By: Dr. J. P. Hubert
There is a tremendous amount of "noise" currently polluting the national discussion on health care reform. The first commonly misunderstood falsehood is that the system we now have operates according to "free-market" principles. In reality it doesn’t. For example, all Medicare reimbursements whether to doctors or hospitals are limited by the Federal government. Health Care providers are not allowed to charge whatever the market will bear as is the case in a so-called "free-market." Medicare publishes a list of maximally allowable charges that every provider who participates in the Medicare Program must abide by. Not only may "health care providers" not charge whatever they wish for their services, Medicare only reimburses a percentage of the Medicare maximum allowable charge.
For purposes of illustration; if a health care provider (in this example, a surgeon) charges a usual and customary fee of $2000.00 for a given procedure including all post-operative care, and a private insurance company through a negotiated (discount) care contract pays $1500.00 for the same procedure (a 25% discount), Medicare may set the maximum allowable fee--that the provider is allowed to charge--at $1000.00. From that number, Medicare will actually pay only a percentage of $1000.00 for example 80% or $800.00 that is, 40% of the usual and customary fee or a 60% reduction. The only way the provider in question could be paid the $2000.00 is if the patient paid the entire fee personally. However, Medicare does not allow a Medicare patient to pay a non-Medicare approved rate and therefore the patient would have to drop Medicare entirely if he wished to do so. This is extremely uncommon of course. Most patients of Medicare age are enrolled in the Medicare program and would not be willing to drop that coverage in order to pay a health care provider their usual and customary fee.
If on the other hand, such a patient had a supplemental insurance policy to help make up the difference between the Medicare allowed reimbursement of $800.00 and the allowable charge of $1000.00 the supplemental policy would pay a maximum of $200.00 which means the physician would receive a total of $1000.00 or 50% of their usual and customary fee rather than the 40% that Medicare alone would pay. In either case, the amounts are significantly lower than the so-called usual and customary fee which the surgical provider would charge for the same procedure on a non-Medicare patient with full indemnity insurance coverage. However, the supplemental option does not apply if the provider accepts Medicare assignment meaning that the Medicare approved amount of $800.00 must be accepted as payment in full. Should a physician/surgeon, who accepts Medicare assignment attempt to collect the remaining $200.00 from the patient, the consequence could be the physician’s permanent expulsion from the Medicare program. The Medicare system of reimbursement clearly disadvantages the providers who perform complicated lengthy procedures which are quite costly. They have no legitimate way of compensating for the steep reductions in reimbursements. To my knowledge none of the bills pending in Congress attempt to rectify this problem. Certainly none call for increasing long frozen or severely reduced fees for medical and surgical sub-specialists who for over 2 decades have been discriminated against unfairly. Primary care providers have been the primary beneficiaries of any Medicare fee increases.
The situation is even more drastic with respect to Medicaid reimbursement which is so low as to be incompatible with the financial viability of providers who treat a significant percentage of such patients.
Private insurance companies have largely adopted Medicare reimbursement rates as well over the past 2 decades such that very few if any remaining “for-profit” companies/policies pay the so-called "usual and customary" fees which 20 years ago were significantly higher than Medicare allowable rates. Through a variety of discount vehicles including HMO's, PPO's, and various other kinds of negotiated care contracts, the private health care system no longer operates according to free market principles. In fact, as Mr. Cockburn indicated in his piece, private medical practice ceased following a "free-market" model over 40 years ago when third party payers (insurance companies, Medicare and Medicaid) entered the medical market place. The Health Care "product" from that point on instead of involving only medical providers and patients, thereafter became heavily influenced by the wishes, concerns, goals etc. of third party payers. Their goal was to pay as little as possible to providers through heavy discounting of fees while limiting costly treatments and procedures. This was accomplished by eliminating undesirable insured’s and avoiding those with pre-existing conditions all the while continuing to increase insurance premiums at a much greater rate than the annual rise in cost of living. In the private sector these increasing premiums were utilized to help build profits, increase stock price and pay exorbitant salary, bonus and benefits packages to management rather than being used to pay for needed medical care. This has been unconscionable.
It is a complete ruse to argue that health care reform would mean the end of "free-market" economics in medical care. It ended a long time ago. The only question remaining is whether insurance and pharmaceutical companies will be allowed to continue stealing an unconscionable percentage of the total health care dollars available or whether some significant change is to occur whereby the available monies will be spent directly for the benefit of patients. In other words, will the unjust and immoral monopoly that private health care mega-companies currently enjoy be allowed to continue?
In his article Mr. Cockburn was certainly correct in asserting that the insurance companies and the pharmaceutical industry are too powerful at present in their ability to exercise complete control over private health care policy. They of course have been unwilling to release their strangle-hold over the health care system. Unfortunately President Obama has been unwilling to “take-on” these two industries and has essentially folded his cards and admitted defeat without even trying to reign in their power. The Huffington Post reported that in his secret negotiations, Mr. Obama guaranteed the insurance and pharmaceutical industries that any potential health care reform plan would not allow negotiation over drug prices nor prescription drugs to be imported from other countries, essentially insuring that the currently excessive insurance and pharmaceutical corporations’ profits will be maintained. The President gave away the store before even trying to regulate the worst offenders.
Furthermore, it is ludicrous to blame physician health care providers for the enormous rise in health care costs when their reimbursements on an actual and relative basis have dropped year over year for over 2 decades as compared with the cost of living. Their only recourse has been to make up in volume what they have lost in per-case reimbursement. While some physicians have tried to do so, it is neither morally acceptable nor medically safe beyond a minimal degree. There is only a finite amount of time available and beyond a minor increase in volume of patients or procedures complications, errors and adverse outcomes must result at least in part by attempting to rush too many patients through the system per unit time.
Hospitals have largely experienced the same reimbursement reductions which were effected as part of the diagnosis related group (DRG) legislation 2 decades ago. Insurance and pharmaceutical companies on the other hand continued to raise their rates at an incredible double digit percentage year over year. It is obvious that the major problem with regard to the rising cost of health care is the unregulated nature of the private health insurance and pharmaceutical industries which through incredibly effective lobbying efforts have managed to avoid necessary regulation. Unfortunately, the actual providers of medical care i.e. doctors, nurses and hospitals have all experienced drastic cuts.
The second most frequently false health care claim is that reform will lead to rationing of care and bureaucratic control of medical decision making. That is already the case and it is insurance companies and hospitals that are primarily responsible for doing it and to a lesser extent Medicare. Patients and physicians are still united in seeking to provide needed care in most instances while insurance companies and hospitals have a vested interest in not allowing costly, complicated and high-risk procedures and treatments to be done—in the interest of increasing profits. Sadly, this is even true of so-called “not for profit” hospitals.
Stories abound of patients who have had their insurance company deny payment for various reasons despite their procedures having been determined to be medically indicated by multiple medical providers/experts. Most people are aware that they can be dropped by their insurance company at any time and they must absorb the expense of hiring an attorney to contest the suspension of care when they are least able to do so both from a health and economic standpoint. Insurance companies realize this and take full advantage of it in an almost predatory fashion. Moreover, the insurance companies are not in business to provide their insured’s with health care but unfortunately to make as much money in profits as they can by finding reasons to avoid paying for needed care. It is commonplace for patients to receive a denial of benefits letter from the insurance company for reasons which often are totally spurious.
A third false health care claim is that to provide for the entire nation’s health care would simply be too costly. This is a completely phony excuse as it is obvious that the Federal government is willing to spend virtually any amount of money on making war, bailing out the so-called banks “too big to fail” and in artificially propping up certain industries. In all of these, anything but “market forces” are involved. The amount of corporate welfare (monies provided at taxpayer expense for the benefit of favored corporations) that is given out to certain entities is simply astounding (trillions of dollars so far).
To date the combined actual cost of the Iraq and Afghanistan wars has approached one trillion dollars and the long terms costs associate with them is conservatively estimated at a minimum of another trillion dollars. This is an unconscionable sum of money spent for wars which were unwise, immoral and illegal under US and international law. Imagine how much health care could have been provided with 2 trillion dollars! The annual “Defense Budget” of the United States exceeds a trillion dollars if all the hidden costs are added. Moreover, the two Middle East wars have been financed by the continued passing of war supplemental authorization bills above and beyond the Defense Department’s annual budget to which must be added another almost 200 billion dollars annually in war supplemental’s since 2003. That adds up to another 1.2 trillion dollars through 2009.
The truth is that there is more than enough money to provide health care for the entire nation if our priorities are properly ordered. We should end our empire of foreign bases, our presence in Iraq/Afghanistan and re-regulate the finance industry . All “3” represent ongoing financial drains which we are simply incapable of sustaining. They only benefit a minuscule fraction of Americans—those who have managed through over-utilization of our corrupt campaign finance system to buy the US Congress and the Executive branch in order to insure their own personal self interest and ill-gotten gains.
In conclusion, the following is a summary of the major features which must be included in any serious attempt at health care reform.
1.) In order to be meaningful it must address the issue of corrupt insurance and pharmaceutical company practices. If the current system is allowed to persist, the number of Americans without insurance will continue to grow from the current almost 50 million to who knows what number as more and more Americans become incapable of affording their health care premiums.
2.) If the cost of prescription drugs is not drastically lowered in the United States, increasing numbers of patients will be forced to do without them either partially or completely which over time will only increase the cost of medical care.
3.) Equally important is the need to make it illegal to exclude patients from coverage because of pre-existing conditions or because they required costly medical treatments and or procedures both of which are examples of discriminating against patients who have a history significant illness.
4.) The uninsured must be brought into the system if we are to eliminate the high cost of treating them in emergency room settings after they have already become seriously ill. (author's emphasis throughout) This is particularly crucial if the “risk-pool” is to be made large enough to be able to reduce premium rates for groups and individuals.
The two most important problems which must be definitively corrected are the almost 50 million Americans without health care coverage of any kind and the monopoly exercised currently by the insurance and pharmaceutical industries. A failure to resolve these 2 problems will result in higher heath care costs, reduced care and higher taxes that is, a situation worse than the one we face now.
Based on what has transpired to date, I fear that President Obama will allow the insurance and pharmaceutical industries to continue making obscene profits the way the banking industry has--which to date he has been unwilling to re-regulate.
I hope I am wrong. It increasingly appears that the US Congress and Executive branch are controlled by big Pharma, big Banking and the big health insurance companies.
To be continued…
