Medicare and the Public Option

In today's Senate Finance Committee debate on the Health Care Public Option, Sen. Schumer (D-New York) asked Sen. Grassley (R-Iowa) if in addition to being opposed to the public option he was also opposed to Medicare. The consensus answer form a number of Republican's seemed to be that the Public Option would be like Medicare and that's what they didn't like about it (even though they were not opposed to Medicare) because the public plan might limit payments to physicians.

Medicare has had a difficult time controlling payments to physicians. In 2010, physicians face an across-the-board cut in Medicare payments of over 20%. This is about what would be necessary to keep growth in payments to physicians in line with growth in the US economy and is a result of Medicare's Sustainable Growth Rate formula (SGR). The SGR has been strongly resisted by the AMA and legislation since 2002 has consistently overridden the formula.

These circular arguments (we can't control costs even with a public option like Medicare even though costs are out of control) leave me a little despondent about our ability to control health care. But, just focusing on physicians, it begs the question of whether physicians in solo or small-group practice can effectively control costs. Do physicians need to move to larger, multi-specialty practices where there are economies of scale and control over prices for physician's services. And, if so, how do we get there?