Final answer:
In 1989, the Medicare fee schedule for physicians was enacted based on the average cost of medical procedures. Issues with fee-for-service models and political influences highlight the complexities of managing Medicare costs. Despite these efforts, healthcare costs in the U.S. continue to be high due to multiple factors, including the incentives for physicians to perform unnecessary services.
Step-by-step explanation:
In 1989, Congress enacted the Medicare fee schedule for physicians based on the average cost of medical procedures. This fee schedule was part of broader efforts to manage healthcare costs, which have been a significant factor in government spending. The incentive structure within Medicare has often led physicians to perform more services and tests, which in turn raises medical spending. The geographical location of the physician, the level of physician education, and the number of patients treated were not primary bases for the creation of the fee schedule.
It's important to note that Medicare funding and spending have been subjects of political debate, especially concerning the balance between providing necessary services and managing costs. For instance, in 2003, the Medicare prescription drug benefit expansion highlighted the competing pressures involved in federal healthcare spending, with strong lobbying from organizations like the AARP.
Despite changes like the Medicare fee schedule, health care costs in the United States remain high, which is attributed to a number of complex factors, including the fee-for-service payment model that creates incentives for more tests and procedures, rather than efficient and effective care.