Who says?
Thursday, June 4 2009
Shadowfax, proprietor of Movin’ Meat, is one of my favorite doc bloggers, but not for posts like this:
Jon Cohn at TNR reports that the HELP plan will reimburse providers at 110% of the current medicare level. That’s a pittance. Medicare is currently reimbursing at unsustainable levels, such that many physicians have closed their practice to new medicare patients. Typically, docs cross-subsidize by cost shifting onto commercial payers, which, depending on many factors can reimburse at 130-300% of medicare (with 150-200% representing the median).
As it happens, Jon Cohn has done a fair amount of reporting on the rationale behind the 110% figure, and it’s only a pittance if you consider it in a vacuum, apart from other payment and delivery reforms. The HELP paper is not terribly specific, but there’s no reason to infer that they intend the public option to be merely Medicare+10%, and nothing more.
Granted, a little skepticism is healthy, but Shadowfax expresses his in rhetoric designed by the insurance and hospital industries to oppose reform: specifically, the phrase cost-shifting. The idea that providers “shift costs” from Medicare patients to commercially-insured patients is a contrivance that depends entirely on accepting the cost of care as given. And who says what care costs? The hospitals do, of course. And that’s a problem, because hospitals are always going to want more reimbursement than they get.
I don’t know enough about Shadowfax’s hospital, so let me use a hospital close to me as an example. This is the hospital that sent me a glossy ad in the mail, announcing its purchase of a second Da Vinci surgical robot, an unproven gee-gaw intended to lure wealthy older men into their wards. And when said hospital totals up its “costs of care”, those robots are going to be part of the tally; it’s entirely likely that commercial insurance will end up paying for a big chunk of those robots, even if Medicare patients also get robot surgery.
If the hospital had to rely on Medicare alone, they probably wouldn’t be able to hire to buy the robots – but that doesn’t meant their surgical outcomes would be any worse. So when Shadowfax says Medicare is reimbursing at “unsustainable levels”, there could be some truth to that; but the rest of the truth is that “unsustainable” means hospitals would no longer be able to buy expensive, unproven toys. “Unsustainable” doesn’t necessarily mean that providers and hospitals would be unable to provide a reasonable standard of care to their patients.
If the rising costs are the biggest problem in health care reform – and from the government’s point of view, that is the case – funding a public option at 150-200% of Medicare is going to worsen, not improve the situation. Funding the public plan at far less than commercial insurance pays – but slightly more than Medicare rates – makes a lot more sense, but only alongside the many additional reform measures that are still on the table.
The cost of seeing a patient is the amount of money spent on renting an office, buying office equipment, paying the salaries of office-workers and nurses and coders and maintenance workers, paying for health insurance benefits of the employees, paying for malpractice insurance, paying for gas, paying for electricity, paying for water, paying for medical equipment, paying for licensure costs, et cetera.
These are all costs that can not be covered adequately by Medicare payment rates or public option payment rates, necessitating cost-shifting onto private insurance. And this is long before even considering purchasing any medical equipment which would help preserve peace of mind and decrease discomfort of patients coming in for surgery.
The above costs are all costs that do not magically go away by creating more bureaucracy to handle public option insurance claims. It is a fallacy to think that adding bureaucracy, especially government bureaucracy, will decrease costs. Government is inherently inefficient.
If you had your own medical practice and you were being paid only Medicare and Public-Option rates, you would actually be generating negative income (revenue minus costs), essentially paying out of pocket to be able to see patients. Numerous medical practices have suffered this unsustainable situation and were forced to shut down, leaving their patients behind with no physician to take them and to the fate of seeking comprehensive care in the emergency room. This is Massachusetts.
Yet, you think this is the way things should be. Not because you are running a medical practice, but because you are looking for a way that the government can provide an enormously-massive new entitlement without bankrupting the entire country. The way you find most appropriate is to institute payment rates which have no hope of keeping medical practices solvent and to incorporate magical thinking into certain “reforms” which have been widely claimed but never proven to decrease the costs associated with running a medical practice.
Medicare is in the red by billions of dollars every year. The deficit is calculated in the tens of trillions of dollars over the next few decades. And that is a government bureaucracy which pays 100% of what Medicare pays, unlike the public option at 110%. It is rather silly to think that a new government entitlement will be any different, especially when we see the results of the public option trial run in Massachusetts.
Hi Peter! First of all, Massachusetts does not have a public competitor; the current proposals on the table are substantively different from what that state has done, and much broader in scope. Mass. did health finance reform, which isn’t the same as health care reform.
Second, the government’s primary interest in health care reform is reigning in the cost inflation that is driving Medicare spending; that’s what gets guys like Peter Orszag out of bed in the morning, and why a lot of what gets talked about is actually finance reform. But even still, Medicare ran a deficit only in the HI trust fund last year; if you include the SMI trust fund, they ran a $12 billion surplus.
As for claims and proof, the only reason none of these claims are proven is that they’ve never been tried – here. We’ve never had a public plan available to everyone in this country. We’ve never had a board like MedPAC that could set policy. We’ve never had comparative effectiveness research. So it’s true that none of these have been proven – but only if your standard of proof ends at the US borders. In lots of other countries have done many of these things, and they are still able to provide excellent health care at a much more reasonable cost. So by that standard, they are very much proven reforms.
As for cost here, if you can point to any breakdown of what a typical patient costs, fine. But I guarantee you the AHA and AHIP are including everything from rubber socks to robots in their tally of hospital costs; if you want to prove cost-shifting is real, you have to come up with better numbers than they did.