Facts Dispute Opinions on Healthcare Reform
By Cary Gutbezahl, MD
The primary rule of medicine is “first, do no harm”.
Why can’t health care policy makers adopt the same principle? Otherwise, in the not too distant future, we’ll be scrambling to replace the next broken healthcare system.
While the current health care system has generated its share of problems and complaints, the Federal Government is busily working on a successor program. We applaud the focus on improving access and managing costs, but wave a yellow flag about some basic opinions that seem to be the basis of evolving healthcare reform.
As the debates roar on in Washington, considerable attention has been focused on the so-called success of Medicare and recent Massachusetts health care reform.
Government policy analysts consistently err in predicting the effects of health policy.
Did anyone in 1964 think Medicare expenditures would be as high as they are today? The fact is that decision makers failed to look forward from a factual, predictive basis. They would have realized that there would be many more beneficiaries due to longer life spans, technological advances, and greater intensity of service. Despite monopolistic price control by the Federal Government, the sheer number of Americans now receiving coverage has driven Medicare expenditures through the roof.
Two recent news reports suggest that what we are promised may not be what we get.
The first story is from Massachusetts, the state whose model for health insurance reform is touted as a model for federal reform. Just this month, the State dramatically exceeded their own predictions and incurred an increase of nearly 25% to subsidize health care insurance in the last fiscal year. It should be noted that these are not healthcare consumers who fall under the poverty definition for Medicaid eligibility. Instead, the overrun was created by an increase in the number of people who purchase State-subsidized insurance. The cause for the increase is the number of eligible people; not increases in the cost of insurance.
Playing Politics with Healthcare
Similarly, government estimates of the cost of the end-stage renal disease program were grossly underestimated. Such gross underestimates of the costs of health care programs is more common than accurate estimates. These underestimates allow politicians to build a consensus for change. But the agreements underlying the consensus are eroded due to cost overruns. When the unanticipated results occur, financial distress forces the politicians to modify the deals that initially were made to get the legislation passed. Changes include health care provider taxes, reductions in payments to physicians and hospitals, and utilization review techniques.
Payment reductions and administrative hassles lead to the second news report. Last week, the New York Times reported that Medicare enrollees are having difficulties gaining access to physicians. Studies show that an increasing number of physicians are withdrawing from Medicare because payment levels are too low and there are too many administrative hassles. Physicians are often willing to negotiate a private arrangement with the patient, but they would rather forgo business than continue to practice under Medicare’s rules.
Physicians Choosing to Quit Serving Medicare Patients
That physicians are choosing to withdraw from Medicare has important implications for policy making. First, some voices in the public debate contend that the success of Medicare should be spread to other health care consumers. While Medicare is a success in many ways, it should be recognized that it has generated many problems as well. Medicare does not pay its fare share of health care costs. Since the beginning of Medicare, expenditures have far exceeded any predictions when Medicare was approved. In response to rising expenditures, due in large part from rising demand, the government has unilaterally set lower prices. We are now seeing that this is hurting access to care.
Pay-for-Performance Sounds Good Until You See How it Increases Costs
In addition, government plans to increase “pay for performance” are not likely to reduce the “hassle factor”. In fact, recent demonstration programs noted that many physician groups reported great difficulties (and expense) in trying to comply with the program’s reporting requirements. In other words, physician reimbursement reform may result in more administrative hassles, rather than fewer. Similarly, proposals to create bundled payment for hospitals and physicians are likely to create problems from a new set of built-in financial incentives and fights over “splitting the pie”.
If the government policies reduce the willingness of physicians to see patients, we will be creating a new set of problems. This issue should not be ignored since another lesson from Massachusetts is that expanding the numbers of insured people has resulted in shortages of physicians due to higher demand.
Where’s All This Headed?
There is a joke among compensation consultants that every company is working with three incentive plans. The one they one they just implemented, the one they just replaced, and the one they are working on to replace the new program. It seems likely that the same thing may happen to health care.
If we do healthcare reform right, we can perhaps avoid being the butt of the joke.
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