Health reform winners and losers, and how it affects doctors

I congratulate President Obama and the Democrats on their historic health reform achievement.

Will this bill be able to win approval as it runs the parliamentary gauntlet? Is it an act of political suicide that will become manifest in November? Will it bankrupt the country because of lack of cost controls?

Regardless of where one stands, the bill is a political act of vast ambition and colossal risk.

Now may be a good time to pick winners and losers of health reform.

Winners

• Drug companies, which backed Democratic efforts and will have 32 million more new customers, financed by government.

• Hospitals, which heretofore have had to accept non-paying patients and now will have patients paying money-losing Medicaid rates.

• The uninsured, with the possible exception of the young and healthy who now buy insurance or be penalized by the IRS by failing to comply with the individual mandate.

• Those with pre-existing illnesses, those whose payments were capped by insurance companies, those who had to pay full costs of preventive care or high deductibles, and children who will now be covered by their parents’ insurance policies until their 26th birthday.

Losers

• The biggest loser is likely to be private insurance companies, which will be heavily regulated, restricted from raising rates, obligated to accept all comers, unable to rescind coverage , and the target of higher taxes.

• Middle-class taxpayers and patients, who, if Massachusetts with its universal coverage can be used as an example, can expect higher taxes because of lack of cost controls, higher premiums as health plans pass through their increased expense, more limited access to doctors because of primary care shortages, and longer waiting lines to see a physician.

• Medicare recipients, who among other things, will see about $500 billion cuts in benefits, higher fees, reduction in Medicare Advantage plans, and more controls over what tests and procedures doctors can order.

• The states, many already on the verge of bankruptcy because of high Medicaid costs. and Medicaid providers, physicians, pharmacists, and others, who cannot continue losing money based on low reimbursements. State attorney generals in nine states, are taking actions by mounting efforts to declare the bill unconstitutional.

Doctors

The results will be mixed.

Negative

• The practice load of 32 million more uninsured entering the system, coupled with the influx of new Medicare recipients, will strain the capacity of already overloaded practices.

• Low Medicare rates, and even lower Medicaid rates, will tax the ability of practices to survive economically.

• The doctor shortage, particularly of primary care physicians, now estimated at 50,000, will be exacerbated, partly because more doctors will decline to accept new Medicare and Medicaid patients.

• The bill does not address the problems that concern physicians the most – tort reform and the sustainable growth rate formula, which calls for an annual reduction in Medicare physician fees — this year 21% — and which is always reversed.

• The creation of an independent payment advisory board, free from Congressional oversight, is regarded as a negative, because it can make arbitrary decisions.

Positive

• Medicaid rates are likely to be increased to Medicare rates for primary care physicians . This will be plus for primary care doctors and will tilt the table towards primary care over specialists,

• Another plus is a “modest increase” in funding for training programs.

• The American Medical Association, the American College of Physicians, and family practice and pediatric associations have supported the Obama administration’s position on reform. The members of these organizations and physicians in general support expansion of insurance coverage for the uninsured.

I predict this bill will be the start of a long and bitter debate on how to fund generous federal health benefits – coverage for pre-existing illnesses, free preventive care, guaranteed comprehensive health plans, mandated benefits with no caps, and subsidies for 32 million uninsured — up to $88.000 per family.

As history has shown with Medicare and Medicaid, costs will surely far exceed projections. As a nation, we shall have to grapple with the economic consequences of the universal coverage moral imperative.

Richard Reece is the author of Obama, Doctors, and Health Reform and blogs at medinnovationblog.

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  • PAUL MD

    I am afraid that the country will get what it has asked for. As a physician, a taxpayer, a patient and a “non-Kool-Aid” drinker my advice continues to be the same on this subject. Be careful what you ask for, you just might get it. This time, it looks like you got it.

    Without SGR reform and Tort reform, I do not personally nor professionally accept this shiny new “change you can believe in” and to the extent possible, I will not go quietly into that good night.

    I, like ALL sentient beings, will respond to do what is in my family’s, my, my partner’s, my community’s and profession’s self interest. In that order. This means that as a provider, I will continue to provide honest, skilled, legal care to those that I wish to share my skills with and vice versa. There is, however, no longer the concept of “the extra mile”…as long as “the market” will bear it.

    I will propose to my partners that we accept no free care in the meantime, that we either stop accepting Medicaid or reduce the numbers that we will see, that we prepare to trim our office staff and that we charge patients “lawyer rates” to fill out all paper work including nursing home, Dept of Corrections, private insurers, Workers comp, Accountable Care Organizations etc to the legal extent allowed. State and federal forms (FMLA, Social Security etc) will be processed as quickly as we deem reasonable, within the extent of current law.

    Sorry, can’t get lean without getting mean. By “mean”, I am merely advocating adopting some of the legal competitive aspects of American businesses.

    There is no reason, though, that we can’t all remain friends is there? I mean….it’s just business right?…..don’t take it personally….is what I mean.

    Nothing to really worry about though. Coming to a neighborhood like mine (and yours), the soon to arrive ACOs (Accountable Care Organizations) will further neuter my outlying attitude of freedom and autonomy now termed as “obstructionists” and may render this excellent blog irrelevant and useless….if not illegal.

    Regardless of your position on the subject, continue to educate yourself and engage the system or others will make the decisions of your life for you. One other thing, PLEASE WAKE UP!

  • Doc99

    “One more such victory and I am undone.”
    Pyrrhus of Epirus

  • Jake Williams

    @Paul

    You just made my day. The more you charge, the more revenue you’ll have to buy needed equipment. The more equipment, the more you can charge. It’s diabolical and genius all at once. I’d much rather have the wealth of the nation being funneled into physicians hands than corporate fat cats. MDs tend to know a little more than trust fund babies, and as such, may know more advantageous ways of spending their wealth. Is this based on any study? No, not that I know of. However, one blogger stated earlier this month, “sometimes we must trust our intuition.” My intuition says education should be an indicator of wealth. We should do whatever it takes to maintain this standard.

    You aren’t making just a business decision here. Your making a moral one. I believe you (Paul) are doing the right thing by being methodical in your approach to compensation. We live a world where credit card companies charge you a fee to make a payment. Let’s not pretend doctors are anywhere close to being evil when they expect their fair share.

    I’m not a doctor. I’m a patient.

  • Ron P.

    @Paul

    Applause to a person of independence, integrity, and courage. Potential problems to come:
    What happens when too many PCPs decide to retire, quit, or go galt? Lower the standards to become a PCP? Or “freeze” the existing ones to their jobs? Wasn’t there a society in antiquity that “lamed” their healers so they couldn’t run away? Of course, the healers were slaves….

    • Doc99

      Enter Dr. Nurse.

  • EA

    I don’t know how this can be negative for insurance companies. They have 50 million new customers to be paying into their coffers. Any new cost that they accrue by not being able to decline care for preexisting conditions, etc, they will just pass off onto the other consumers. Our premiums are about to get more expensive rather than more affordable. They corporation will never bear the brunt of increased costs. They ALWAYS pass it off to the consumer.

  • PAUL MD

    Jake Williams,
    If these are really your thoughts, you would be welcomed in our practice and I would be honored to be involved with your health care.

    Careful with the trust fund thing. There are many in medicine that wear those shoes as well. Problem is, they look just like the rest of us. Under closer scrutiny, you generally will find a silver spoon in their mouths and a gold one up their a@$. Not bad folks at all, but not a lot of street cred in my book.

    I was the student admissions committee representative for my medical school and a student trustee/tourguide. Easy to find the trustafarians there…application full of exotic travel and non-paying exposure to interesting medical work usually subsidized by Daddy Warbucks. While a third year at my med school I told one of my trustfund roommates that I would meet him at the Financial Management office (formally the Financial Aid office) and with a perplexed look on his face, he asked me where it was. What chip on my shoulder?

    To be fully transparent, I am NOT a “Trustafarian” as my plumber buddy from high school calls them on Nantucket….but it certainly sounds like a good gig if you can get it.

    I am a “Trust Fund” guy in a way….let’s see…my wife and two small children are trusting me to support them…my brother and father trust me to help them stay afloat during hard business times….my in-laws trust the same..ditto…Sallie Mae trusts that I will continue to pay down my loans lest they need a federal bailout.

    After 13 years of paying student loans to the tune of somewhere between $150,000 and $200,000 so far, I am proud to say that I now have the amount owed down to the original amount borrowed…around $130,000 when I graduated in 1992.

    I’m not asking for sympathy. No one twisted my arm. I would, however, appreciate some level of understanding from folks. I may be bitter…ya think? Let’s see…the same scenario plays itself over day in and day out…

    ….health care too expensive…screw the doctors…
    ….hospital requires your free services….screw the doctors…
    ….reimbursements go down….screw the doctors…
    ….trial attorneys on TV “have you, anyone you loved, anyone you remotely know been harmed by a health care provider….screw the doctors…
    ….medical offices are high utilizers of health care dollars, raise our premiums for our employees….screw the doctors…

    The work is good, better than digging ditches and the rewards both tangible and intangible can be worth it. At times deeply moving and other times, quite troubling.

    A builder builds your house, expects to be paid for his time, effort and expertise. Reasonable business model.

    An electrician wires your house, expects to be paid for his time, effort and expertise. Reasonable business model.

    Hairdresser coifs your ‘do, expects to be paid for his time, effort and expertise. Again, reasonable business model.

    Why then is it that a physician, after treating a patient, cannot reasonably expect to be paid for time, effort and expertise without being seen as greedy?

    Whoa! Wasn’t that refreshing!
    Paul

  • Ron P.

    @EA
    Actually, if you look at what is currently happening in Massachusetts, you will see that 90% of the proposed rate increases by HC insurers were “refused.” Evil, greedy, money-grubbing HC insurers, you ask? No. The fact that most of the insurers are nonprofits (BC/BS, Harvard-Pigrim, etc.) simply passing along higher costs doesn’t seem to matter. When decisions are made by those who are politically motivated, those decisions are then made on the basis of politics. Not economics. Not good medical reason. Not common sense. Pure politics. (It is probably no coincidence that Gov. Patrick “officially” kicked off his re-election campaign at the same time.) And, what better, easier way to force “single-payer” into being than to bankrupt the private insurers so the government is “forced” to take up the slack?

  • EA

    @ Ron P.
    That’s true. If the govt regulates health insurance premiums, the companies can’t pass off increased costs onto consumers. It’s also true that this will drive them out of business, causing the private health insurance sector to collapse. Is this what the govt is hoping for…that’s a different topic.

    It will truly be interesting to see if the federal govt will regulate premiums like we’re seeing in Massachusetts. If they don’t, we’ll see massive increases in premium costs. If they do, well, it might be the end of BC/BS, etc…unless the govt bails them out!

    But your statement about most insurance agencies being not for profit isn’t exactly true. In Idaho, BC/BS were allowed to attain for profit status in the 90s. A quick google search reaffirmed that this is wide spread throughout the country. Although, it appears that BC/BS in Massachusetts uses a not-for-profit subsidiary. Those companies that are for-profit can pass off costs with ease. Just look at the 30-40% premium increases we’re seeing this year paired with decreased reimbursements and record profits. Anything to keep those profits rolling in.

  • Jake Williams

    @Paul

    I’m not sure I follow your reasoning behind needing to be careful with the trust fund comment. Just because some physicians are born into wealth, does not mean those doctors are less intelligent or have poorer work ethic. I would much rather have the wealthiest use that wealth to their advantage by educating themselves. I was comparing those that are endowed with riches that do not pursue a higher meaning or purpose other than to use that money to get richer. Like going to war for instance. (For the record, I don’t entirely buy into that conspiracy. I’m merely creating a reference.) I’m just under the impression that doctors would have more insight into potential R&D projects than your average “celebrity.” I’m not sure it’s such a big gap as it was twenty years ago. Perhaps the information age alleviates that issue a bit. For instance, TED does a wonderful job of engaging everyday citizens into “what’s happening.”

    If I appear ignorant it’s because I’m a 22 year old student. Don’t put too much weight into my comments.

    Lastly, Thank you for the feedback. ;)

  • PAUL MD

    @ Jake,

    I was kinda being “ironical” and taking license and liberties with my own peer group. No ignorance (other than mine, perhaps) noted. You did lose me on “TED” which to me is Thyroid Eye Disease. Thanks.

  • Mat

    “Without SGR reform and Tort reform, I do not personally nor professionally accept this shiny new “change you can believe in” and to the extent possible, I will not go quietly into that good night.”

    Paul, where is the proposal you physicians are pushing on SGR reform that we should support? You guys seem to complain a lot, but offer little legislatively. Where is the bill you’re backing for how things should be done differently?

    As for tort reform, if it’s caps (which is what it usually is), that has never seemed to improve things for anyone. Your premiums rise and fall with the economy. Health care costs don’t change, and access doesn’t change. The only ones who benefit from those are your liability carriers who have some more predictability in losses. Why people in the risk business should get to arbitrarily mitigate that risk is beyond me.

    “Why then is it that a physician, after treating a patient, cannot reasonably expect to be paid for time, effort and expertise without being seen as greedy”

    You say this, but you physicians had this. You charged and billed like any other professional. But you decided to get on the government gravy train, which worked well for you for decades. Your salaries consistently went up regardless of the broader economy, and payment consistently increased. Now that it’s changing, you’re complaining. Understandable of course, but it’s hard to have a lot of sympathy for those who thought the government gravy train would last forever.

    Your patients aren’t calling you greedy, the government is. Your patients for the most part have no clue how you get paid.

    As to your complaints about being called greedy, physicians don’t hesitate to call every other group they oppose “greedy”. Why should you be spared such insult when you don’t hesitate to use it on others?

    You say you just want others to understand, but your comments seem to reflect your own position without any understanding of any others. When your profession voluntarily chose the third party payer system, they put themselves in competition with a bunch of other people with what appeared to be an ever expanding pool of money. But that was a false belief, and now the pool is going to at least stay the same size, if not shrink. Why should your claim on the pool be given priority over everyone else’s? Do they not add value to the system?

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