How Now, Medicare?
By
Mike Pulaski, FACMPE
Physicians Practice, The Business Journal for Physicians
January/February 2003, Vol. 13, No. 1, p 39.
If you want to know how our Medicare system is going to look a few years from now, familiarize yourself with the healthcare systems of Canada, the United Kingdom or Sweden for the answer. In these countries, their healthcare delivery systems are socialized; however, a comparison with the US’s Medicare system is quite easy if you understand who the customer is for healthcare services and who the consumer is.
The consumers of healthcare services and the customers of healthcare services have different personalities with varied, and often conflicting, economic incentives. The consumers (patients) want accessible, high-quality healthcare. The customers (government and employers) want to balance the budget or protect their corporate bottom line. Consequently, a conflict develops into what I call the cost/access dichotomy.
This dichotomy describes the dilemma of a society choosing between access to high-quality healthcare and the cost of maintaining it. Simply, the more access consumers have to high-quality healthcare, the more the customers sponsoring that care must pay for it. Similarly, the less the customers pay for healthcare, the less access to a lower quality of care the consumers have.
The United States is not the only industrialized Western society experiencing problems with its healthcare delivery system. Sweden, the United Kingdom, and Canada have similar problems with the cost/access dichotomy even though their systems are socialized. Government (customer) spending cuts on healthcare programs in these countries have produced economic rationing of certain procedures. The citizens of these countries perceive a drop in the quality of their healthcare providers’ services as well.
The economic rationing of procedures takes the form of delayed patient treatment until the country’s healthcare budget accommodates payment. For example, British women may have to wait up to six months for a hysterectomy; a Canadian may have to wait months before having a cardiac by-pass. It is not unusual for a Swede to wait 4 months for cataract surgery.
Some of these Canadian and European patients will not wait in “queue” for procedures; will not tolerate the ambiance of the waiting rooms and hospital wards associated with socialized medicine. Instead, they seek qualified private providers who perform the procedures they want -- on demand-- in a setting they feel appropriate and comfortable. These private providers practice outside their countries’ socialized systems. The patients, most of them affluent, pay for these services out-of-pocket.
The latest round of cuts in Medicare reimbursement for physician services in the US will cause a similar effect seen in the history of socialized medicine. That is, patient access to healthcare will be restricted because more providers will stop their participation in the Medicare program, concentrating on the better paying patient. It is already happening. For example, a new AMA-sponsored survey of physicians from all specialties found that 42% of them plan to drop their participation if there are any further decreases in reimbursement after this year.
If this decrease in physician participation continues to happen, then we will see a snowball effect caused by the cost-access dichotomy. Patients will seek care from a dwindling number of participating physicians, causing an increase of Medicare patients in their payor mix, which in turn will force these physicians to severely restrict patient access or drop participation in the Medicare program altogether. Thus begins a vicious downward spiral.
As a practice administrator for a physician group who is charged with its fiscal well-being, and as an ageing Baby Boomer who will be looking to receive Medicare benefits in the not-to-distant future, I find myself emotionally challenged in recommending to my employers that we drop our group’s participation in the Medicare program. I have no doubt that I will recommend to them we drop participation – I just don’t know if it will be in 2003 or the next time we have reimbursement cuts. It is the prudent business decision to eventually do it.
Prudence aside, I know how much medical care coverage costs. This year my group saw its health insurance premium increase 27%. I look at what the annual premium for an individual costs in today’s dollars, and can only speculate what it will cost when I am on a fixed income and the Medicare program is a skeleton of what it is today. It’s frightening.
Over the last two decades, medical group businesses like the rest of corporate America have found it difficult if not impossible to maintain retirement benefits such as retirement plans and retirement health insurance coverage. Thus, it is up to the individual to save for his or her retirement. It is now becoming very apparent that the bulk of our retirement savings may be spent on healthcare!
If the Medicare program does actually follow the history of the Canadian and European experience, and we experience limited access and rationed treatment, I seriously doubt that many of us will be able to afford going outside the system and pay for treatment out-of-pocket.
How now, Medicare?