By Steve Kelman

Blog archive

The Lectern: High costs, courtesy of Congress

Under this provocative headline, "High Medicare Costs, Courtesy of Congress" Wednesday's New York Times discussed a bill, now passed by the House, that would roll back earlier congressional legislation mandating that Medicare award business to medical equipment suppliers (providing items to patients, reimbursed by Medicare, for items such as walkers, wheelchairs, and hospital beds) based on competitive bids rather than a price-list system that has tended to produce prices higher than retail prices for the same items available on the Internet and elsewhere. The competitive bidding program, scheduled to go into effect, was set to produce average savings of 26 percent on the items bid out, according to the Center for Medicare and Medicaid Services, and to save Medicare about $1 billion a year in reimbursements.

The arguments for preserving this ripoff sound remarkably like arguments sometimes made by those who see the federal procurement system itself more as a source of benefits to companies than as a system designed to procure best-value products and services for agency missions. It is argued that some of the current providers of medical equipment might go out of business if Medicare switched to competitive bidding, as if firms have a right to be kept in business even if they are uneconomical sources of products or services. Local small businesses might be beaten out in competition by nonlocal firms, perhaps even large businesses. Workers in these firms might lose their jobs.

Perhaps this ripoff might be stopped in the Senate?

The Times notes how this development bodes ill for the ability to take on special interests in the reform of the health care system. More broadly, this is an example of how hard it often is to keep government focused on getting a good deal on behalf of taxpayers and agency missions.

Posted on Jun 26, 2008 at 12:10 PM


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