The Truth about Health Reform

As scarce as truth is, the supply has always been in excess of the demand.

Josh Billings (1818-1885), John Billings: His Sayings (1865)

November 14, 2011 - The Obama administration has finally caught up with the truth about health reform: You cannot simultaneously boost demand, lower costs, and decrease physician supply.

So today the administration announced plans to expand the health care workforce (Washington Post, November 14, 2011). If you read between the lines, most of these workers will be below the physician level. The administration will spend $1 billion (a paltry sum in Washington these days) to hire, train, and deploy who care for Medicare and Medicine patients.

This effort, says Dr. Donald Berwick, “will open the door for many innovators and organizations that have ideas to bring to the table.” We shall see.

Anyway, it’s about time the administration focused on a growth industry.

• Health care added 300,000 jobs last year, according to the Bureau of Labor Statistics.

• Medicaid will be expanding by 32 million in 2014 and is growing rapidly during the recession. Medicare is adding 12, 000 baby boomer eligible recipients each day.

• Health costs for commercial insurers rose 10% in 2010, and 7.5% according to S&P while the general inflation rate was 1.1% in 2010, and 3.8% in 2011.

• And the American Medical Colleges projects a 63,000 doctor shortage by 2015, and a 130, 600 shortfall by 2015.

Not a Pretty picture.

It is hard to reverse the laws of supply and demand, and of economic gravity. Meanwhile, care demands are expected to rise because of the aging population and the prolongation of life. New technologies are extending the lives of very sick patients, just as smoking cessation live 8 years longer than non-smokers, but as a headline in today’s Kaiser Health News proclaims “Death is Always Cheaper.”

There is no end in sight for the doctor shortage. Older doctors are retiring quicker. Younger doctors are choosing to work shorter hours, many as specialists working regular hours as employees. Morale is low. Doctors are infuriated by new regulations demanding compliance, projected SGR cuts of 27.4%, and control over their incomes by an unelected Payment Commission. They are dubious government “innovations “ with new delivery models such as ACOs will make practice more efficient or save money.

All of this in face of the truth that most patients prefer to see their own doctors, and doctors, by dint of their long years of training and daunting educational debts, will likely have to paid more than other “health care workers,” the administration’s term, not mine.

There is another truth as well. As long as patients and doctors are unaware and insensitive to the true costs of care, a byproduct of entitlement programs promising virtually “free care,” and as long as patients do not “pay up” at the point of care, costs will continue to spiral upward.

As I write in my book, The Health Reform Maze (Greenbranch Publishing, 2011) in a section entitled “Costs and Demands,”

As long as we have an aging population; sick patients who wish to live a little longer; evolving costly technologies, doctor devoted to those technologies, and consumers who demand them, costs will rise.

Tweet: Health reform faces this truth. You can’t simultaneously expand care, lower costs, increase demand, and decrease the physician supply.