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On Daeho Kim's Claim That All of Our Medicare Spending Problems Are the Reagan Administration's Fault…

Austin Frakt: Pricing CABG | The Incidental Economist:

I’ve now had a chance to read Daeho Kim’s working paper “Medicare Payment Reform and Hospital Costs” (ungated pdf). It has already received some attention from Tyler Cowen, Reihan Salam, and Noah Miller, and I’ve already received some comments about it from readers. The key question among the bloggers is whether the phenomenon Kim investigates explains why US health expenditures pulled away from that of other nations beginning in the early 1980s, an upward bending of the cost curve…. [I]t’s fairly easy to put that question to rest without reading very far into Kim’s paper. It suffices to know that [the paper is] about how Medicare’s payment system for inpatient hospital services increased use of certain costly inpatient services and inpatient spending…. [T]he 1980s [cost explosion] phenomenon is largely an outpatient one…. [Kim's paper] does not address the main driver of the 1980s curve bending…

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