of federal data by The New
York Times. A comparison of Medicare figures with retail catalogs
reveals dozens of instances of the program’s paying above-market costs.For example, last year Medicare spent more than $21 million on
pumps to help older and disabled men attain erections, paying about
$450 for the same device that is available online for as little as
$108. Even for something as simple as a walking cane, which can be
purchased online for about $11, the government pays $20, according to
government data.These widespread price discrepancies, including those for oxygen services, have been noted in dozens of regulatory reports.
But
when officials and politicians have tried to cut these costs, they have
often encountered a powerful foe: the companies that sell these
devices, who ask their elderly customers to serve, in effect, as unpaid
lobbyists, calling and writing to their representatives in Congress,
protesting at rallies, and even participating in political attacks
against individual lawmakers who take on the issue.
Here is the full story. You are correct to think that not all versions of a single-payer system need discourage innovation. You are also correct to think this is what they look like.
so does this mean that medicare is encouraging innovation by overpaying? or is that something specific for chemicals in bottles?
Actually, all forms of government interference encourage innovation. But I’m not sure that’s what you mean.
Peter
Hey-oh! Nice.
this post would make sense if medicare was allowed to negotiate its prices and/or didn’t have other restrictions placed on it. see here: http://blog.wired.com/wiredscience/2007/04/medicare_negoti.html
a much greater number of republicans are against allowing medicare to negotiate than are democrats. so on one hand you don’t allow medicare to negotiate for the cheapest price and on the other hand you complain that medicare is not paying the cheapest price. if you guys were robots, the logical paradox would make your head explode.
from
Libertarianism in One Lesson
a much greater number of republicans are against allowing medicare to negotiate than are democrats. so on one hand you don’t allow medicare to negotiate for the cheapest price and on the other hand you complain that medicare is not paying the cheapest price. if you guys were robots, the logical paradox would make your head explode.
There is no paradox, you are offering a false choice. Medicare does not have to negotiate lower prices, all they have to do is comparison shop.
a much greater number of republicans are against allowing medicare to negotiate than are democrats. so on one hand you don’t allow medicare to negotiate for the cheapest price and on the other hand you complain that medicare is not paying the cheapest price. if you guys were robots, the logical paradox would make your head explode.
There is no paradox, you are offering a false choice. Medicare does not have to negotiate lower prices, all they have to do is comparison shop.
The Medicare bureaucracy doesn’t care whether Medicare pays too much for some items, any more than the British NHS bureaucracy gives a damn if you have to suffer for two years before you get your arthritic hip fixed – what difference does it make to them?
Using hip replacements to illustrate the difference in waiting times between America and countries with socialized medicine is common but misleading as most hip replacement surgery in America is paid by Medicare and hence is a single-payer deal.
“Libertarians invented outrage over government waste, bureaucracy, injustice, etc. Nobody else thinks they are bad, knows they exist, or works to stop them.”
It’s more that libertarians more consistently than others note the structural incentives to create waste, bureaucracy, injustice, etc. Others seem to believe that wise men in regulatory roles are a solution of some sort.
Of course, the internet’s oldest anti libertarian knows this …
Mr. Negotiator,
Can the federal government negotiate? Or do they simply make a number of random rules and threaten you with auditing?
http://thehappyhospitalist.blogspot.com/2007/11/shifting-of-bell-curve.html
Hmmm…a group of people who spend their entire day lying and avoiding detection from the Man, but they will tell the truth during a hospital visit.
Maybe I’m missing something.
My girlfriend, a nurse case manager, deals with a lot of cases where ID is not forthcoming and false information is given. These all become part of the “free healthcare pool” in the People’s Republic of Massachusetts.
Spencer,
Medicare is such a large health care buyer that it distorts the whole health care industry. I am a psychiatrist and in general reimbursement rates from private insurance companies are derived directly from Medicare rates. My father worked for a medical device company and said that his company lobbied to get devices and proceedures approved by Medicare because once Medicare approved it, other companies had to follow suit.
I don’t know of a specific study that documents this, but that’s my experience.
@”just asking”:
> Does any country use health care vouchers, and competing HMOs?
The Swiss have something in that direction: mandatory health insurance by competing, private providers with subsidies for the poor to buy insurance. Moreover, regulation that makes the insurance offerings genuinely comparable to ensure a functional market.
Their problem remains the price monopolies on the health care provider side. But in total their system works much better than any other I’ve seen.
Let’s insert a few facts into this discussion.
Statement from American Association for Homecare, November 30, 2007
The New York Times article by Charles Duhigg (“Oxygen Suppliers Fight to Keep a Medicare Boon,† November 30, 2007) paints a biased and misleading picture of the healthcare sector that provides home oxygen therapy to Medicare beneficiaries.
The article contends that Medicare vastly overpays for medically prescribed oxygen therapy delivered in the homes of Medicare beneficiaries and that Internet pricing of oxygen equipment is a more realistic barometer of what Medicare should be paying for oxygen therapy. Medical oxygen is a prescription drug that is highly regulated by the FDA. The typical Medicare beneficiary on home oxygen therapy is an elderly patient who suffers from chronic obstructive pulmonary disease (COPD).
The American Association for Homecare welcomes a genuine debate about appropriate Medicare payment policy for oxygen therapy. In fact, the Association and companies providing oxygen therapy have been working for more than a year to design alternatives to existing Medicare oxygen policy for Congress to consider. Unfortunately, both the New York Times article and federal policymakers have focused only on the equipment costs associated with home oxygen therapy rather than the complete therapy, which requires numerous services. Based on this misleading perspective, which is divorced from the realities of serving the Medicare population and COPD patients in particular, Congress has enacted numerous cuts to oxygen over the past decade, reducing Medicare payment rates for oxygen therapy by nearly 50 percent. Moreover, oxygen payments are scheduled to be reduced by an additional 19 percent over the next two years because of previous legislation, regardless of congressional action this year.
The fundamental flaw in the New York Times article is the dangerously simplistic assumption that oxygen therapy delivered to Medicare patients in their homes should cost the same as the Internet or eBay price to buy the equipment only.
The reality of serving this population is very different. A 2006 study by Morrison Informatics gathered and analyzed data from homecare providers that collectively serve more than 600,000 Medicare beneficiaries receiving oxygen therapy in their homes. That number represented more than half of the Medicare population receiving oxygen therapy at home. The study found that nearly three-quarters (72 percent) of the cost of providing oxygen therapy to Medicare patients in their homes represent services, delivery, and other operational expenses that benefit patients. Only about one-quarter (28 percent) of the cost represents the oxygen equipment itself. These service costs have not been factored in to any of the government sanctioned studies.
The article discusses lobbying expenditures by the home oxygen therapy industry. Lobbying expenditures by the home oxygen therapy sector is a tiny fraction of the total expenditures by pharmaceutical companies, hospitals, and physician groups that seek to influence Medicare policy by lobbying Congress.
It is worth noting that all home medical equipment spending by the federal government is less than two percent of all Medicare spending. Long-term oxygen therapy reduces hospital admissions. The average daily cost for home oxygen therapy is approximately $7.60 in Medicare, compared to average of more than $4,600 per day in a hospital under Medicare.
The article also mischaracterizes the Medicare competitive bidding system and new quality standards for durable medical equipment. By design, this competitive bidding program excludes many home medical equipment providers from participating in Medicare – even if the providers agree to lower prices set by the bid process. The Medicare bidding program will likely drive large numbers of providers out of the Medicare program.
The allegation by unnamed Medicare officials that the home medical equipment industry undermined new quality standards is false. In fact, the home medical equipment industry advocated for higher quality standards than those actually adopted last year by Medicare.
These and other errors, omissions, and the use of unnamed sources to make unsupported claims in the New York Times article suggest that the reporter never intended to write an objective story.
BACKGROUND
In 2006, Congress dramatically changed policy for oxygen therapy by requiring Medicare beneficiaries to assume ownership and responsibility for their oxygen system after 36 months of use. Previously, the beneficiary used the equipment as long as medically necessary and an oxygen provider took responsibility for maintenance, a back-up oxygen-delivery system, 24-hour emergency service, and other services required for proper use and patient safety.
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