The Raw Numbers and How Hard It is to Change American Health Care

Everybody is America is soft, and hates conflict.  The cure for this, both in politics and society, is the same. Give them the raw truth.

John Jay Chapman (1862-1933),  Practical Agitation (1898)


President Barack Obama left no doubt Tuesday night what his Obamacare sales technique will be: loud voice, lots of confidence and no apologies.

Don’t dwell on the scratches on the hood. Just tell the customer how good it will feel to rev the engine and drive the car off the lot.

David Nather, "Despite Troubles, Obama Embraces Health Law, Politico, January 29, 2014

Yesterday I interviewed Jane Orient, MD, executive director of the 5000 member Association of American Physicians and Surgeons (AAPS). She said 3^rd parties  pay for 85% of care. Yet  she advocates that physicians  chuck 3^rd parties and rely exclusively on direct pay from patients.  

 Last night I listened to  President Obama’s State of the Union address, in which he begged Americans to sign up for his health law so that every American would have 3^rd party coverage.

These two events got me to thinking about the raw numbers and why health reform is so difficult in America without 3rd parties.
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Let’s look at these raw numbers.

There are, in round numbers.

·         315 million Americans

·         1 million physicians

·         5000 hospitals

·         500,000 physicians hospital employees

·         50 million Americans in Medicare

·         60 million Americans in Medicaid
       36 million AARP members, a prime source of Medicare supplemental plans

·         160 million Americans covered by private plans

·         A health industry spending $2.6 trillion annually

·         Total U.S. government spending $3.8 trillion

·         An economy of $16.6 trillion

·         A national debt of $17.3 trillion

·         A health insurance industry with revenue of $663 billion

I
       If I may paraphrase the late Senator Everett Dirksen of Illinois, "A trillion here, a trillion there, and pretty soon, we're talking about real money."

E    Each of these entities or sectors or phenomena,  whatever you wish to call them,  has its lobbies, champions, critics, and  entrenched interests.   Put them in a national  mixing container, shake them up, turn it upside down,  and what do you have  -  the raw truth  that although we have a mixed pluralistic system  it is also very ery hard to change, reform, or transform.  

I thought of the raw truth and the raw numbers as I contemplated what I should say in a talk I’m scheduled to give before the Association of American Physicians and Surgeons (AAPS)/   This is a very conservative group that considers ObamaCare  an obamanation, if you’ll pardon an abominable pun.    AAPS wants a strictly one-on-one relationship between patient and doctor with patients paying doctors directly.  It calls this direct pay medicine. 

Direct pay doctors are a fringe phenomenon, representing 1 of 2000 doctors,  yet they may be emblematic of a larger change – two tier medicine.  In two tier medicine,  the government is one tier. It provides care for the basic necessities.  It is often characterized by less than optimal care with long waiting lines and restricted or rationed services for those who cannot afford to pay.    

The second tier, provided by the private sector,  provides additional care with better care faster access, and more time with physicians  for those able to pay.

John C. Goodman, a conservative economist who considers himself the father of health savings accounts, encourages patients to shop for care and to pay for routine services out of  pocket, describes the situations of patients in these two tiers:

“ In one system, patients will be able to see doctors promptly. They will talk to physicians by phone and email. They will have no difficulty scheduling needed surgery. If they have to go into a hospital, a "hospitalist" (who reports to them and not to the hospital administration) will be there to make sure their interests are looked after. They may even have an independent agency that reviews their medical records, goes with them when they meet with specialists and gives them advice on every aspect of their care."

"In the other system, waiting times will grow for almost everything-  to get appointments with physicians, to get tests, to obtain elective surgery, etc. Patients may find that they don't have access to the best doctors or the best hospitals. They may find that the facility where they are treated does not have the latest technology. In terms of waiting times and bureaucratic hassles, health care for these patients may come to resemble the Canadian system. It may become even worse than the Canadian system."

"The evolution toward a two-tiered system was already under way before Barack Obama became president. But ironically, the Affordable Care Act (Obamacare) is accelerating the pace of change. “

The evolution has many facets. Less than 50% of doctors are now accepting Medicaid patients and in Texas,  less than 60% of patients are seeing Medicare patients. More and more Employers and employees are embracing health savings accounts,  with patients paying more of the bills, but paying lower premiums and accepting higher deductibles.  

 And there is a movement towards direct pay medicine and some of its hybrids – concierge medicine, retainer, medicine, cash only medicine. Advocates of government  deplore this trend. They say they are immoral, favor the rich, and are non-egalitarian.  Yet two tier systems exist at the margins in all developed countries.   

 Insurance companies resist the trends as well, for it dries up a source of new customers and threatens the very concept of managed care,  that its experts know best what it good for its customers and protects them against excessive care.   

And government? Well, progressive government's very reason for being is providing entitlement programs to retain political power.

Will the second tier grow?  Will more physicians choose to enter direct pay practices?  Will more choose  not to  accept Medicaid and Medicaid patients?  Yes, but there will be sharp limits. 

 Just look at the raw numbers. Ninety percent of  physicians depend of 3rd parties for their cicnoems. The number of Americans who depend on Medicaid and Medicare will grow from 110 million to 150 million by 2020.  Employers will continue to cover 160 million Americans, although the numbers may diminish slightly. The number of physicians employed by hospitals will grow.  Hospitals will depend on Medicare and Medicaid for more than 50% of their revenues.  

Self-interests, perhaps I should say, entrenched interests, will protect their turf.   In Minnesota, where I am speaking before AAPS, UnitedHealthGroup is the state’s largest employer.  System wide,  it has over 100,000 employees, covers 70 million people, and has over $7 billion in revenues.  United and other health insurers are not going to go gently into that good night of independent practices stripped of 3rd pqartie,s , now will the federal government.

Tweet:  Raw numbers indicating the size, scope, and revenues of major health are players preclude any major return to independent medical practices.