Cutting reimbursements for drugs by 40% is going to have impacts on everything from R&D to what drugs are available. Drug companies median profit margin varies widely but its about on average 12-14% [0]. I don't think you can just wave a magic wand and say now you get 40% less and you'll just deal with it. It's also naive to believe you can just export some reimbursement model from another country to the US and just plug and play.
> That gives us 6 percent total savings in the system. Then we say Medicare rates for all providers, all doctors, hospitals, dentists. Everybody gets the Medicare rate. And that saves about 7 percent savings for the system cost.
Same problem here. Paying doctors and hospitals 7% less will have an impact. Prices aren't just some arbitrary number you can change on a whim and have no effect.
> And then finally we have high levels of inefficiency with so-called doctor-induced demand, where there’s too many procedures using high tech when you don’t need it, because they can charge more.
This is just a change from bottom up (doctor) to top down (some medicare committee). I agree that there is a problem with over-treatment but I'm skeptical that a rule based system would be the ideal way to address this problem.
> And there’s fraud. And so there’s a lot of estimates at very high levels of fraud and excessive costs. We took that service delivery savings as modest, maybe 1 to 2 percent. Add them all up, you get 19 percent savings.
Traditionally government services are more susceptible to fraud as there is less of an incentive to address fraud. I'm not sure why a single federal agency would be more effective at rooting out fraud than smaller private insurers.
Overall I'm skeptical of a top down approach primarily because they mainly address the problem by lowering prices by fiat rather than addressing the systematic issues of high costs.
[0] https://yourbusiness.azcentral.com/average-profit-margin-pha...