Updated: Free-market think tank calls for end to government-set Medicare rates

The National Center for Policy Analysis, a free-market think tank, in a new report urges Congress to end the practice of government setting reimbursement rates rather than canceling the 21.3 percent cut to Medicare physician payments. Study author John Graham, the director of Health Care Studies at the Pacific Research Institute, instead proposes letting doctors and patients set rates among themselves. 

“The fundamental problem with Medicare’s fees is not the level at which the government fixes them," Graham writes, "but that the government fixes them at all." 

"The system cannot be repaired: It would be far better for the federal government to simply pull the plug on the entire mechanism and convert Medicare [physician payments] to a system of vouchers," Graham concludes. "In return for a hard budget cap, the government would allow physicians to charge whatever fees they and their patients agreed upon. The government could liberalize the popular, private Medigap plans to allow seniors to cover extra physicians' fees, protecting them from the costs of outpatient care beyond the value of the vouchers."