When your Grandma gets her yearly physical, the doctor gets a check from the government. Did you ever wonder, though, who decides how much?
The Relative Value Scale Update Committee
Rather than the market, a committee selects the prices that convey information and incentives. Your opinion?
The Economic Lesson
Why should we care about Grandma and the doctor? Because Medicare spending now is close to 12% of the federal budget. With 30 million or so baby boomers expected to pour into Medicare during the next 10 years, and 40 more million close behind, spending will skyrocket.
What to do? Called “The Moment of Truth,” President Obama’s deficit commission report suggests that instead of pursuing “phantom savings,” Congress should implement “common-sense reforms to physician payments, cost-sharing, malpractice law, prescription drug costs, government-subsidized medical education, and other sources.” You can look at the report here.