Response to Response to My Latest Blog on Top-Down Vs. Bottom-up Reform

Response to my blog of yesterday.

From Steve:

"I agree with the future shortage issue. The rationing point is a bit complex.
Anyway, how do we resolve Medicare does not pay doctors enough, and often hospitals for that matter, with Medicare going broke? Who do you think is going to successfully address Medicare costs and how? Bottom-Up sounds good, but I do not see how this works in practice. Private insurance has shown no ability/willingness to hold down costs."


"I enjoyed the interview with Dr. Cooper. Penn grad '85 here. Since graduation I have spent time in the military, moonlighted quite a bit and now work at several places in PA. My experience and what I have seen of physician behavior is a bit different than his. I see guys who own MRIs and PT services making self referrals. I see the consultants coming in to make sure we don't :leave money on the table." Yes, most docs remain good guys, but there is a lot more bad behavior, questionable behavior, than he has seen."



My response to his reponse

Steve:
Excellent point about Medicare not paying doctors and hospitals enough yet going broke. The main reason, I think, is that Medicare has no way to control the number of procedures being down in a fee-for-service environment.

Further, Medicare has neither the staff, nor the expertise, nor the political stomach to deny or review requests. To control costs, Medicare simply arbttrarily rachets down fees for doctors , and more and more doctors respond by declining to accept new Medicare patients. Or doctors do more tests and procedures – either to meet patient expectations and to meet their bottom-up lines.

Insurers, on their part, to keep their networks open and to offer needed services, have to negotiate higher fees than Medicare to keep respectable networks of providers.

And so the cycle goes.

Bottom-up means payments refers to services and innovations set at local and regional refers to services and payments in private markets , rather than by what the government dictates from the “top-down” by fiat.

Health costs, in my opinion, will be best controlled and quality maintained by health consumers spending their own money and truly understanding what things cost. This bottom-up approach will vary by region – in California by capitation, in Massachusetts iby budgets for episodes of care, in Pennsylvania by the Geisiinger approach with integrated care coordination with outcome guarantees for some high-ticket procedures. More globally,i.e. nationally, by HSAs with high deductible accounts or by cross-state shopping for the best deal, or by doing away with “community rating” or comprehensive “ standard” benefit plans. The governnment could seize the initiative by opening up FEHBP (Federal Health Benefit Plans) to all rather than just government employees and to national politicians. I would like to point out that “bottom-up” HSAs are working beautifully in Minnesota , not exactly a conservative state, which leads the nation in HSA membership, and where employers have experienced health care cost drops of 30% to 50% in those with HSAs. I would also note another “bottom-up” approach “work-site clinics,.“ These are being set up by half the corporations across the land, with more than employees in one localtion, with 20% to 40% cost savings. I have interviews in Obama, Doctors, and Health Reform with HSA and work site clinic leaders.

Cost control will not be easy, and much of it will be ironic and contradictory, as exemplified by those who say, “ I hate socialism but don’t mess with my Medicare.” Well, someone has to mess with Medicare. It is going to financial hell in a handbasket. To use it as a model for reform defies logic. To save itself, Medicare is going to have to reform, partly by learning lessons from the hated private sector, where costs are going up at a 30% lower rate than Medicare.