New York Times Article Shows Health Care Price Controls Lead to Shortages — Times Opinion Editors Like Price Controls Anyway

President Barack Obama favors offering a public plan for health insurance modeled on Medicare, declaring recently, "The thinking on the public option has been that it gives consumers more choices, and it helps give — keep the private sector honest, because there's some competition out there." Not surprisingly, the editors at the New York Times endorsed the idea in an editorial yesterday. That editorial blithely noted that such a government plan

…could probably force doctors and hospitals to accept lower reimbursements than they negotiate with private insurers, allowing the public plan to charge lower premiums and attract more customers.

The insurance industry and leading Republicans decry that as unfair competition. Hospitals and doctors worry about being underpaid, but there is a limit to how low government reimbursements can fall without driving them out of the program.

The Times' opinion editors evidently don't bother to read the news sections of their own paper before pronouncing on public policy. Just a week before, the Times found that Medicare reimbursements were so low that increasing numbers of doctors are refusing to accept patients covered by the government insurance program. As the Times reported:

Many people, just as they become eligible for Medicare, discover that the insurance rug has been pulled out from under them. Some doctors — often internists but also gastroenterologists, gynecologists, psychiatrists and other specialists — are no longer accepting Medicare, either because they have opted out of the insurance system or they are not accepting new patients with Medicare coverage. The doctors' reasons: reimbursement rates are too low and paperwork too much of a hassle.

According to the article, the Medicare Payment Advisory Commission, an independent federal panel that advises Congress

…found that 29 percent of beneficiaries who were looking for a new primary care physician had problems finding one who accepted Medicare…And a 2008 survey by the Texas Medical Association found that while 58 percent of the state's doctors took new Medicare patients, only 38 percent of primary care doctors did.

The Times' surprising solution? Private concierge medicine.

[A] more expensive option is concierge or "boutique" care, which comes in two forms. In the most popular kind, doctors accept Medicare and other insurance, but charge patients an annual retainer of $1,600 to $1,800 to get in the door and receive services not covered by Medicare, like annual physicals. Before signing up and paying the retainer, patients should get a written agreement spelling out which services the doctor will bill Medicare for and which the retainer covers. And always check carefully for double-billing.

The other form of concierge medicine — doctors who have opted out of Medicare — is more expensive still. Fees range as high as $15,000 a year and cover office visits, access to the doctor when care is needed, referrals to specialists and thorough annual physicals.

If you want doctors. hospitals and insurers to lower their rates, let them compete in open markets without excessive regulations. A good start would be to remove most, if not all, of the nearly 2,000 federal and state health insurance mandates. Creating an implicit subsidy to the government plans by imposing price controls is not the way to go. As the Times' article clearly shows price controls inevitably lead to shortages. Now if only the Times' opinion editors could learn this elementary bit of economics.