Worst Editorial of the Year Award

This is Robert Frank, writing in The New York Times:

If the Mayo model is better and cheaper, why hasn’t it swept the market like wildfire?

He gives six separate answers (that’s right: six!) and all of them are wrong!

The answer, supplied by yours truly in A Framework for Medicare Reform is that (1) Medicare punishes Mayo for supplying low-cost, high-quality care and rewards other hospitals for doing the opposite and (2) private payers have been pushed to pay the same way Medicare pays.

Comments (7)

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  1. Ken says:

    Frank doesn’t know anything about health economics.

  2. John R. Graham says:

    Articles like Professor Frank’s drive me crazy, with their overly generalized assertions. Take this sentence, comparing the U.S. to other countries: “Elsewhere, most doctors are salaried.” Simply not true: Almost all physicians in Canada, which is the most extreme case of government monopoly, “single-payer”, access to medical services, are paid fee-for-service. See Nadeem Esmail’s comparison of international health care (http://tinyurl.com/62nh69, pp. 50-52), which clarifies that only Iceland and Finland have exclusively salaried primary-care docs. Hungary, Ireland, Italy, Luxembourg, New Zealand, Poland, Spain, and the United Kingdom put specialists on salary, but everywhere else has different ways to pay them.

    While “common sense” might suggest that fee-for-service medicine encourages too much use of medical services, it also suggests that salaried doctors would have the opposite incentive: To see only healthy patients and chat to them about minor issues during hour-long appointments.

    There’s no perfect way to pay any professional. The problem is not how doctors are paid, but who pays them. As long as it’s not the patient who pays, it’s a waste of time discussing anything else.

  3. Neil H. says:

    What’s really surprising here is this: You would think that if you don’t know about a subject and if you are going to make controversial comments in the New York Times, you would at least check with a few people who do know something before going to print.

  4. Devon Herrick says:

    “Frank doesn’t know anything about health economics.”

    For that matter, neither does he understand how insurance works.

    Insurance is not pooling good and bad risks. It’s pooling risks of a like (but unknown) nature. Once you have heart disease, your risk of health problems is relatively known. One million people with heart disease could easily be underwritten. But their premiums would need to reflect their expected costs.

    An adverse selection death spiral doesn’t occur when healthy people bail out of the risk pool. Rather, adverse selection death spirals occur when insurers (or politicians) attempt to cross-subsidize unprofitable customers by gouging profitable ones (this doesn’t even make good business sense).

  5. Joe S. says:

    Paul Krugman doesn’t understand anything about health economics either. But that doesn’t stop him from spouting off.

  6. Nancy says:

    I agree with all of the above. This is garbage.

  7. Neil H. says:

    It’s worst than the worst editorial. It’s the worst editorial penned by a PhD in economics.