Well, Isn’t THAT Special…

Church LadyWell, now, isn’t that special…

Forbes reports on a new investment vehicle, tailor-made for the get-rich-quick crowd:

Playing The Odds: Hedge Funds Finance Medical Malpractice Claims:

An entirely new industry has cropped up in recent years as trial lawyers set their sights on making money off physicians, corporations and other targets–particularly financing malpractice suits through hedge funds. In 2010, hedge funds invested $1 billion in these types of suits, much of it for medical malpractice cases…

… the rewards can be remarkable for investors, which is why dollars are flowing into these hedge funds. Payouts can result in tens of millions of dollars.

George Soros, call your office…

Having milked all the money they can from sub-prime mortgages, derivatives, credit default swaps, and political largess from wholly-owned and operated politicians, and after causing a depression or two, our financial wizards now turn their attention to where the real money is: suing doctors. Gotta love it. Ya think, maybe, just maybe, our tort system is a little out of control?

In days gone past — when there was hope about changing such things — I would have launched into a diatribe about the need for reigning in the lawyers, tort reform, etc. etc. Perhaps age, experience, and a touch of wisdom have led me to see the futility of such righteous indignation. Simply put: the system is never going to change. Sadly, we are locked in: the consequences of our current tort system is carved in stone, and they will be both inevitable — and ugly.

The system will never change because the system is the problem: most politicians are lawyers, and lawyers pour ungodly amount of money into the politicians’ pockets — the Democratic Party is a wholly-owned subsidiary of the Trial Lawyers Association (90 percent of its $30.7 million in contributions since 1989 went to Democrats). The AMA — purportedly representing physicians — is now a political, socialist animal, having embraced the dark side themselves, making hundreds of millions selling the diagnosis and procedure codes to physicians required to be (under)paid by the Feds and big insurance.

Tort reform? Fuggeddaboutit. When it has been passed at the state level, it has been gutted by the courts (need I mention that judges are lawyers, too?). And tort reform will do nothing to change the enormous cost increases brought about by defensive medicine — at best it may moderate malpractice insurance premiums, when it survives the courts, which it rarely does.

So what’s the inevitable consequence of this disastrous medicolegal monster? Access, my friend, access — as in: none:

Frivolous lawsuits are helping drive physicians out of the profession and pushing up the cost of health care. A Gallup-Jackson health care survey released last year found that $1 in every $4 spent in health care is for unnecessary tests and procedures that doctors order to prevent from being sued.

As 32 million new patients acquire health insurance under ObamaCare and the number of Medicare recipients doubles over the next decade, the physician shortage will be worse than ever. Hedge funds that target doctors will not only make health care more expensive, but they will make a doctor very hard to find.

The parasite has grown fat and happy sucking blood from its host — but at some point the host weakens and dies. Best pick his pocket now, while the gettin’ is good. His days are numbered.

Stay healthy, folks — the doctor will likely not be around when you need him. Maybe you can call your lawyer instead — or your friendly hedge fund manager.

The Doctor Will See You Now – Or Else!

 
It has been clear since the passage of Obamacare, with its ludicrous economic projections and Enron-accurate accounting, that the outcome of this gargantuan medical gewgaw will be enormous shortfalls in funding for healthcare. The long-term consequences of its financial chicanery are legion, from spiraling deficits, to drastic cutbacks in funding to hospitals and health care providers , to the hyperbolically-described “death panels”: restrictions in payment for health care services as determined by faceless bureaucrats, based on cost considerations masquerading under the paper-thin guise of “medical consensus.”

One of the most disastrous aspects of this plan, both economically and practically, has been the decision to provide coverage for the low-income uninsured by rolling them into Medicaid, the joint federal and state health insurance program for the poor. Medicaid in virtually every state has been an economic disaster, leading to massive state budgetary deficits, and reimbursements to physicians and other health providers substantially below the costs of providing services. This has resulted in the inevitable migration of physicians out of Medicaid, and increasingly from Medicare as well, as Medicare treads the same path of massive bureaucratic burdens on providers and sharply declining reimbursements. The end result has been a crisis of access, where covered patients under these federal programs are increasingly unable to find physicians who will see them. The massive expansion of beneficiaries in Medicaid will drastically worsen this access problem, leaving many, if not most, of the newly covered without health care.

In a classic statist response to this inevitable and impending crisis, our aristocratic masters have discovered, anew, the joys of coercion and intimidation in solving another of their self-engendered debacles:

Justice Department declares war on doctors

Today the Antitrust Division, joined by Idaho Attorney General … forced a a group of Boise orthopedists to accept price controls for worker’s compensation and HMO contracts as part of a settlement accusing the doctors of “price fixing.” According to the complaint, the conspiring orthopedists engaged in two antitrust conspiracies, which took place from 2006 to 2008. In the first conspiracy, through a series of meetings and other communications, the orthopedists agreed not to treat most patients covered by workers’ compensation insurance.

They entered into a group boycott in order to force the Idaho Industrial Commission to increase the rates at which orthopedists were paid for treating injured workers. The Idaho Industrial Commission sets the fee schedule that determines the amount that orthopedists and other healthcare providers receive for treating patients covered by workers’ compensation insurance. The boycott resulted in a shortage of orthopedists willing to treat workers’ compensation patients…

In the second conspiracy, all of the defendants … and other conspiring orthopedists agreed to threaten to terminate their contracts with Blue Cross of Idaho. They jointly threatened to terminate their contracts to force Blue Cross of Idaho to offer better contract terms to orthopedists.

The proposed settlement prevents the Idaho Orthopedic Society and the named orthopedists from agreeing with their competitors on fees and contract terms. The settlement also prohibits them from collectively denying medical care to patients, refusing to deal with any payer or threatening to terminate contracts with any payer.

To say this action is chilling is a profound understatement: the implications of this settlement are nothing less than the erosion and ultimate destruction of our current system of providing health care in this country.

At first glance, this appears to be a legitimate attack on a price-fixing scheme by physicians to increase their income. The reality is far more sinister.

The Justice Department, in cooperation with the Idaho State Attorney General, brought suit against the physicians under the Sherman Antitrust Act. Passed in 1890, it was designed to prevent collusion by Standard Oil and other oil companies to raise prices by creating monopolies or cartels. The Act and its application has been controversial since day one, and it has morphed over the years to address real or perceived commercial malfeasance far removed from its original intent.

The case against the physicians in Idaho represents a tectonic shift in the way government deals with the physicians they pay. As the Mises Economics blog points out:

This case is a watershed for two reasons: First, until now the Federal Trade Commission, not the Justice Department, has taken the lead in prosecuting physicians. Since 2000, the FTC has brought about three dozen cases against physicians (all but one of which settled without any trial). But the FTC only has civil and administrative jurisdiction; the Antitrust Division has civil and criminal jurisdiction. The Sherman Act makes no distinction between civil and criminal “price fixing,” so in a case like this, it’s entirely a matter of prosecutorial discretion whether to charge the doctors with a civil or criminal offense. Based on the descriptions in the Antitrust Division’s press release, there’s certainly no reason they couldn’t have prosecuted the doctors criminally and insisted upon prison sentences — and there’s little doubt such threats were made or implied to obtain the physicians’ agreement to the proposed “settlement.”

The second reason this is a landmark case is that the Justice Department has unambiguously stated that refusal to accept government price controls is a form of illegal “price fixing.” The FTC has hinted at this when it’s said physicians must accept Medicare-based reimbursement schedules from insurance companies. But the DOJ has gone the final step and said, “Government prices are market prices,” in the form of the Idaho Industrial Commission’s fee schedule. The IIC administers the state’s worker compensation system … This isn’t a quasi-private or semi-private entity. It’s a purely government operation.

What’s more, the Antitrust Division has linked a refusal to accept government price controls with a refusal to accept a “private” insurance company’s contract offer. This leaves little doubt that antitrust regulators consider insurance party contracts the equivalent of government price controls — and physicians and patients have no choice but to accept them.

Please read the whole article, in particular the update at the end. This settlement is nothing short of stunning.

Has the nickel dropped yet?

Virtually all health care provided in this country is contractual, whether by the Federal Government or third party private insurers. The consolidation of the insurance industry and the growth of government-funded health care — which Obamacare vastly expands — means that, with the exception of certain cash-based niches such as cosmetic surgery and Lasik procedures, physicians are legally obligated to accept the contractual fee for any covered service. The cartel in health care lies not with the physicians — who remain loosely organized if at all and prohibited (rightly and ethically so, in many ways) from unionization — but with the government and the insurance industry. The insurance industry closely tracks federal actions, both in regulation and fees — and hence both private insurance and the Federal Government collude in very real ways to fix physician fees.

In most areas of the country, a small number of major national insurance carriers insure the vast majority of patients not covered under Federal programs — thus leaving physicians largely powerless to refuse the increasingly austere payments these plans offer, lest they find themselves without patients. Thus the government and private insurance carriers are free to ratchet fees downward to the point where there can no no longer be economic viability for physicians. This is exactly the scenario under which the Idaho orthopedists declined to see patients — very reluctantly — who were covered under workman’s compensation, and threatened to withdraw en mass from their Blue Cross of Idaho contracts. They quite simply had no other leverage against the government/insurance cartel.

Now they have none.

It is important to realize that under antitrust law, there does not need to be a formal agreement or conspiracy to “fix prices” — collusion can be inferred by the behavior of competitors, to wit: if enough physicians in an area decline to see, say, Medicaid patients, because of unsustainably low fees, the Justice Department may infer that they are colluding to fix prices, and move against them with an antitrust action.

Checkmate.

It should not be difficult to see the inevitable outcome of this coercive economic thuggery. Physicians will inevitably be forced into large organizational relationships — primarily hospital-based (toward which there is a virtual stampede from private practice over the past 2 years) for economic security. But this financial haven will prove short-lived, as the endless financial pressures of burgeoning health care costs and spiraling federal and state deficits will drive many physicians from practice altogether as burdensome regulation and plummeting incomes ultimately drive the best and the brightest to find employment elsewhere. There will then be no doctor to see you — coerced or not — and the answer, as always the case in such government-engendered crises — must be a government solution: government-employed physicians. Hello, National Health Service.

Hyperventilatory, catastrophizing rhetoric? Right-wing extremist fear-mongering? Hysterical overreaction to loss of income? No, none of the above. Mark my words, we are witnessing the disassembly of the American system of medicine — a system which, for its many flaws, has provided the best and most advanced health care the world has ever known. For some, its destruction will be a victory, flush with the naive Utopian vision of universal, government-controlled health care.

For you, the patient, the outcome will prove far less sanguine.

Medicaid, Anyone?

In my prior post I highlighted some of the problems with Medicaid, the joint state and federal health coverage for the poor. In case you might think that physicians won’t participate simply because the reimbursement is so poor (which would certainly be reason enough), check this out, from my state medical society today:

The WSMA has complained to both the Centers for Medicare and Medicaid Services (CMS) Region X and the Washington Department of Social and Health Services (DSHS) about the egregiously burdensome requests made of physicians’ practices by the Audit Medicaid Integrity Contractor (MICs). CMS has awarded the Medicaid audit contract for Washington to Health Management Services (HMS) of Irvine, Texas.

HMS is making unrealistic requests of practices in preparation of “field audits:” An eight page detailed request for information on each of the practice’s “providers,” with a 15 calendar day deadline; complete medical records on claims selected for audit, in some cases hundreds of records, and for records dating back to January 2004. Even worse, the lengthy list of records requested does not include patients’ names, only identification numbers and dates of birth!

So, let’s see: Medicaid pays far less than the cost of providing care, and often take 6 months to pay that poor pittance. For those dwindling number of physicians foolish enough to remain in this system, they pursue aggressive audits which require enormous amount of practice resources in response, and then, after such an audit, almost certainly will require large “refunds” of money “fraudulently” paid to physicians, who have failed to master the Byzantine and inscrutable regulations which no mere mortal can understand, much less comply with.

Is it any wonder that physicians are are heading for the lifeboats of this sinking vessel?

So, let’s move the uninsured in large numbers into this very same system, shall we?

The Future in Health Care

From the New England Journal of Medicine, a recent physician survey on the effects of the pending health care reform legislation on physician supply:

Key Findings

Physician Support of Health Reform in General

• 62.7% of physicians feel that health reform is needed but should be implemented in a more targeted, gradual way, as opposed to the sweeping overhaul that is in legislation.
• 28.7% of physicians are in favor of a public option.
• 3.6% of physicians prefer the “status quo” and feel that the U.S. health care system is best “as is.

Health Reform and Primary Care Physicians
• 46.3% of primary care physicians (family medicine and internal medicine) feel that the passing of health reform will either force them out of medicine or make them want to leave medicine.

Health Reform, Public Option, and Practice Revenue/Physician Income
• 41% of physicians feel that income and practice revenue will “decline or worsen dramatically” with a public option.
• 30% feel income will “decline or worsen somewhat” with a public option.
• 9% feel income will “improve somewhat” with a public option, and 0.8% feel income will “improve dramatically” with a public option.

Health Reform, Public Option, and Physician Supply
• 72% of physicians feel that a public option would have a negative impact on physician supply, with 45% feeling it will “decline or worsen dramatically” and 27% predicting it will “decline or worsen somewhat.
• 24% of physicians think they will try to retire early if a public option is implemented.
• 21% of physicians would try to leave medicine if a public option is implemented, even if not near retirement age at the time.

Health Reform and Recommending Medicine to Others as a Career
• 36% of physicians would not recommend medicine as a career, regardless of health reform.
• 27% would recommend medicine as a career but not if health reform passes.
• 25% of physicians would recommend medicine as a career regardless of health reform.
• 12% would not recommend medicine as a career now but feel that they would recommend it as a career if health reform passes

And this from the New York Times today:

With states squeezing payments to providers even as the economy fuels explosive growth in enrollment, patients are finding it increasingly difficult to locate doctors and dentists who will accept their coverage. Inevitably, many defer care or wind up in hospital emergency rooms, which are required to take anyone in an urgent condition.

The inadequacy of Medicaid payments is severe enough that it has become a rare point of agreement in the health care debate between President Obama and Congressional Republicans. In a letter to Congress after their February health care meeting, Mr. Obama wrote that rates might need to rise [hedge alert!] if Democrats achieved their goal of extending Medicaid eligibility to 15 million uninsured Americans.

In 2008, Medicaid reimbursements averaged only 72 percent of the rates paid by Medicare, which are themselves typically well below those of commercial insurers, according to the Urban Institute, a research group. At 63 percent, Michigan had the sixth-lowest rate in the country, even before the recent cuts.

In Flint, Dr. Nita M. Kulkarni, an obstetrician, receives $29.42 from Medicaid for a visit that would bill $69.63 from Blue Cross Blue Shield of Michigan. She receives $842.16 from Medicaid for a Caesarean delivery, compared with $1,393.31 from Blue Cross.

What the Times neglects to mention is that physicians’ overhead expenses substantially exceed these reimbursements — every Medicaid patient seen will cost the physician more than they will be reimbursed, often substantially more. Malpractice premiums annually for obstetricians? Generally well over $100,000. It takes a lot of $29 office visits to pay for that — and that’s just one part of overhead.

So, for those who believe we have to do “something” to fix health care, so let’s just pass this monstrosity and fix it later, this is what you’re looking at: fewer doctors, already in significant shortage; health “insurance” that pays so poorly no physician will be financially able to see you.

My suggestions, if this health care bill passes? 1) stay healthy, very healthy; 2) start saving a lot of money, since your only access to health care will likely be a shadow system where physicians will see you for cash only.

Welcome to the new millennium in health care.

What’s the alternative? Well, I hope to lay some out in the near future, time permitting.

Taking the Blue Pill, Rather than the Hip Replacement

As the Democrats in Congress press forward in blind determination to pass their health care reform legislation come hell or high water, the pernicious effects of the legislation are increasingly becoming evident to anyone who takes the time to dig into its details. Though our Congressional representatives cannot seem to find the time to read these gargantuan, 2000-page bills, busy as they are padding their pockets with filthy lucre from lobbyists and interest groups, those at the state level who are will be responsible for picking up the credit card bills from this monomaniacal spending spree are starting to sweat. Even the Blue states — no strangers to fantasy spending budgets, punitive taxes, and political giveaways — can see the handwriting on the wall.

Out here in scenic Washington — where Patty Murray is considered an astute statesman and Jim McDermott is considered sane — the details of Obamacare are becoming frighteningly clear:

Washington has a 13.2% uninsured rate and one half of these people are in the age range of 18-34. Because of the bill \'s individual mandate that would require every adult to buy health insurance, 432,000 young healthy people in the state would be forced to make this purchase … The bill also requires a community rating price control on all policies which would cause these young Washingtonians to pay a higher price for coverage, while older, sicker individuals would pay less for their insurance.

There is something of a sweet irony here: those who voted overwhelmingly for Obama and who much prefer spending money on grunge music, Hempfests, and gas masks are about to wake up and find themselves paying hefty premiums to greedy insurance corporations, or facing big fines or jail time for refusing to do so — proving there truly is Karma in the world.

The Avatar-blue seasoned citizens will likewise find themselves unpleasantly surprised:

On the other end of the age spectrum, 890,000 seniors have Medicare coverage in Washington. Congress plans to finance the Senate bill in part by cutting Medicare by $471 billion. Physician reimbursement would be reduced by 21%, while Medicare Advantage would essentially be eliminated, forcing 205,000 Washington seniors out of the program and back into traditional Medicare. Access to doctors is already a problem for Washington seniors because of low Medicare payments compared to private insurance. Further cuts in how much Medicare pays doctors will only make this access problem worse for seniors.

In fairness here, the 21% cut in physician reimbursements is by no means certain: Congress has consistently blocked these “budget neutrality” cuts in the past (to prevent a mass exodus of physicians willing to see Medicare patients), even though they use the imaginary $250 billion “savings” as part of the budgetary chicanery to make Obamacare look affordable.

But Medicare Advantage plans are squarely in the sights of the Congressional cost-cutting guns. These plans provide benefits to Medicare patients using private health insurance, typically providing much better benefits than Medicare alone while costing less than expensive supplemental plans which merely cover Medicare’s substantial co-pays and deductibles. MAs are very popular — 30-40% of Medicare-eligible patients use Advantage plans, and the percentage has been growing rapidly. The drastic slash in funding for MA plans will result in benefit cuts and stiff premium hikes, driving many patients back to traditional Medicare, drastically ratcheting up out-of-pocket expenses for the elderly and cutting many of their benefits.

And it should be stressed that physician access problems in Medicare patients (it is extremely difficult in Washington to find primary care physicians who accept new Medicare patients, and the specialists are fast bringing up the rear given Medicare’s drastic cuts in fees to specialists) are not simply about low payments, and greedy doctors wanting more money; it is about reimbursing physicians to provide care at levels substantially lower than their overhead costs.

Quite simply, when you see a Medicare patient, you lose money.

Of course, you don’t have to be young or on Medicare to reap the benefits of health care reform:

Almost 130,000 Washington residents have health savings accounts (HSAs) and high deductible insurance plans. The Senate bill reduces the HSA contribution amount by one half and doubles the penalty for non-medical withdrawals. New government limitations will probably eliminate high deductible policies and consequently eliminate HSAs. All HSA holders would lose their personal coverage and be forced to buy traditional insurance.

The Seattle area has growing industries in biotech and medical device manufacturing. The Senate bill would add a 10% to 20% tax on these businesses. The cost would either be passed on to consumers or, more likely, would cause a reduction in medical research and development.

Almost 2.7 million workers and their family members in Washington receive health insurance through their employers’ self-insured programs. These people would be allowed to keep their insurance for five years. The plans must then comply with strict government benefit plans which would cause many employers to drop their coverage and force many workers to join a government plan. In addition, generous employer-sponsored insurance will be subject to a new 40% tax. In three years, 20% of all workers will be paying this tax and in six years, 20% of all households making more than $50,000 a year will have to pay this tax.

And then there’s Medicaid — coverage for the poor co-funded by federal and state governments. Obamacare extends health insurance to the uninsured poor by greatly expanding Medicaid, which is already well on its way to bankrupting the states:

Under the Senate-passed bill the number of Medicaid recipients in Washington would immediately increase by over 280,000 people. The federal taxpayers would initially pay for these new enrollees, but within five years state taxpayers would be forced to pay at least $6.8 billion more over the following ten years. The total cost of Medicaid to Washington taxpayers would then be nearly $36 billion for that ten year period. Access to doctors for Medicaid patients is even worse than for Medicare patients because of lower doctor reimbursement rates. Adding hundreds of thousands of people to Medicaid, when these patients are already being turned away by doctors, makes no sense for either patients or taxpayers.

This is fiscal insanity, akin to buying a ticket for passage on the Titanic after it has hit the iceberg.

Washington State is hardly alone in its terror about the coming health care regime. California, whose credit rating is shakier than a welfare queen on crack, is looking at financial and medical Armageddon as well. From the New York Times:

The [California Medicaid] program, known as Medi-Cal, currently serves roughly 6.5 million poor Californians. And that number could increase by 2 million under the pending legislation. Congress wants to use the Medicaid program as a way to cover more of the uninsured poor, reasoning that it’s a relatively cheap way to go by relying on existing programs.

But doctors say only a third of the state’s 60,000 practicing physicians are participating in the program because of low reimbursement rates, and they fear that more physicians will opt out.

“Increasing eligibility for Medi-Cal without increasing reimbursement rates would be catastrophic,” said Brennan Cassidy, president of the 35,000-member California Medical Association. “There’s no place for those patients to go for primary care because doctors aren’t accepting them.”

Again, the problem is not merely “low reimbursements” — it is Medicaid payment rates which cover less than half a physician’s costs to see the patient.

It is difficult to overstate how disastrous the pending Congressional legislation will be for health care and our nation’s financial stability. Are we really getting ready to jump off this precipice?

Sadly, it appears so.

I’ll Have the Medicare — & Hold the Mayo

The blogs have been abuzz about the big news from Arizona: The Mayo Clinic in Arizona will no longer be accepting Medicare patients for primary care.

The Mayo Clinic, praised by President Barack Obama as a national model for efficient health care, will stop accepting Medicare patients as of tomorrow at one of its primary-care clinics in Arizona, saying the U.S. government pays too little.

More than 3,000 patients eligible for Medicare, the government \'s largest health-insurance program, will be forced to pay cash if they want to continue seeing their doctors at a Mayo family clinic in Glendale, northwest of Phoenix, said Michael Yardley, a Mayo spokesman. The decision, which Yardley called a two-year pilot project, won \'t affect other Mayo facilities in Arizona, Florida and Minnesota.

Obama in June cited the nonprofit Rochester, Minnesota-based Mayo Clinic and the Cleveland Clinic in Ohio for offering “the highest quality care at costs well below the national norm.” Mayo \'s move to drop Medicare patients may be copied by family doctors, some of whom have stopped accepting new patients from the program, said Lori Heim, president of the American Academy of Family Physicians…

I’m surprised it took this long.

Mayo Clinic has long had a well-earned reputation for providing high-quality care at lower cost than much of the health care economy, due in large part to their successful formula (closed panel, salaried clinic physicians, and the resulting tight peer review) which is difficult or impossible to reproduce throughout the highly-diversified delivery systems in U.S. healthcare.

But Mayo Clinic is now coming to terms with the hard economic realities of seeing Medicare patients: it costs more to see them than you are paid:

The Mayo organization had 3,700 staff physicians and scientists and treated 526,000 patients in 2008. It lost $840 million last year on Medicare, the government \'s health program for the disabled and those 65 and older…

For years, physicians and clinics have simply absorbed this cost, effectively using their cash flow from better-paying private insurers to cover their Medicare losses. And we have reached the point where this calculus is no longer viable — a line crossed some years ago with Medicaid, the federal health program for the poor, whose reimbursements are only 60% or less of what Medicare currently pays.

What we have here is an unsustainable business model.

Typically, the folks at CMS downplay this reality, using the accounting chicanery so prevalent among our government bureaucrats, who love to piss on your leg and tell you it’s raining:

Nationwide, doctors made about 20 percent less for treating Medicare patients than they did caring for privately insured patients in 2007, a payment gap that has remained stable during the last decade, according to a March report by the Medicare Payment Advisory Commission, a panel that advises Congress on Medicare issues. Congress last week postponed for two months a 21.5 percent cut in Medicare reimbursements for doctors.

Yes, the gap may have remained stable — but Medicare payment rates have declined significantly over the past decade. In 1997 the Medicare conversion factor per relative value unit (RVU) was $40.97; in 2007, it was $37.89 — a nearly 10 percent decline, without factoring in inflation — and not including significant reductions in relative value units themselves (which are purportedly a hard measure of the costs and value of the service provided, but in reality are frequently “recalculated” to reduce Medicare expenditures), and a marked increase in bundling (wrapping several services together and paying for only one). What has happened is that private insurers have followed Medicare’s lead and also significantly reduced their fees, which are commonly calculated based on Medicare’s rules and formulas, but at a slightly higher conversion factor.

So while the ratio may appear stable, the reality is that both Medicare and private carriers have been dropping their fees, while medical expenses (salaries, benefits, supplies, malpractice premiums, etc.) have risen significantly faster than inflation. So the income vs. expense curves are now crossing for many, if not most, medical practices, and Medicare patients are beginning to generate significant losses, while private reimbursements can no long cover the difference. The only economically sane decision to remain solvent is to cut back or eliminate Medicare patients. The result? Reduced access to care. Of course the politicians will take credit for reducing health care costs — caring for fewer patients will certainly cost less.

Who needs death panels?

This is simple economics, really — but far too difficult for our politicians and liberal policy wonks to understand:

Robert Berenson, a fellow at the Urban Institute \'s Health Policy Center in Washington, D.C., said physicians’ claims of inadequate reimbursement are overstated. Rather, the program faces a lack of medical providers because not enough new doctors are becoming family doctors, internists and pediatricians who oversee patients’ primary care.

“Some primary care doctors don \'t have to see Medicare patients because there is an unlimited demand for their services,” Berenson said. When patients with private insurance can be treated at 50 percent to 100 percent higher fees, “then Medicare does indeed look like a poor payer,” he said.

No, Medicare doesn’t just look like a poor payer — it is a poor payer, and doesn’t cover the expenses involved in providing the medical care it pays for — even for a highly efficient organization like Mayo Clinic. This idiot’s theory is that simply by increasing the number of primary care providers, competition will be greater, and more MDs will be willing to take less to provide care. Law of supply and demand and all that.

So if you’re selling TVs which cost you $500 to purchase wholesale at a retail price of $350 (and that’s the price the government mandates), opening new dealerships will make this arrangement more economically viable, through competition.

Where do they find these morons?

Not unexpectedly, Mayo Clinic’s jilted Medicare patients are none to happy, as they are being asked to pay cash (gasp!) to keep their physicians:

A Medicare patient who chooses to stay at Mayo \'s Glendale clinic will pay about $1,500 a year for an annual physical and three other doctor visits, according to an October letter from the facility. Each patient also will be assessed a $250 annual administrative fee, according to the letter. Medicare patients at the Glendale clinic won \'t be allowed to switch to a primary care doctor at another Mayo facility.

A few hundred of the clinic \'s Medicare patients have decided to pay cash to continue seeing their primary care doctors, Yardley said. Mayo is helping other patients find new physicians who will accept Medicare.

“We \'ve had many patients call us and express their unhappiness,” he said. “It \'s not been a pleasant experience.”

Mayo \'s decision may herald similar moves by other Phoenix-area doctors who cite inadequate Medicare fees as a reason to curtail treatment of the elderly, said John Rivers, chief executive of the Phoenix-based Arizona Hospital and Healthcare Association.

“We \'ve got doctors who are saying we are not going to deal with Medicare patients in the hospital” because they consider the fees too low, Rivers said. “Or they are saying we are not going to take new ones in our practice.”

So Mayo’s trying to offload their Medicare patients onto other primary care physicians in the community, who no doubt will be more than happy to pick up these new financial albatrosses.

Best of luck with that plan.

The solution to this imminent disaster in access is not merely an increase in Medicare payment rates — Medicare and Medicaid are hell-bound for bankruptcy, and a few band-aids won’t stem the hemorrhage, but only make it worse. The imminent passage of “health care reform” legislation now bubbling in the witches’ cauldron of Congress will not only worsen Medicare’s situation — half a billion dollars are being cut from Medicare under the new legislation — but will instead bring this access disaster to private insurers as well. As their loss ratios are fixed by law at unsustainable levels, and community ratings forces them to accept high-cost patients without financial compensation for their increase risk and cost exposure, they will be forced to raise premiums to untenable levels — or drastically cut reimbursements to hospitals and physicians.

The system is a disastrous maze, and needs to be completely dismantled, and rebuilt from scratch. And the chances of that happening are zilch, zip, zero.

Welcome to the future of health care in America. Better stay healthy.

The Non-Reform Health Care Bill

In the dark of night, appropriately, the Senate last night voted to end debate on its health care reform bill, bringing it to a floor vote. From Commentary magazine comes the following assessment of what will be voted on:

The non-reform health-care bill does, to the disgust of liberals, make insurance companies very happy. The government is coercing customers to buy the companies’ products under penalty of prosecution and fine. The non-reform health-care bill does, to the horror of seniors, slash $500B out of Medicare with no conceivable alternative other than rationing to meet its new budget. The non-reform health-care bill does, to the delight of trial lawyers, do nothing to reform the tort system or the problem of defensive medicine. And the non-reform health-care bill does, to the chagrin of deficit hawks, do nothing to bend the cost-curve or cut the deficit. (James Capretta explains: “For starters, as CBO notes, the bill presumes that Medicare fees for physician services will get cut by more than 20 percent in 2011, and then stay at the reduced level indefinitely. There is strong bipartisan opposition to such cuts. Fixing that problem alone will cost more than $200 billion over a decade, pushing the Reid plan from the black and into a deep red.”) Finally, the non-reform health-care bill will, to the embarrassment of good-government types, in all likelihood get passed through a combination of bribery and secrecy, with virtually no time for thoughtful consideration.

On every level it \'s a policy train wreck.

Not to mention that it pushes many of the uninsured into Medicaid, in a massive expansion of a program which is bankrupting the states, and which very few physicians can afford to take due to abysmal reimbursement rates which do not come close to covering expenses. The 22% Medicare fee cuts to physicians — one of the many accounting gimmicks thrown in to make this bill appear to be financially viable — will, if enacted, lead to a mass exodus of physicians from Medicare as well. Universal insurance coverage (which this bill does not even achieve) does not equal universal access, as we are about to discover to our horror and dismay.

I am doing my best to be sanguine about things over which I have no control, but it is difficult to watch the death of a profession and a superb health care system, to advance the partisan agenda of the power-hungry crooks and cronies who make up our current government. Revulsion is not too strong a word.

We will live to rue the day this disaster passes into law.

UPDATE: From the WSJ:

The rushed, secretive way that a bill this destructive and unpopular is being forced on the country shows that “reform” has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it, as Finance Chairman Max Baucus admitted on the floor last week. The only goal is to ram it into law while the political window is still open, and clean up the mess later.

***

• Health costs. From the outset, the White House’s core claim was that reform would reduce health costs for individuals and businesses, and they’re sticking to that story. “Anyone who says otherwise simply hasn’t read the bills,” Mr. Obama said over the weekend. This is so utterly disingenuous that we doubt the President really believes it.

The best and most rigorous cost analysis was recently released by the insurer WellPoint, which mined its actuarial data in various regional markets to model the Senate bill. WellPoint found that a healthy 25-year-old in Milwaukee buying coverage on the individual market will see his costs rise by 178%. A small business based in Richmond with eight employees in average health will see a 23% increase. Insurance costs for a 40-year-old family with two kids living in Indianapolis will pay 106% more. And on and on.

These increases are solely the result of ObamaCare --above and far beyond the status quo --because its strict restrictions on underwriting and risk-pooling would distort insurance markets. All but a handful of states have rejected regulations like “community rating” because they encourage younger and healthier buyers to wait until they need expensive care, increasing costs for everyone. Benefits and pricing will now be determined by politics.

As for the White House’s line about cutting costs by eliminating supposed “waste,” even Victor Fuchs, an eminent economist generally supportive of ObamaCare, warned last week that these political theories are overly simplistic. “The oft-heard promise ‘we will find out what works and what does not’ scarcely does justice to the complexity of medical practice,” the Stanford professor wrote.

• Steep declines in choice and quality. This is all of a piece with the hubris of an Administration that thinks it can substitute government planning for market forces in determining where the $33 trillion the U.S. will spend on medicine over the next decade should go.

This centralized system means above all fewer choices; what works for the political class must work for everyone. With formerly private insurers converted into public utilities, for instance, they’ll inevitably be banned from selling products like health savings accounts that encourage more cost-conscious decisions.

Unnoticed by the press corps, the Congressional Budget Office argued recently that the Senate bill would so “substantially reduce flexibility in terms of the types, prices, and number of private sellers of health insurance” that companies like WellPoint might need to “be considered part of the federal budget.”

With so large a chunk of the economy and medical practice itself in Washington’s hands, quality will decline. Ultimately, “our capacity to innovate and develop new therapies would suffer most of all,” as Harvard Medical School Dean Jeffrey Flier recently wrote in our pages. Take the $2 billion annual tax --rising to $3 billion in 2018 --that will be leveled against medical device makers, among the most innovative U.S. industries. Democrats believe that more advanced health technologies like MRI machines and drug-coated stents are driving costs too high, though patients and their physicians might disagree.

“The Senate isn’t hearing those of us who are closest to the patient and work in the system every day,” Brent Eastman, the chairman of the American College of Surgeons, said in a statement for his organization and 18 other speciality societies opposing ObamaCare. For no other reason than ideological animus, doctor-owned hospitals will face harsh new limits on their growth and who they’re allowed to treat. Physician Hospitals of America says that ObamaCare will “destroy over 200 of America’s best and safest hospitals.”

• Blowing up the federal fisc. Even though Medicare’s unfunded liabilities are already about 2.6 times larger than the entire U.S. economy in 2008, Democrats are crowing that ObamaCare will cost “only” $871 billion over the next decade while fantastically reducing the deficit by $132 billion, according to CBO.

Yet some 98% of the total cost comes after 2014 --remind us why there must absolutely be a vote this week --and most of the taxes start in 2010. That includes the payroll tax increase for individuals earning more than $200,000 that rose to 0.9 from 0.5 percentage points in Mr. Reid’s final machinations. Job creation, here we come.

Other deceptions include a new entitlement for long-term care that starts collecting premiums tomorrow but doesn’t start paying benefits until late in the decade. But the worst is not accounting for a formula that automatically slashes Medicare payments to doctors by 21.5% next year and deeper after that. Everyone knows the payment cuts won’t happen but they remain in the bill to make the cost look lower. The American Medical Association’s priority was eliminating this “sustainable growth rate” but all they got in return for their year of ObamaCare cheerleading was a two-month patch snuck into the defense bill that passed over the weekend.

The truth is that no one really knows how much ObamaCare will cost because its assumptions on paper are so unrealistic. To hide the cost increases created by other parts of the bill and transfer them onto the federal balance sheet, the Senate sets up government-run “exchanges” that will subsidize insurance for those earning up to 400% of the poverty level, or $96,000 for a family of four in 2016. Supposedly they would only be offered to those whose employers don’t provide insurance or work for small businesses.

As Eugene Steuerle of the left-leaning Urban Institute points out, this system would treat two workers with the same total compensation --whatever the mix of cash wages and benefits --very differently. Under the Senate bill, someone who earned $42,000 would get $5,749 from the current tax exclusion for employer-sponsored coverage but $12,750 in the exchange. A worker making $60,000 would get $8,310 in the exchanges but only $3,758 in the current system.

For this reason Mr. Steuerle concludes that the Senate bill is not just a new health system but also “a new welfare and tax system” that will warp the labor market. Given the incentives of these two-tier subsidies, employers with large numbers of lower-wage workers like Wal-Mart may well convert them into “contractors” or do more outsourcing. As more and more people flood into “free” health care, taxpayer costs will explode.

• Political intimidation. The experts who have pointed out such complications have been ignored or dismissed as “ideologues” by the White House. Those parts of the health-care industry that couldn’t be bribed outright, like Big Pharma, were coerced into acceding to this agenda. The White House was able to, er, persuade the likes of the AMA and the hospital lobbies because the federal government will control 55% of total U.S. health spending under ObamaCare, according to the Administration’s own Medicare actuaries.

Others got hush money, namely Nebraska’s Ben Nelson. Even liberal Governors have been howling for months about ObamaCare’s unfunded spending mandates: Other budget priorities like education will be crowded out when about 21% of the U.S. population is on Medicaid, the joint state-federal program intended for the poor. Nebraska Governor Dave Heineman calculates that ObamaCare will result in $2.5 billion in new costs for his state that “will be passed on to citizens through direct or indirect taxes and fees,” as he put it in a letter to his state’s junior Senator.

So in addition to abortion restrictions, Mr. Nelson won the concession that Congress will pay for 100% of Nebraska Medicaid expansions into perpetuity. His capitulation ought to cost him his political career, but more to the point, what about the other states that don’t have a Senator who’s the 60th vote for ObamaCare?

UPDATE 2: from Robert Samuelson, WaPo:

These fears are well-grounded. The various health-care proposals represent atrocious legislation. … So Obama’s plan amounts to this: partial coverage of the uninsured; modest improvements (possibly) in their health; sizable budgetary costs worsening a bleak outlook; significant, unpredictable changes in insurance markets; weak spending control. This is a bad bargain. Health benefits are overstated, long-term economic costs understated. The country would be the worse for this legislation’s passage. What it’s become is an exercise in political symbolism: Obama’s self-indulgent crusade to seize the liberal holy grail of “universal coverage.” What it’s not is leadership.

Samuelson argues that the uninsured will receive better care because more of them are covered. Of course, that is only true if they can actually get to see a physician who accepts their Medicaid coverage, which is already an enormous problem, and will certainly grow worse. I suspect they may actually receive better care now, uninsured, than they will covered under Medicaid.

No Death Panels Needed

Over at Big Government, we get a glimpse of where ObamaCare will take us: Health Care \'s Coming Heart Attack – A Pre-Obama Care Death Panel?

I am writing of the Obama Administration \'s – regulatory decision – to go ahead with a massive cut in Medicare payments to cardiologists. I emphasize that this is a regulatory decision because it was not made by the Congress legislatively (not that that would be ok) but, instead, it was made by the massive Health and Human Services Department of the US Government. Given the limited resources of the Medicare budget, in order to increase payments to general practitioners (in an effort to attract more such doctors – a good idea), bureaucrats needed to gore somebody \'s ox and cardiologists were chosen (a horrible idea).

The decision to do so is astonishing.

Keep in mind that the very purpose of health care is to improve the health and therefore the lives of Americans. The cardiologist community has been wildly successful in that endeavor. Although heart disease remains the #1 killer of Americans, the mortality rate for heart attacks has plummeted. For instance, the post-heart attack, 30-day mortality rate decreased from 18.9 percent in 1995 to 16.1 percent in 2006 and the in-hospital mortality rate decreased from 14.6 percent to 10.1 percent.

Further, between 1994 and 2006, the mortality rate among women 55 and under who suffered a heart attack dropped an incredible 52.9%. For men in that same age group the drop was 33.3%. According to the author of the mortality study that determined those latter figures: “It appears that risk factors, which may be controlled through prevention efforts, are very important in driving these mortality reductions.”

Given those figures, it is hard to argue with the success of cardiologists who sit on the forefront of heart care and heart disease prevention – unless, of course, you are a government bureaucrat.

Rather than pouring more dollars into an obviously successful branch of medicine that is saving lives (the ultimate purpose of health care?), the Obama Administration is going ahead with a plan to cut nearly $1.5 billion from Medicare payment to cardiologists. Obama is doing so by such devices as literally eliminating reimbursement for certain services and/or reducing the amount they will pay for others. Case in point, cardiologists have been able to bill for an extended first visit with Medicare patients to get their history and to recommend a course of treatment. As of January 1, 2009 [2010 – ed.] – no longer.

What is being referred to here is Medicare’s decision to eliminate consultation service codes as of Jan 1 2010. These codes are almost exclusively used by specialists, and pay substantially better than standard visit codes, reflecting the higher complexity of care typically involved in specialty care. It is not just the cardiologists who are affected by this administrative change in Medicare payment — it is all specialists: oncology (cancer treatment), infectious disease, pulmonary, surgical specialties such as orthopedics, urology, ENT, neurosurgery, cardiac surgery, etc. etc. They are betting on a premise already proven false: that preventive medicine through primary care will reduce costs.

Specialty care is more expensive because specialists care for the sickest and most complex patients. When you are having your acute MI, you need a cardiologist, not a family practice physician. Specialty care is where the vast number of advances in American medicine have taken place — the advances which give us the best results in the world in cancer treatment, heart disease, and surgical advances such as laparoscopy and other minimally invasive procedures.

The inevitable outcome of these changes are that Medicare patients will have reduced access to specialists, as specialists increasingly are unable to afford taking a loss on every Medicare patient they see due to reimbursements which fall below their costs of providing care. They will by necessity reduce the number of Medicare patients specialists see, or force them to stop seeing Medicare patients altogether, resulting in longer waits to see a specialist and regional shortages of care in these areas. One does not need “death panels” to make policy changes which restrict care to the elderly and disabled; quiet bureaucracy works every bit as well, with the added advantage of plausible deniability.

Welcome to the new millennium in health care. Hope you enjoy your government-run universal health care.