Joseph Antos, the widely respected Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute, agrees with the Soviet label. “Medicare ignores the market, setting prices for physician services based on an academic theory with its roots in the Soviet Union,” he wrote in his “Confessions of a Price Controller.”

Dr. Antos writes with authority on this issue. As he acknowledges in the piece, he oversaw both the academic study leading to this pricing system for physicians and its subsequent implementation.

I find it hard to disagree with Dr. Antos. Medicare fees are administered prices, set by a central government for the entire country. And that is Soviet economics.

So naturally one is led to ask: Who imported this fiendish Soviet pricing theory to the United States and imposed it on Medicare?

It was the administration of President Ronald Reagan, with the concurrence of a Congress controlled by the Democrats.

The Reagan administration acted after it became alarmed at the inflationary force inherent in a payment mechanism adopted by Medicare at its inception, at the behest of the hospital industry: retrospective, full-cost reimbursement of each hospital for its reported costs. Read the rest of this entry »