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Preface: Kevin Pho, MD, America’s most prolific and most-widely read blogger, today reprinted a previous blog of mine, written on March 22. Since I wrote the blog, several things have happened: 1) President Obama did not get the “bump” in the polls he expected: instead the number “opposed” compared to those “in favor” jumped to 12.3%, a record high; 2) it became apparent the health care overhaul will cost U.S. companies more than $75 billions and will make 3500 companies more likely to drop prescription drug coverage for retirees and shift the cost to Medicare because of a change in how the government subsidizes those benefits; 3) hundreds of thousands of disappointed “uninsured” have flooded the White House and health plan switchboards in search of “free” coverage, only to find out the coverage does not take effect until 2014; 4) opposition to Obamacare has become the focal point of the Tea Party and Republican efforts to unseat Democrats in the November 2010 mid-term elections.

Health reform winners and losers, and how it affects doctors

April 19, 2010

by Richard Reece, MD

I congratulate President Obama and the Democrats on their historic health reform achievement.

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 of health reform.

Winners

• 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 parents’ insurance policies until their 26th birthday.

Losers

• 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 bankruptcy 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.

Doctors

The results will be mixed.

Negative

• 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.

Positive

• 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.

Richard Reece is the author of Obama, Doctors, and Health Reform and blogs at medinnovationblog.