Even if it is against the law to reduce supply, there are many subtle ways to reduce the quality or convenience associated with the product or service. If both the provider and the patient are prevented from using higher prices to ration the available supply, then there will be strong incentives for the provider to pick only those patients that satisfy his or her own preferences, whatever they happen to be. The result is likely to be increasing problems for Medicare beneficiaries to gain access to the providers they would prefer to see. This lack of access could be expected to be greater for patients with more serious medical problems which expose the provider to increased risks. In addition to these effects on providers and patients, controls also can be expected to cause increasing problems for the agency charged with enforcement.
All markets have some degree of what can be called fraud and abuse.
Direct controls which increase in their effect over time create a new definition of what may be considered illegal as both providers and patients have growing incentives to charge and pay illegal payments to circumvent the effects of the controls. There is little doubt that a government can reduce outlays if it is willing to devote increasing amounts of resources to enforcement, and is willing to try to block the efforts of both providers and Medicare recipients who want to avert the controls. The objection to controls is not the amount of the savings, but the method of getting there. A competitive approach could create strong incentives for patients to choose health care or health plans on the basis of quality and value. And, at the same time, providers would have the incentive to compete for patients on the basis of quality, service convenience, and value.