Monday, March 22, 2010

Democratic Health Bill - Winners, Losers, Doctors

I congratulate President Obama and the Democrats on their “historic achievement.”

It was indeed “historic.” The House passed the Senate version with polls showing less than 50% presidential approval, less than 20% approval of a Democratic-dominated Congress, a 40% public approval of the health bill, and without a single Republican vote. That's quite a remarkable political achievement.

The only remaining questions are: Will this bill be able to win approval as it runs the parliamentary gauntlet? Is it an act of political suicide that will become manifest in November? Will it bankrupt the country because of lack of cost controls?

Regardless of where one stands, the bill is a political act of vast ambition and colossal risk.

Now may be a good time to pick winners and losers.


The winners are likely to be:

• Drug companies, which backed Democratic efforts and will have 32 million more new customers, financed by government.

• Hospitals, which heretofore have had to accept non-paying patients and now will have patients paying money-losing Medicaid rates.

• The uninsured, with the possible exception of the young and healthy who now buy insurance or be penalized by the IRS by failing to comply with the Individual mandate.

• Those with pre-existing illnesses, those whose payments were capped by insurance companies, those who had to pay full costs of preventive care or high deductibles, and children who will now be covered by their parients’ insurance policies until their 26th birthday.


• The biggest loser is likely to be private insurance companies, which will be heavily regulated, restricted from raising rates, obligated to accept all comers, unable to rescind coverage , and the target of higher taxes.

• Middle-class taxpayers and patients, who, if Massachusetts with its universal coverage can be used as an example, can expect higher taxes because of lack of cost controls, higher premiums as health plans pass through their increased expense. , more limited access to doctors because of primary care shortages, and longer waiting lines to see a physician.

• Medicare recipients, who among other things, will see about $500 billion cuts in benefits, higher fees, reduction in Medicare Advantage plans, and more controls over what tests and procedures doctors can order.

.The states, many already on the verge of barkruptcy because of high Medicaid costs. and Medicaid providers, physicians, pharmacists, and others, who cannot continue losing money based on low reimbursements. State attorney generals in nine states, are taking actions by mounting efforts to declare the bill unconstitutional.


The results will be mixed.


• The practice load of 32 million more uninsured entering the system, coupled with the influx of new Medicare recipients, will strain the capacity of already overloaded practices.

• Low Medicare rates, and even lower Medicaid rates, will tax the ability of practices to survive economically.

• The doctor shortage, particularly of primary care physicians, now estimated at 50,000, will be exacerbated, partly because more doctors will decline to accept new Medicare and Medicaid patients.

• The bill does not address the problems that concern physicians the most – tort reform and the Sustainable Growth Rate formula, which calls for an annual reduction in Medicare Physician fees, this year 21%., and which is always reversed.

• The creation of an independent payment advisory board, free from Congressional oversight, is regarded as a negative, because it can make arbitrary decisions.


• Medicaid rates are likely to be increased to Medicare rates for primary care physicians . This will be plus for primary care doctors and will tilt the table towards primary care over specialists,

• Another plus is a “modest increase” in funding for training programs.

• The American Medical Association, the American College of Physicians, and family practice and pediatric associations have supported the Obama administration’s position on reform. The members of these organizations and physicians in general support expansion of insurance coverage for the uninsured.

I predict this bill will be the start of a long and bitter debate on how to fund generous federal health benefits – coverage for pre-existing illnesses, free preventive care, guaranteed comprehensive health plans, mandated benefits with no caps, and subsidies for 32 million uninsured , up to $88.000 per family.

As history has shown with Medicare and Medicaid, costs will surely far exceed projections. As a nation, we shall have to grapple with the economic consequences of the universal coverage moral imperative.


Joel West said...

Thanks for posting such a detailed analysis. The news coverage seems to be ignoring the impact on doctors — as though the supply of healthcare (and health professionals) is infinite and inexhaustible.

Also, the other coverage tends to say that "doctors won" because a few professional associations sided with Obama. Obviously the truth is more complex — particularly since we don’t know what Medicare cuts will actually be enacted.

Richard L. Reece, MD said...

Thank you, Joel and Vanessa for your comments. Congress seems to take for granted physicians will always be there - no matter how low Medicare and Medicaid reimbursement goes, no matter what how irritating and burdensome regulatory harassments, no matter high high the patient low, no matter how what the level of demoralization and unhappiness, no matter what the laws of supply and demand dictate. We are about to find out if these are happy Congressional illusions or reality-based disillusions.