...it’s important to understand that [Medicare's] low reimbursement rates are a feature not a bug.
Try explaining that to patients who can't find a doctor who participates in Medicare! Yglesias ignores their plight...but he continues:
Probably the single most persuasive conservative critique of the social democratic agenda is that programs to provide public services have a tendency to become tilted in favor of the interests of public service providers rather than public service users.
I would argue that government-run "public service programs" tend to tilt not necessarily in favor of productive providers, but in favor of politicians and their crooked, politically powerful allies (see: ACORN, labor unions, etc.).
Poor people have very little political clout in the United States, anti-tax activists have a lot of political clout in the United States, and public sector unions have a medium amount of clout. So when you set up a program to help poor people, the tendency is for it to be starved of revenue and also for the most powerful advocates for the program to be the providers rather than the clients, meaning that labor costs wind up being a big part of the bundle.
Wow. It almost sounds like liberal Yglesias is saying that public sector labor unions hurt poor people almost as much as stingy rich people do. Interesting...but here's Yglesias' main point:
Medicare is an important exception to all these trends. It’s not a program for poor people, it’s a program for old people. Including lots of old people with high levels of social capital and a large proclivity to participate in the political process. Consequently, there’s strong political pressure for generous benefits...
...there’s a reasonable amount of interest in getting as much health care services per dollar as possible. Consequently, providers are paid enough to make it worth their while to see Medicare patients, but much less than they’d like to make. The result is not a perfect program (far from it) but this particular aspect of Medicare is an example of big government at its best—serving clients’ interests rather than those of providers.
In the private sector, there is a delicate balance between the interests of the provider and the interests of the customer. This balance is constantly adjusted to changes in the market. If a greedy provider charges too much, customers will go elsewhere. If a stingy customer is unwilling to pay enough, the provider can sell the goods and services to another customer. With a competitive market, free from distortions created by power-hungry politicians, the harmony of interests keeps goods and services flowing freely at reasonable prices.