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Open Letter to Two NPR Reporters

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Ms. Chana Joffe-Walt and Mr. David Kestenbaum
All Things Considered
National Public Radio

Dear Ms. Joffe-Walt and Mr. Kestenbaum:

Your excellent February 26, 2010, report on the history of how government officials chose the different methods that Medicare has used over the years to determine doctors’ pay
is frightening because…

… in your report, Joe Califano, a chief architect of Medicare, admits that the first method of determining doctors’ pay was chosen for political reasons, namely, to buy doctors’ support for Medicare.

… you report that Mr. Califano, LBJ, and Congress were genuinely surprised by the rapid cost increases sparked by this first method.

… you reveal that much of the treatment that Medicare paid for was previously provided free by physicians; that is, Medicare crowded out a sizable chunk of private-sector philanthropy.

… you tell how attempts to change this first method of paying doctors were deeply influenced by skilled lobbyists working on behalf of doctors.

… in describing the development of the method currently used for determining doctors’ pay, you (perhaps without realizing it) reveal that this current method is the product of a comically childish labor-theory-of-value analysis – the same sort of analysis that is at the foundation of Marxian economics.

… your report ends with the admission that, because the current method isn’t working so well, Uncle Sam – 45 years after Medicare was launched – is still searching for a sound method for determining physicians’ pay.

Given this history, what reason is there to suppose that Obamacare is a good idea?

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030