David Henderson on Medicare price controls

It is often debated whether a cut in Medicare reimbursement rates should be counted as a “price control.”  David Henderson adds a valuable point:

…a year or two after I left the Council, the Reagan administration took the next step of imposing price controls on doctors under Medicare. Doctors were no longer allowed to do what was variously called “extra bill” or “balance bill.” They couldn’t charge even a penny more than Medicare paid. That’s what made it a system of price controls. Moreover, under later regulations, if a doctor takes even one Medicare patient, then he has to charge Medicare rates to all his Medicare patients even if those patients would rather ensure access by paying the whole bill (Medicare plus a doctor’s additional charge) out of their own pocket. It is this system of price controls that is causing many doctors to take no Medicare patients.

Here is more.  Bryan Caplan comments, and Greg Mankiw’s recent post is relevant too.


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