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.

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9 thoughts on “Taking the Blue Pill, Rather than the Hip Replacement

  1. Some states have made accepting Medicaid a requirement for licensure, so they have ways of making you see things their way.

  2. A relative had a hip replaced last year. The prosthetic cost $5k (went to the manufacturer). The prosthetic salesman’s commisison was $10k (directly to him). He showed up to the OR with various artificial hips and handed one over to the Ortho and got paid $10K for that. He’s not even a doc. He’s an ex pro hockey player who was hired for his ability to schmooze. He is a completely useless middleman. The Ortho didn’t need his help to select the right hip, but that is the way our system is set-up. We should cut out idiotic practices like this to save money. The only reason I know this is the way it works is because the relative who had the surgery works in the hospital and knows all the docs and medical supply salesmen. The system as a lot of fat that could be trimmed, but like any entrenched institution, it will do everything it can to keep the status quo. The voice crying in the wilderness is never heeded until it is too late.

  3. With all due respects, SK, this story is certainly bogus. The company gets $5K and the rep $10K?? Right. Surgical reps in my experience are salaried, and don’t work on commission. They may serve as technical consultants but don’t “pitch” their products based on commissions.

    Someone got their facts seriously wrong on this.

  4. Well Doc,

    Why are costs rising faster than inflation? What are the ‘costs’ for a family doctor who sees a patient with a flu-bug and writes a prescription for a low grade anti-biotic?

    Certainly medical personnel’s investments in education should be rewarded but something is seriously out of joint in our present system. And that’s not meant to imply an endorsement of a single payer system.

    Why is the system slowly collapsing? Is it waste, inefficiencies, protecting turf or what? I suspect that if we “follow the money” answers will emerge.

    It’s great that you add your insights into why ObamaCare is not the right solution but what is the right solution?

    And please, we don’t need a lot of medical detail, first give us the ‘big’ picture so that we have context, then detail can be incorporated within a framework of understanding.

    And forgive my frankness, but if you can’t explain it, then you don’t understand it (general principle) and thus your commentary will be necessarily incomplete and therefore insufficient to further understanding. In which case, despite the best of intentions, you’re part of the problem.

  5. Well Geoffrey,

    I have written rather extensively on this blog, not only about the problems in health care, but proposing solutions, to our dysfunctional current health care system, and I anticipate continuing to do so. Check out my Maze series if you’re interested — although I suspect from the tone of your comment you’re really not all that interested.

    As far as the costs to a primary care physician for a relatively straightforward office visit (and why the “scare quotes” around costs, Geoffrey?), well, let’s see: salaries and benefits (including health insurance) for a growing number of employees needed to handle the massive paperwork the current private & federal reimbursement system demands; taking nearly twice the time documenting the visit as spent seeing the patient, to meet federal & private coding requirements for payment and to protect against Monday-morning quarterbacking by trolling malpractice attorneys; appealing frequent payment denials for failing to meet the extraordinarily complex billing regulations, or purely arbitrary denials of payment, which are common; meeting the demands of unfunded state and federal mandates, such as compliance programs, HIPAA, identity theft prevention, pay-for-performance, etc etc; depreciation, maintenance and supplies for expensive medical equipment to provide high quality care; hefty malpractice and general business liability premiums; medical supplies, drugs, office supplies, rent, disposal of infectious waste, continuing education to maintain professional excellence (also required by states for licensure).

    That’s just a few “costs” for starters. For that “simple” office visit (which is not likely nearly as simple as you seem to think) the FP doc will get paid about $35 by Medicare, about $24 to $26 by Medicaid. His or her costs for that visit likely run $40-$45. Do the math.

    And forgive my frankness, but if you can’t explain it, then you don’t understand it (general principle) and thus your commentary will be necessarily incomplete and therefore insufficient to further understanding. In which case, despite the best of intentions, you’re part of the problem.

    Of course, being a fair man, you would apply this same principle to yourself, no?

  6. There are actually a lot of faults I find with the way health care “reform” is being addressed, with the rush to pass the bill instead of taking the time to evaluate it and its effects high on the list. More and more, it becomes clear that the interests of the average American are not being represented in Washington.

    It is my hope that these mandates will be declared unconstitutional, exposed for the corporate game that they are, but given the supreme courts track record, this is not something I am counting on. It is a shame there aren’t more stand up politicians in Washington…

  7. I’m a parter in a small engineering consultancy, and I am amazed MD’s can stay in business. Your commenters that feel there is some bad actor that is causing all the costs are not living in the real world. The next time they go to the muffler shop they will see a sign showing mechanics time at $95/hr + a charge for disposal of contaminated oils etc.

    If we paid the Doc at that rate (low), a 20 minute visit would be at least $40! Much as I respect mechanics, the quality control and cleanlieness of their operations would not do for medicine.

    Labor and Services of trained professionals cost money. And the more overhead we pile on them the more it costs. There is no magic bullet.

    If we work hard at everything DrBob mentions we could probably shave 15-20% off of costs. Beyond that we need a leap in technological productivity that will come in diagnostics, drugs and biomedical technology. There are no crooks here, but we need to budget and pay for the services we ask for.

  8. A quote, perhaps apocryphal, of the famous aeronautical engineer, Ed Heinemann on designing aircraft systems was, “add lightness, simplify, simplify, simplify”. I’m pretty sure we would get a much different result if health care system redesign were in the hands of engineers rather than lawyers. For starters, doctors shouldn’t have to waste their valuable skills filling out paperwork and working under the constant threat of litigation. Without this burden, costs would come down and more people could afford better care. Any new system should be designed for the vast majority of health care providers who are honest, not for the very few who are not. More money is doubtless wasted in policing the good guys than would ever be lost to the few bad apples. At a minimum, the system should be designed so that MDs earn more per hour than JDs.

  9. I am so happy that my father, who was a doctor, (Pysician & Surgeon. Remember those?) talked me out of attending medical school and following him into his practice. This was in 1960. His reasoning was Lawyers, Politicians and Insurance Companies would not let me treat my patients properly. I’m sure he’s spinning in his grave seeing what has happened to the profession he loved.

    Good luck Doc.

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