Medicare: No incentives to control costs

An op-ed in the Boston Globe:

. . . there are few, if any, incentives to prudently control the cost of medical treatment. It is well documented that retirees will undertake treatment as long as the value of that care is more than the co payment for which they are responsible. As for providers of medical care, such as doctors, nurses, and hospitals, any desire to restrain costs through cheaper treatment alternatives is often overridden by self-interest or the perception that more expensive treatments are in order.

Finally, politicians have virtually no short-term incentives to tackle the Medicare problem. The reason is clear: any change that leaves the elderly worse off than before will lead to swift condemnation and ballot box reprisals by a large and vocal segment of the population. Meanwhile, pressure from much younger workers who fund Medicare is nearly non-existent.