In the face of greatly increased demand for services, providers are likely to charge higher fees or take patients with better-paying private insurance over Medicaid recipients, "exacerbating existing access problems" in that program, according to the report from Richard S. Foster of the Centers for Medicare and Medicaid Services.
Here is much more. As I understand the broader story, if you seriously analyze the effect of the current reform package on Medicare and Medicaid, the basic story of how the whole thing will work falls apart. Here is a further point:
In its most recent analysis of the House bill, the CBO noted that Medicare spending per beneficiary would have to grow at roughly half the rate it has over the past two decades to meet the measure's savings targets, a dramatic reduction that many budget and health policy experts consider unrealistic.
That's for a high-voting group which is growing in numbers. And this:
The report, requested by House Republicans, found that Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether.
The laws of economics have not been repealed. I know fully well how hard it is politically, but until the supply side (and I mean the supply of services, not health insurance) is more competitive, the proposed reforms will make the core problems of U.S. health care worse not better.
Given congressional laws like EMTALA which mandates care for the uninsured, it seems unlikely that more competition amongst providers is going to magically solve the problem of too much costly regulation. JCAHO the hospital accrediting body alone adds enormous costs to operating any such center while the billing practices of Medicare and other insurance companies make it unlikely that any but the largest providers would survive. Now I understand that most libertarians will point to labor market restrictions as a big cost and while that may be true, lowering quality control will be unlikely to be popular and
and unfortunately the most highly regulated group, physicians, face high input costs and salaries that are not big drivers of health care costs (ie their salaries have stayed constant despite enormous health care growth in the last decade)…
‘…the proposed reforms will make the core problems of U.S. health care worse not better.’
Everything – both reforms and lack of reforms, has made the core problems of U.S. health care worse.
Maybe the problem resides somewhere else, in something which makes America distinctly unlike other industrialized democracies, or for that matter, rapidly industrializing semi-democracies.
Maybe even including the incredible amount of time wasted talking about health care, compared to providing it.
I would like to see a petition started by economists stating their rejection of this plan. The public discourse is too focused on who is lying (both sides, to varying degrees), rather than answering the basic questions. Media and politicians are unable to decipher the plans and come to anything more than superficial conclusions. It would help if economists who know the significant flaws of this plan would unite and speak with one voice (or as close to one voice as possible).
This is precisely the point I raised at Econoblog.
How are prices (prices, not costs) determined in the present U S system.
Costs arise from the creation and distribution of capital goods, from the education and development of providers, from the requirements in developing medications,techniques and other materials. The costs must be covered, but, is there not more (other services, regulation, politically determined objectives, etc.) that makes up prices?
Just as we must separate the issue of HealthCare from the “insurance” issue,
we need to examine costs and prices separately.
R.Richard Schweitzer
Providers have very little ability to raise fees (well, actually they can raise fees anytime they want, but will only collect the contracted amounts from private and government insurers plus copays and deductible).
Providers can within some constraints, manage patients mix emphasizing private pay over government pay.
It is curious that those who now say that this will cost more were against efforts to have a third party review of the effectiveness of medical devices, drugs, and practices, and who also oppose pay for performance. And, when they talked about paying for doctors to talk about end of life issues, they labeled it death panels.
Who is this “they”?
And why are you so comfortable making such generalizations? Your political ox getting gored?
Sheesh.
One thing about health care that has long mystified me: why does health insurance cover routine things like checkups, immunizations, teeth cleanings, etc.
It seems to me this is a bit like buying an auto insurance policy or warranty that covers oil changes, belts, car washes, ashtray cleaning, and tires, rather than the major expenses like drive train failure, body rust through, and the repairs needed after a collision (after you pay a deductible). And makes you go to a dealer to get everything done.
Seems like insurance locks us into selected and approved providers, for even the most minor things.
No wonder it’s expensive!
What it will do is create rationing among those on medicare. This is the most evil part of the bill. Should a doctor decide not to offer a procedure because society has decided as a whole to decrease demand for some procedures? A medical decision will be made by the doctor, the patient, the bureaucrat, and those on the government “panel” deciding which procedures are top priority.
Am I the only one that thinks this is evil?
“the proposed reforms will make the core problems of U.S. health care worse not better”: who gains by that? Whom did they pay to bring it about?
+1 to Bill & Yomtov: Economists can talk as long as they want about what an ideal system would look like, but at the end of the day, they only matter insofar as they can convince the 2 political parties to incorporate their ideas into the proposed bills. It’s worth proposing better ways to do things to the Democrats, but when Tyler’s only contribution is “no, this won’t work”, he’s aligned himself with the Republicans, who, though their actions over the summer, have made it clear they don’t actually want to cut costs: they just want to block any reform, even reform economists tend to like.
In these comments you will find a number of attempts to dismiss my point, fewer attempts to refute the point or respond to it. It makes some of you feel uncomfortable and you are resorting to evasions. Beware of that.
“One thing about health care that has long mystified me: why does health insurance cover routine things like checkups, immunizations, teeth cleanings, etc.”
Employer-provided health insurance was not supposed to be insurance in any realistic sense; it was supposed to be compensation given in lieu of wages and salaries during a period of war-time restrictions on pay. “Insurance” that covers the routine things is much more effective as compensation. By various accidents of history, we have now reached a point where a quite large amount of employee compensation is delivered through the intermediary of for-profit insurance companies.
I would be much happier with the Congressional debates on reform if the Wyden-Bennett proposal were getting more attention — simply because it admits up front that we are talking mostly about reforming health care financing, then some reform of health care insurance, with very little reform of health care proper.
“…found that Medicare cuts contained in the health package approved by the House on Nov. 7 are likely to prove so costly to hospitals and nursing homes that they could stop taking Medicare altogether.”
Particularly in rural areas, there are entire counties where there are no doctors accepting new Medicare or Medicaid patients. The problem is spreading: Loveland, Colorado, between Denver and Ft. Collins, was identified as one of the best places in the country to retire to, so long as you had private health insurance, because no doctors in the city were accepting new Medicare patients. Perhaps not soon, but at some point acceptance of Medicare/Medicaid is likely to be made mandatory.
Tyler,
Not sure who you are addressing, but I don’t give quite the weight to increasing competitiveness that you do.
Why do we even care if the supply side is more competitive? Only because we believe (hope?) that increasing competition will make the health care system more efficient. But even if we take that as a given, it doesn’t mean there are no other ways of improving the system’s efficiency. How much difference things like more effectiveness research, electronic medical records, more standardization of insurance codes, etc. might make is not clear. But like more competition, the hope is that they might improve efficiency.
Also, your post is somewhat cryptic. We are not talking about wheat prices here. What does increasing competitiveness mean? Breaking up large hospital chains that dominate areas? Expanding the number of practitioners by reducing licensing constraints? Not allowing physicians to own things like imaging centers? To me, at least, your point would be much more clear if you could elaborate a bit on what specific things you feel should be done.
Perhaps not soon, but at some point acceptance of Medicare/Medicaid is likely to be made mandatory.
Michael, I think I know the point you are trying to make here.
But, acceptance by whom or what? And the result of THAT is going to be interesting.
One of the consequences of all this reform could be a complete change in who decides to practice medicine.
Gosh, maybe we will have doctors who are as good at providing health care as we have public school teachers increasing test scores of American school children.
And for all the talk about how much we spend on health care and how little we get, I rarely hear the same folks discussing how true this is in the public school monopoly and what we might learn from that mess.
Doesn’t DC have the highest spending per pupil of all public school systems in the US? And who among the DC commenters sends their children to DC public schools? (You know, like our Pres.)
But you know how “they” are.
And anyone paying attention knows what I mean.
But heck yes, let’s get the government and politicians involved even more in healthcare because we have so many clearly demonstrated examples of the government and our political class running large portions of the economy effectively.
But then “they” would say that.
Great, we need a federal bureaucracy to define unnecessary services. Just what we need, more bureaucracy more brain dead lawyers.
But assume that you can go to never never land and remove “unnecessary” services, how will that contain the growth of health care spending. Unless you think “unnecessary” services are the root cause of cost escalation all you see is a very temporary blip in spending. And then the escalation continues.
If you see defensive medicine as driving some of the “unnecessary” spending, you need tort reform. If you see “unnecessary” spending defined as wasteful spending that doesn’t improve outcomes, well that was what HMO’s claimed they could do. How did that work out? When given the opportunity to vote with their feet, consumers walked. One of the biggest canards is talk about “unnecessary” services.
I have never, ever, seen anyone argue against medical research to discover best practices. However arguing that the government can not efficiently allocate resources or that a centralized bureaucracy is not the best way to decide such issues is very different. How have Medicaid and Medicare done on these topics to date. What makes some think that centralized command and control will improve the health sector, when we have a long historical record of such structures failing. Only the most rabid lawyers who want to play God advocate such a system.
And Medicare and Medicaid have more problems with fraud and do less to stop it then private insurance firms.
Pay for performance is a silly idea almost impossible to put into practice. The unintended consequences are just waiting to create havoc. Indeed the Democrats have essentially dropped such plans because they don’t know how to implement it in any meaningful manner. It is a lawyers wet dream to interject even more litigation into the system.
And no group or person has sought to muzzle a doctor from discussing end of life issues with a patient. They just don’t want the government telling the doctor what they must tell the patient during that conversation.
Of course I am waiting for the following speech by Obama or Pelosi. “Folks the good news is that you all have health insurance, the bad news is that we have no way to pay for this – so we decided that most medical care is “unnecessary” and we aren’t going to cover anything.”
To Spencer,
it has more impact on some specialties then others. For example I assume that the rate of cesarean births stayed constant even if many consider the reason for the initial increase in cesarean deliveries was “defensive” medicine. In addition, I think the greatest cost to physicians from malpractice claims is the time and damage to reputation. While insurance rates go down and total potential costs may go down, I think for doctors who are risk adverse, which is most doctors, they may still “overinsure” in terms of defensive medicine.
On another note, if some are tempted to agree with posters who claim that they are expert consultants in health care and, God forbid they have a job teaching this stuff somewhere, read the following from the WSJ
http://online.wsj.com/article/SB10001424052748703792304574504020025055040.html?mod=WSJ_hps_sections_opinion
“Perhaps not soon, but at some point acceptance of Medicare/Medicaid is likely to be made mandatory.”
Then I’ll quit. I won’t be made a slave.
Medicare/Medicaid is little more than charity care for most of us physicians already. If we end up with a public option, the end result is bound to be a single payer system paying Medicare rates at best, and this would not cover the cost of keeping my office doors open, much less give me any return on the direct and opportunity costs of 14 years of training.
We stand on the edge of an abyss.
McDonalds produces better food outcomes than all other meals, at less cost. (Food outcomes being measured in calories/dollar). Obviously then, everyone who doesn’t support giving McDonalds a monopoly on food production hates the poor.
DanC,
You might find this enlightening.
Bernard
You are distorting facts.
Grassley said “the way the House committee-passed bill pays physicians to advise patients about end of life care and rates physician quality of care based on the creation of and adherence to orders for end-of-life care…We dropped end-of-life provisions from consideration entirely because of the way they could be misinterpreted and implemented incorrectly.”
That is not opposition to doctors giving end of life counselling this is opposition to rating doctors on end-of-life care. Saying that getting the government involved in such situations is an undue intrusion fraught with danger from poorly written rules is not the same as keeping doctors from giving end-of-life counselling.
On CER as Gail Wilensky commented “I think it is vitally important to keep comparative clinical effectiveness analysis and cost-effectiveness analysis separate from each other. ”
People can oppose CER not because they oppose medical research but because they oppose using stimulus money to fund a Federal agency that goes beyond medical research to look at cost effectiveness of various treatments. Opposition to creating Federal oversight to determine cost-effective care is not the same as opposing medical research. If private insurers want to fund such studies I have no objection.
But that is a very different argument then opposing medical research. Wanting the Federal government to fund medical research but opposing the government attempts to decide the cost effectiveness of treating some groups is dangerous territory. And while it may scare Rush Limbaugh it also scares the Easter Seals, Friends of Cancer Research, and the Alliance for Aging Research.
First, is their anything in the current system that prevents doctors from discussing end of life issues with patients or families? No.
Second, is anyone seeking to bar doctors from holding such conversations? No.
So why is the new law needed?
Given that President Obama spends a great deal of time talking about bending the curve of government spending, given that advisors to the President have talked about stopping payments to seriously ill patients, given that courts and regulatory agencies often interpret laws in unexpected ways, what is the compelling need for this legislation. In the context of other rhetoric coming from the White House and Congress, they seem to view this as a way to save money.
In any case, the civil rights debate said that affirmative action would never be used. But how did the courts interpret the legislation over time?
I look at it as a Federal government intrusion into conversations that currently occur everyday. I see no need for this legislation. And doctors will continue to encourage people to plan for end-of-life care.
I read the NYT piece and it distorts Joe Wilson’s complaint. Even if I think Joe Wilson was wrong to speak out in that manner. However, in the total context of Congressional comments and comments by Presidential advisors, people should be wary of new Federal legislation that inserts itself into the doctor patient conversation.
Unless you can point to some bill before Congress that seeks to muzzle doctors from having end-of-life discussions, your claim that some oppose these conversations goes too far. They just oppose Federal laws seeking to shape that conversation.
Why is this law needed?
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