The practice of medicine is a calling and as such, my colleagues and I have endured more unfair revenue cuts than most businesses would have endured. Yet, a medical practice is also a small business, and there are limits to how much we can endure. We are now at the point where further cuts are not survivable. Just like any small business, our revenue has to exceed costs in order to survive. Despite everything that I have been able to do to cut costs, the margin of profit is now thin, and the proposed greater than 10 percent cut will put us out of business. The only option will be to downsize the practice and stop seeing all Medicare patients. I would hate this, but it will be the only option I have if Congress does not reverse the proposed cuts.

Dr. Atkinson, 45, said she paid herself a salary of $110,000 last year. Her insurance reimbursements often do not cover her costs, she said.

"I calculated that every time I have a Medicaid patient, it's like handing them a $20 bill when they leave," she said. "I never went into medicine to get rich, but I never expected to feel as disrespected as I feel. Where is the incentive for a practice like ours?"

Labels: Medicaid, Medicare

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Medicare Faces Inadequate Financing

Spending Grew 44 Percent in Past 3 Years

Medicare—the world’s most expensive single-payer health-care program—is not adequately financed for the next ten years, according to the Medicare Trustees’ 43^rd report to Congress, released March 25.

The report notes that Medicare’s hospital (Part A) expenditures, which were $203.1 billion in 2007, are projected to more than double to $414.9 billion by 2017. But hospital trust-fund assets are projected to fall from $326 billion this year to $96 billion in 2017.

Total Medicare expenditures are expected to grow to more than $867 billion annually by 2017. “In the long range, projected expenditures and scheduled tax income are substantially out of balance, and the trust fund does not meet our test of long-range close actuarial balance,” the report emphasized.

Total Medicare expenditures amounted to $431.5 billion in 2007 (up from $301.5 billion in 2004). There about 44 million Medicare recipients. That means that the average amount spent per individual recipient was $9,807.00. But, more importantly, it is estimated that only about 180 million people are taxpayers in the US -- that is, about 60% of the population. So, for each of you taxpayers, your share of Medicare is $2,397.00 each year. Thus, it takes just four taxpayers to pay for each Medicare recipient's average share of benefits. That's in addition to any insurance costs you pay for your own family.

In addition to Part A’s $203.1 billion, last year’s Medicare expenditures included:

• $178.9 billion for Medicare Part B (physician visits, outpatient hospital, home health and other services) and
• $49.5 billion for Medicare Part D (prescription-drug coverage and premium and cost-sharing subsidies for low-income enrollees).

Medicare enrollment grew to 44.1 million people in 2007—36.9 million seniors and 7.2 million disabled—up from 41.9 million in 2004. That is a 5.24 percent increase over three years, while total expenditures grew by 44 percent. (Note: Table II.B1 states that total Medicare expenditures were $431.5 billion in 2007; Table V.F4 states that total Medicare expenditures were $434.7 billion in 2007.)

Source: “2008 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds,” March 25, 2008: http://www.treas.gov/offices/economic-policy/reports/medicare-report-2008.pdf

Labels: Medicare

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Universal health care is the wrong prescription

By BRIAN SCHWARTZ
INDEPENDENCE INSTITUTE

What good is having medical insurance if you cannot get medical care? Peddlers of "universal health care" - from Hillary, Obama, to 2nd Congressional Democratic candidate Jared Polis - don't get this.

"Universal health care" is false advertising for politically controlled medicine, with government as the "single payer" monopolistic insurer. But having coverage does not guarantee getting medical care.

Since patients prepay through taxes, medical care appears "free." Hence, they have strong incentive to over-consume and providers need not compete on price.

To contain costs, governments restrict your access to life-saving treatment. In countries with such "universal coverage," patients die waiting for treatment.

The Canadian Medical Association Journal reports that in one year, 71 Ontario patients died while waiting for coronary bypass surgery and over one hundred more became "medically unfit for surgery." The Canadian Broadcasting Corporation reports that "109 people had a heart attack or suffered heart failure while on the waiting list. Fifty of those patients died."

"Physicians across Canada are in an advanced stage of burnout due to work conditions" which "causes them to retire early . . . or simply leave," a former Canadian Medical Association president told the New York Times. He "attributed much of the problem to technological shortages and the powerlessness doctors feel when patients complain about long waits for treatment."

"Access to a waiting list is not access to health care," wrote Canadian Chief Justice McLachlin when striking down legislation banning private insurance in 2005. Last year, a New York Times headline read: "As Canada's Slow-Motion Public Health System Falters, Private Medical Care Is Surging."

And England? The BBC reports that "up to 500 heart patients die each year while they wait for potentially life-saving surgery." The Times claims that a British woman "will be denied free National Health Service treatment for breast cancer if she seeks to improve her chances by paying privately for an additional drug."

A Daily Telegraph headline reads: "Sufferers pull out teeth due to lack of dentists." Another article says that "doctors are calling for NHS treatment to be withheld from patients who are too old or who lead unhealthy lives."

Consider politically controlled health care in America: Medicaid and Medicare.

Doctors are five times more likely to refuse seeing new Medicaid patients than privately insured patients. Increasing reimbursement rates won’t help much; more than two-thirds of doctors reported being overwhelmed by Medicaid's billing requirements, paperwork, and delays in payment.

ABC News says that "Medicare rules bar cancer drugs for patients," including the privately insured.

"Single payer" advocates cite international comparisons of life expectancy to support their cause. But life expectancy depends on factors unrelated to health care, such as unintentional injury and homicide. Health economist Robert Ohsfeldt found that when accounting for these two factors, life expectancy in America is comparable to that of Canada and England.

What really matters is your chance of surviving a serious illness. The American Cancer Society claims that "U.S. patients have better survival rates than European patients for most types of cancer."

So if politically controlled medicine isn’t the solution, what is? Not a Massachusetts-style "individual mandate," which forces everyone to buy insurance. This is essentially single-payer in disguise. Insurance regulations severely limit competition, so insurance companies are effectively government contractors for politically defined insurance.

The Boston Globe reports that to contain costs, Massachusetts authorities will "probably cut payments to doctors and hospitals" and "reduce choices for patients." Sound familiar?

Instead, we must recognize how government policies have crippled free markets.

Because the tax code deeply discounts employer-provided insurance, you're essentially stuck with your employer's non-portable plans. Hence, insurance companies can afford to be stingy and deny you care; they know that losing you as a customer requires that you change jobs. With government as "single payer" it's even worse: To change insurance providers you must move to a different state or country.

Our current system also encourages thoughtless over-consumption and skyrocketing costs.

The tax code punishes paying for medical care out-of-pocket and rewards buying insurance. So "insurance" has become prepaid medicine, and patients over-consume like business travelers dining on their company's expense account.

Further, legislation mandating minimum benefits makes insurance unaffordable for many. Consider: Colorado law compels widowed wives to pay higher premiums for prostate screening, maternity, and marital therapy.

Some Colorado legislators recognize this injustice. Just as businesses incorporated in other states can operate in Colorado, Coloradans should be able to buy affordable policies from insurance companies that meet less damaging regulations of another state.

While "universal health care" may provide health insurance, it doesn't guarantee health care. The uninsured are not the problem, but the symptom of the real problem - government meddling in personal choices of how we care for ourselves and our families.

Brian Schwartz, an optical engineer in Boulder, is a guest author for the Independence Institute. His free-market proposal to the Blue Ribbon Commission is at WhoOwns You.org.

Labels: Canada, CO, Insurance, MA, Medicaid, Medicare, OpEd, UK

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The Wave of the Future

The wave of the future is the free-standing Emergency Department.

By requiring insurance coverage or full payment at time of presentation, these facilities are able to offer reduced waiting times, concierge-style amenities, and a full array of emergency diagnostic and therapeutic services. And if they refuse to accept Medicare or Medicaid, then they are not forced to follow the restrictive rules of EMTALA.

EMTALA applies only to "participating hospitals" -- i.e., to hospitals which have entered into "provider agreements" under which they will accept payment from the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) under the Medicare program for services provided to beneficiaries of that program.

So these "free-market" emergency facilities can not only refuse treatment of patients who are unwilling or unable to pay, but they can also transfer patients at will without negotiating with a receiving hospital or jumping through a lot of regulatory hoops. Realistically, however, hospitals love receiving transfers from these types of facilities because they know they are getting fully-paying patients. Do you think that a hospital might accept an otherwise healthy well-insured young woman with a gallstone attack in transfer, perhaps causing the cirrhotic Medicaid patient to wait a few more hours in their own ER? I think they just might. The bottom line is a powerful incentive.

As this business model becomes more widespread, hospital-based emergency departments will be faced with an increasingly problematic payer mix, because the higher-paying patients will be siphoned off the top, leaving only the most undesirable trauma and Medicare/Medicaid populations to fill their overcrowded waiting rooms. And when emergency physicians have a broader selection of practice environments to choose from, I suspect the hospital-based ERs will soon have some difficulty filling their schedules as well, thereby compounding their problems even further.

Guess what?

Healthcare isn't a right after all.

Labels: Analysis, Insurance, Medicaid, Medicare

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Brian Schwartz alerted us to an article in the Rocky Mountain news from January 9, 2008 about the fact that Medicare costs for the prescription drug program had caused a 6.7 % increase in health spending during 2006.

Walmart. That's who.

In Sept. 06, Walmart started its $4 prescription program -- which it now reports has allowed consumers to save over $1 billion dollars nationally (and $13 million in Colorado) in just 18 months. That's a great record - and you don't need a Medicare or Medicaid card to get those savings. In fact, you don't need an insurance card of any kind. Now that's a way to reduce health care spending. You can find out from Walmart what drugs are included in the Walmart program, and the savings per state.

Walmart reports that 30% of these prescriptions are filled for those without any insurance -- the uninsured. And these $4 prescriptions are also a huge plus for those Medicare seniors who are in the doughnut hole, which occurs when a senior has between $2,400 and $5,421.25 in drug expenses per year. In that hole, Medicare coverage disappears. So, more people can buy the drugs prescribed by their doctors and take all of the prescribed amounts -- not taking half or skipping doses because of costs. In addition, Walmart has picked up customers. And, as a result, competitors Target, Costco and Kroger have followed with their own programs as well. So, nationally, more and more prescription drug consumers benefit.

In several states, there are government restrictions on Walmart's ability to sell $4.00 prescriptions. These states include Colorado. So, without government restrictions, Colorado consumers could save more. We'll check into this and report back.

In the meantime, imagine a Free Market!

Labels: Analysis, Free Market, Medicare

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Government, regulations drive up health costs
Linda Gorman, Independence Institute

I've got to say that the Feb. 25 editorial, "The surging tide of health-care costs," broke new ground for me in health-care policy. "The popular Medicare program... ." First time I knew that we had data letting us assess whether something that was virtually mandatory and without any substitutes, unless one is very rich, is "popular."

Then there were the factors cited by the editorial as driving health-care cost increases: "an aging population, boomer retirees, advances in drugs and medical technology." Never mind that the boomers are the aging population and so shouldn't count twice; advances in drugs generally save costs. So does a lot of new technology: MRIs are a whole lot cheaper than exploratory surgery, for example.

I guess the implication here is that to cut costs we should go back to the 1930s: put people in beds and provide lots of nurses to take pulses and temperatures without any medical devices or new drugs. Costs would go down.

The literature actually suggests a bunch of other major cost drivers — excess regulation is estimated to account for about 10 percent of U.S. national health spending each year. The spread of public insurance programs including the expansion of Medicaid/SCHIP also likely increases costs. Rising incomes are a huge factor. Wealthy people consume more health care just like they do more transportation, housing and education.

The spread of third-party payment, which has reduced consumer out-of-pocket expenses to all-time lows, is likely a big factor in the cost increase.

Finally, there's the line that "And if private Medicare plans become more popular, that too may increase costs." The embedded assumption here seems to be that private equals higher cost. This often is not the case in the real world.

Linda Gorman is director of the Health Care Center at the Independence Institute in Golden.

Labels: Insurance, Medicaid, Medicare

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The Right Vision Of Health Care
Yaron Brook 1.08.2008

With the primary season in full swing, the presidential candidates are fighting over what to do about the spiraling cost of health care--especially the cost of health insurance, which is becoming prohibitively expensive for millions of Americans.

The Democrats, not surprisingly, are proposing a massive increase in government control, with some even calling for the outright socialism of a single-payer system. Republicans are attacking this "solution." But although they claim to oppose the expansion of government interference in medicine, Republicans don't, in fact, have a good track record of fighting it.

Indeed, Republicans have been responsible for major expansions of government health care programs: As governor of Massachusetts, Mitt Romney oversaw the enactment of the nation's first "universal coverage" plan, initially estimated at $1.5 billion per year but already overrunning cost projections. Arnold Schwarzenegger, who pledged not to raise any new taxes, has just pushed through his own "universal coverage" measure, projected to cost Californians more than $14 billion. And President Bush's colossal prescription drug entitlement--expected to cost taxpayers more than $1.2 trillion over the next decade--was the largest expansion of government control over health care in 40 years.

Today, nearly half of all spending on health care in America is government spending. Why, despite their lip service to free markets, have Republicans actually helped fuel the growth of socialized medicine and erode what remains of free-market medicine in this country?

Consider the basic factor that has driven the expansion of government medicine in America.

Prior to the government's entrance into the medical field, health care was regarded as a product to be traded voluntarily on a free market--no different from food, clothing, or any other important good or service. Medical providers competed to provide the best quality services at the lowest possible prices. Virtually all Americans could afford basic health care, while those few who could not were able to rely on abundant private charity.

Had this freedom been allowed to endure, Americans' rising productivity would have allowed them to buy better and better health care, just as, today, we buy better and more varied food and clothing than people did a century ago. There would be no crisis of affordability, as there isn't for food or clothing.

But by the time Medicare and Medicaid were enacted in 1965, this view of health care as an economic product--for which each individual must assume responsibility--had given way to a view of health care as a "right," an unearned "entitlement," to be provided at others' expense.

This entitlement mentality fueled the rise of our current third-party-payer system, a blend of government programs, such as Medicare and Medicaid, together with government-controlled employer-based health insurance (itself spawned by perverse tax incentives during the wage and price controls of World War II).

Today, what we have is not a system grounded in American individualism, but a collectivist system that aims to relieve the individual of the "burden" of paying for his own health care by coercively imposing its costs on his neighbors. For every dollar's worth of hospital care a patient consumes, that patient pays only about 3 cents out-of-pocket; the rest is paid by third-party coverage. And for the health care system as a whole, patients pay only about 14%.

The result of shifting the responsibility for health care costs away from the individuals who accrue them was an explosion in spending.

In a system in which someone else is footing the bill, consumers, encouraged to regard health care as a "right," demand medical services without having to consider their real price. When, through the 1970s and 1980s, this artificially inflated consumer demand sent expenditures soaring out of control, the government cracked down by enacting further coercive measures: price controls on medical services, cuts to medical benefits, and a crushing burden of regulations on every aspect of the health care system.

As each new intervention further distorted the health care market, driving up costs and lowering quality, belligerent voices demanded still further interventions to preserve the "right" to health care. And Republican politicians--not daring to challenge the notion of such a "right"--have, like Romney, Schwarzenegger and Bush, outdone even the Democrats in expanding government health care.

The solution to this ongoing crisis is to recognize that the very idea of a "right" to health care is a perversion. There can be no such thing as a "right" to products or services created by the effort of others, and this most definitely includes medical products and services. Rights, as our founding fathers conceived them, are not claims to economic goods, but freedoms of action.

You are free to see a doctor and pay him for his services--no one may forcibly prevent you from doing so. But you do not have a "right" to force the doctor to treat you without charge or to force others to pay for your treatment. The rights of some cannot require the coercion and sacrifice of others.

So long as Republicans fail to challenge the concept of a "right" to health care, their appeals to "market-based" solutions are worse than empty words. They will continue to abet the Democrats' expansion of government interference in medicine, right up to the dead end of a completely socialized system.

By contrast, the rejection of the entitlement mentality in favor of a proper conception of rights would provide the moral basis for real and lasting solutions to our health care problems--for breaking the regulatory chains stifling the medical industry; for lifting the government incentives that created our dysfunctional, employer-based insurance system; for inaugurating a gradual phase-out of all government health care programs, especially Medicare and Medicaid; and for restoring a true free market in medical care.

Such sweeping reforms would unleash the power of capitalism in the medical industry. They would provide the freedom for entrepreneurs motivated by profit to compete with each other to offer the best quality medical services at the lowest prices, driving innovation and bringing affordable medical care, once again, into the reach of all Americans.

Yaron Brook is managing director of BH Equity Research and executive director of the Ayn Rand Institute.

Labels: Analysis, CA, Free Market, MA, Medicaid, Medicare, OpEd

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Last month, my physician friend said he was shutting down his office practice and taking a job as a hospitalist. He’s a great, caring doctor who also volunteers his time each week to provide free care on the Indian reservation. I asked why he was making this difficult decision, but already knew the answer before he confirmed it: He’d had it with the avalanche of bureaucratic paperwork and reporting regulations that requires several full-time office employees to deal with, insurers who all had different ideas on how he should practice medicine that weren’t always in the best interests of his patients, ‘quality’ measures that weren’t about quality, third-party payers who were reducing reimbursements and requiring more of his staff to continually fight just to get paid, and he couldn’t afford the 10.1% pay cut that goes into effect next month. Practicing family medicine no longer offered a viable future.

Lots of Americans probably don’t realize that doctors are getting their pay cut 10% by the largest single payer in the country — Medicare — reimbursements that are already often lower than the costs of providing the patient care. Nor do they know about the lobbying interests shaping the evolving healthcare system and the practice of medicine, as well as making these cost-containment reimbursement decisions. Many doctors know this is just the opening salvo into what it will be like for them to become employees under a single-payer plan taking shape. Nurses learned similar lessons years ago, hence, the severe nursing shortages. But patients don’t know what it will be like to be patients. As babyboomers face years when they most need healthcare, these issues will affect them more than ever.

Labels: Medicare

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Universal Health Scare
by Michael J. Hurd (December 1, 2007)

An increasingly popular argument in favor of socialized medicine goes like this: "If universal health care works for the elderly under Medicare, then why not for the rest of us?" If that's true, then the Democratic nominee for President should definitely work this one into his or her acceptance speech, starting now.

But there's a tragic flaw in that argument. Universal care-socialized medicine-for the elderly does NOT "work," even on its own terms. Many services, such as my own (psychotherapy and mental health care), are only partially covered, if at all, under Medicare. It has to be this way; otherwise the program would be slated for bankruptcy even sooner than it already is. Why do you think Medicare "supplemental insurance" is commonplace, if not essential? Because "universal coverage" guaranteed by political funding is a myth. And if you think it's a myth now, wait until the baby boomers come of age and Medicare faces certain bankruptcy. And if "universal coverage for all" passes, then the price tag for the U.S.

Treasury goes into the billions or trillions of dollars. And you thought the Iraq war was expensive.

None of these dollars-and-cents concerns address the deeper problem with socialized medicine: What it does to the doctor. Although politicians may applaud themselves for "giving" everyone health insurance for free, doctors pay the biggest price by being at the mercy of the bureaucracy and injustice created by this monolithic system. Also, once the private insurance sector (or what's left of it) is completely out of business, which will be inevitable if not outright mandatory, doctors will have no choice but to follow government dictates. As it stands now, medical reimbursement rates for doctors are spiraling downward, even as tax rates go up. The Governor of California even has the audacity to try and make doctors foot some of the bill for socialized medicine in that state.

Doctors, under universal coverage, won't enjoy the freedom to charge patients fee-for-service, and patients likewise will not enjoy the freedom of paying their doctors fee-for-service to get better quality care. This is what "universal coverage" truly means, whether it's written into the legislation or not. And the reason is simple: Socialized medicine, no matter what you call it, makes the private practice of medicine obsolete, just as it has severely undercut the practice of medicine under Medicare.

Does anyone know an elderly person who is actually happy with his or her doctors, by and large, under Medicare? Are any of you who already are elderly happy with the treatment you receive under Medicare? As doctors get increasingly frustrated, and the lines and the waiting times get longer, and the paperwork piles higher and the visits get shorter, doctors will no longer work directly for the patient. Many will see no need to strive for excellence, because under these programs they get patients whether they're good doctors or not. It's the only game in town.

"Universal Care" will drive a permanent wedge between the patient and the doctor. Imagine if the government took control over YOUR chosen profession, career or job and dictated your every move, including exactly what you could earn in that job-whether you do it well or not.

Remember that Medicare is only a slice of socialized medicine. Calls for universal coverage are the real thing. Under what's being proposed now, we 're going to get more of the same-only a LOT more of it.

The person who claims that "universal care worked for the elderly, so why not the rest of us?" had better check out the facts. The Government pays about fifty percent of all medical expenses today. It pays more every year. People are less and less happy with their doctors and the whole financial aspect of medicine. Gee, do you think maybe government is creating more problems rather than solving them?

Labels: Medicare, OpEd

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