Capital and Physicians

Capital has its  rights, which are as worthy of protection as other rights.

Abraham Lincoln, (1809-1865), First Annual Address to Congress, December 3, 1861
April 12, 2012 -  In my corner of the universe,  two current events occupy my attention.

·        Physicians’ search for capital to fund practice infrastructure  so they can finance activities such as electronic systems purchasing and maintenance , marketing, staff,  regulatory burdens,  malpractice premiums,  educational  requirements, innovations,  and administrative activities in order to function is the  brave new health reform world.   Increasingly, to find that capital, they are turning to hospitals and hospital system

·        The politicians’ search for the right balance between  “fairness”  and “ growth. “ The respective   arguments are  couched in terms of the “haves,” the top 1%, against the “have-nots”, the bottom 99%, or “social justice” versus “greed.” Those on the “fairness” side point to the growing  income chasm between the”rich,” defined as those making over $250,000, and  the “poor,” which  includes everyone  in  the middle class and those below the poverty  line.

Spreading the Wealth

The Obama team argues the U.S., on moral grounds alone,  need to spread the wealth for the greatest good of the greatest number.   Obama evokes the Buffett Rules,  that millionaires, and and those making $200,000, should pay at least 30% on income , just like middle class taxpayers. In other words, the U.S  tax system is  bad, even evil because it is a  capitalistic  buffet for the “rich”   and  a capital sin to boot. You should not be “own your own.”  The government should pull you up using other people’s bootstraps. Under the Democratic scenario,  Romney will be viewed as a rich villain who does not pay his “fair share” of taxes.

Lifting All Boats

The GOP side counters that overall economic  growth will, in the words of President John F. Kennedy, “lift all boats.”  This is the notorious “trickle down” or supply side theory.    Republicans   point out  1) increased capital gains taxes have historically always been accompanied  by lower government revenues  thereby  punishing  poor which it was designed to help; 2) we already have the 4^th highest capital gains taxes among OECD nations;  3) the US has the highest corporate tax (just under 40% ) if one combines federal and state taxes; and 4) the richest 10% in the U.S. pay more taxes than any other country, including Sweden.
Lifting Taxes and Lowering Physician and Hospital Pay

The Obama approach to health reform  is : 1) to pay for it by taxing  "the rich"; 2) taxing medical device makers,  drug firms, Cadillac  health plans, and other medical supply chain participants ;  3)  lowering Medicare payments to hospitals, doctors, and Medicare Advantage plans; and 4) creating “savings” through better prevention, better care,  better outcomes, and better organizations like accountable care organizations. 

The Historic Record

Skeptics respond by saying: Look at the historic record. Government experts predicted in 1966 combined Medicare and Medicaid costs would not exceed $9 billion but by 2012 they were $1 trillion.  Look at the estimated $80 billion in Medicare/Medicaid fraud.  Some say fraud is at least twice that amount.  Look the OMB's estimate of $1.76 trillion in Obamacare costs by 2012, and critics' estimates of $2.5 trillion or more by 2024.  Compare that the Obama camp's original estimate of $940 billion.  Look at the growth of the national debt to $16 trillion,  $5 billion under Obama, more than all previous presidents combined.  Look at the sluggish economy growth of 2.5%.  Compare that to 3.5 to 4.0 growth coming out of previous rececessions.  Look at these things.  Tell me the government will "save" money, and I have a bridge to sell you.

Nevertheless,  the government argument  makes sense if you have a progressive mind cast and envision  conducting a  moral crusade   led by  top down experts  reining in the “rich” and covering 50 million uninsured.  Money is no obstacle to good intentions.

Lack of  Health Sector Capital

Still, lack of capital is threatening the very pillars of American medicine  - independent physicians, voluntary hospitals, and academic medical centers.  If present trends continue, these sectors of our system will be forced to create large  integrated organizations or systems – with higher costs of operation – to compete. 

Mom and Pop and Good Old Doc Gone

Current trends , practicing within a competitive corporate  environment,  economic  pressures  by government  and employers to reduce costs, and a growing shortages of physicians  - will leave the physicians and hospitals no choice but to organize and mobilize countervailing market forces and to set up large integrated  organizations  This may a good thing, but it means the private practice of medicine  and the individual  patient experience will never be the same again. Mom and Pop and Good Old Doc medicine will be gone.\

Tweet:   The U.S. in now engaged in a great civil war between political forces representing  the makers and the takers of capital and health care.