[August 10, 2007 @ 9:06 pm] David Hogberg

David: Great post!

However, I think that Pho op-ed came up a little short. The reason the compensation for PCPs stinks relative to specialists is Medicare’s “prospective payment system.” That system is pretty much one of price controls, and like all price controls, it either creates a shortage or a surplus – or, in this case, both. Medicare apparently underpays for services for PCPs and overpays for ones for specialists. Adding to this is that most private insurance companies follow Medicare’s lead when determining what to pay for services.

Thus, you have an entire reimbursement system that creates a shortage of PCPs and a surplus of specialists. Of course, for a price system to work properly it must be based on supply and demand, but that’s just a boring old notion from stodgy economists – no fun for social engineers.

And if you want to read about how Medicare’s prospective payment system came about, see this book. Actually a pretty good read for a very technical subject.

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