Sunday, January 17, 2010

Questionable Funding of Universal Coverage

Our political leaders tell us that, in the past, there have been no decreases in services after cuts in Medicare funding. Therefore, it is reasonable to fund a portion of the costs of universal coverage with further cuts in Medicare reimbursement rates.

It is true that most Medicare beneficiaries are pleased with the program despite the decreases in payment rates over the years (for an excellent short review of Medicare’s payment history, Despite these decreases in payment for each service, total Medicare expenditures and share of the federal budget are increasing. But in reality, how is Medicare actually funded and have these decreases caused a dramatic change in the practice of medicine in this country?

Although Medicare makes up about one sixth of our total national health care spending, it is the largest insurer and has a major impact on the allocation of health care resources. In a recent posting, (The Mayo Clinic: A Model for Appropriate Care But Can it Survive As Such?) I described that last year The Mayo Clinic billed Medicare $1.7 billion for medical services; however, they lost $840 million due to Medicare underpayment. They made up for this loss by overcharging private insurance, i.e. cross-subsidization. The Mayo Clinic is not alone in this practice. Every hospital in the country has to do the same. Thus the working public has been paying more for their health insurance to offset the inadequate payments that Congress has allotted for Medicare - in essence, a hidden tax on workers.

Hospitals and doctors also quickly learned that Medicare is relatively generous in paying for technology rather than primary care, history taking, physical diagnostic skills, cognitive and conceptual thinking. Technologies and organizations with the greatest lobbying budgets have received the lion’s share of reimbursement. As a result we have an undersupply of primary care doctors, an oversupply of procedureists, an emphasis on intensive care units, overuse of cardiac catheritization and stenting, a frenzy of building proton accelerators and the list goes on and on. With further cuts in Medicare reimbursement to help pay for universal coverage without real structural changes on how we practice medicine, cross-subsidization from private insurance and even a greater emphasis on the overuse of procedures and technology will most likely occur.

Instead of delving into these and other reasons as to why we spend much more than any other country on health care, Washington is again trying the already failed economic approach of decreasing payments. Multiple experts using different methods (see posting The Validity of the Dartmouth Atlas for Health Care) have demonstrated that we spend about $700 billion dollars yearly on non-beneficial inappropriate care. Physicians working together as part of intensive peer review (see posting, Appropriate Care Committees) could address this overspending at the physician-patient interface, thus ensuring individualized evidence-based beneficial care. I believe the economic approach now being pursued by our political leaders will prove to be more frustrating and in the end more expensive. It is time to put the responsibility for rational beneficial care where it should be - on physicians.


Anonymous said...

Every why has a wherefore.........................................

Doctor Kenneth Fisher said...

Please explain and I will do my best to respond. Kenneth A. Fisher, M.D.

TPaine76 said...

You write that "Our political leaders tell us that, in the past, there have been no decreases in services after cuts in Medicare funding."

That's quite a feat when you think about it. It would be like my employer cutting my income by 25%, but assuring me that I'll still be able to afford everything that I'm used to paying for.

Your post explains how our politicians accomplish this sleight of hand. And it’s a reminder that when something sounds too good to be true – it usually is!

Thank you for telling us how it is.