Why Congress Should Change How Medicare Pays Physicians

In the sweltering heat of 19th-century colonial Delhi, legend has it that cobras were taking over the streets. To eliminate the dangerous snakes, British officials offered a bounty for every dead cobra brought to government offices. Soon, locals began breeding and killing cobras for profit. When British officers caught wind of the scheme, they ended the program immediately. In response, the breeders released their now-worthless snakes back into the streets, turning a problem into a crisis.

This tale of unintended consequences, known as the “cobra effect,” serves as a stark reminder that well-meaning policies usually backfire disastrously when they fail to consider human nature and economic incentives.

Medicare’s method of reimbursing doctors bears a striking resemblance to this parable.

Established with the intent to control healthcare costs through calculated payments and budget caps, Medicare’s payment model has instead contributed to healthcare inflation and now threatens to compromise patient health.

Here’s how we got into this venomous situation—and what Congress must do to help.