Why would the fiscal cliff mean that doctors would suddenly take a thirty percent cut in their billing? Nothing was said about that last year when the deal was made. Part of the problem is that deal wasn’t made last year. It was made fifteen years ago and then hidden under fig leaves. Those leaves are going to fall away on January 1.

Inventing Another “Debt Ceiling” to Raise

Back to 1997, the basic bankruptcy of Medicare was too obvious for Congress to deny. They felt they had to do something about it. Basically, seniors were demanding using the program more and more, as is likely to happen when you give away free money. So Congress determined by law that every year that expenses went up above a certain amount, the Medicare reimbursements would go down to compensate. Basically, they tried to impose price controls on medicine in order to counterbalance the inherent price inflation and expansion that such “free money” programs naturally produce.

So, since 1997, every time that the Medicare expenses have expanded too much, Medicare has reduced the amount of money that they would pay for a procedure. This meant doctors became even less happy having to deal with Medicare. Medicare patients found doctors would not take their business or at least didn’t seem happy to do so. Medicare patients vote and make people in Congress want to make them happy in order to gain or stay in office.

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