Massachusetts Health Reform: The Canary in the Gold Mine?

Advocates for health care reform have been keeping an eye on Massachusetts, hopeful that its new health reform law will serve as a pilot program for the nation.

I’m much less hopeful than I was two days ago.

Yesterday I attended the Massachusetts Medical Society’s Eighth Annual Leadership Forum where I was one of four speakers. This year, the Society (which owns The New England Journal of Medicine)  focused on the cost of health care –with a special emphasis on funding universal coverage in Massachusetts. The new was not good. While the citizens of   Massachusetts believe that everyone has a right to health care (when polled 92% say “yes”), no one wants to pay for universal coverage.   When asked “if the only way to make sure that everyone can get the health care services they need is to have a substantial increase in taxes [should we do it] 55% said “no.”

One speaker at the forum recalled a man who explained why taxpayers shouldn’t have to pick up the bill: “The government should pay for it.” (He didn’t disclose who he thinks “the government” is. )

Some citizens of the Commonwealth don’t even want to pay for their own
health care insurance. Under the plan, everyone in Massachusetts is
required to buy insurance (or pay a penalty), with the state providing
a 100% subsidy for those who earn less than 150% of the poverty level.
Those receiving the full subsidy are enthusiastic. The state had hoped
to sign up 57,000 uninsured and they’ve over-shot their target: 76,200
of Massachusetts’ poorest citizens have enrolled.

At the other end of the spectrum, the program isn’t doing as well.
Uninsured citizens earning more than 300% of the poverty level are
expected to buy their own insurance. Here, the state hoped that 228,000
of its uninsured citizens would sign up. So far, just 15,000 have
enrolled.  Apparently, they’ve done the math and decided that it would
be cheaper to pay the penalty.  But their premiums are needed to keep
the program going.  If more in this group don’t sign up, it is not at
all clear how the state will be  able to continue subsidizing the poor.

Yesterday’s first speaker, Robert Blendon, a professor of Health Policy
in Harvard’s Department of Health Policy and Management, talked about
what Massachusetts experience might mean for the national health care
debate: “Massachusetts is the canary in the coal mine,” Blendon
declared bluntly. “If it’s not breathing in 2009, people won’t go in
that mine.”

“If it looks like it’s not possible to reach an agreement on how to
fund universal coverage, politicians will walk right on by,” Blendon
added.

The political cost of trying to put together a plan for national health
reform and failing is just too high for anyone to want to be involved,
he explained. “The Clintons understand this. They tried; they failed,
and they lost Congress.”

“When 2009 or 2010 comes, where will we be on healthcare reform?”
Blendon asked, and then answered his own question. “I think most people
are in a delusional state in terms of what they think will be going on
at that point. They think that the war in Iraq will be over, that we’ll
all be celebrating. I think that by 2009 or 2010, the climate will be
poisonous. The big question will be ‘Who lost the war in Iraq?’ 

“At that point, will there be an issue that can bring people together?”
he continued. “Will it be universal care? Or will universal care be a
divisive issue? “

Blendon pointed out that, even in Massachusetts, support for funding
breaks down along party lines, with Republicans strongly opposed to tax
increases—and there aren’t that many Republicans in Massachusetts.  If
the Massachusetts plan unravels, he asked, “what conclusion will
politicians in Washington draw? If they can’t do it in Massachusetts,
how can we do it?”

Yesterday morning, Blendon predicted: “There is a very good chance that
the SCHIP veto will be sustained.”  And universal coverage for children
enjoys huge public support. If Congress can’t override a veto on SCHIP,
will it ever have the votes (or the spine) needed to fund national
health insurance?

The morning’s second speaker, Dr. Steven Schroeder, a distinguished
Professor of Health and Health Care at the University of California,
San Francisco was almost as pessimistic. His talk was titled “Rising
Medical Expenditures: The Achilles’ Heel of the Massachusetts Health
Experiment,” and he began by analyzing why health care spending in the
U.S. is so much higher than anywhere else in the world. 
It’s not because the baby-boomers are aging, he pointed out. Thanks to
the many new immigrants in this country, we have a younger population
that many developed nations.

The problem he said, is first, that our “fee for service system”
encourages both doctors and hospitals to “ do more. “ As a result,
Americans undergo more expensive procedures and our health care
providers use more expensive technologies. American believe that more
care is better care—and they demand it. Finally, there is no real cost competition in our marketplace.

Schroeder then went on to explain that just as the U.S. spends more
than any other country in the world on healthcare, Massachusetts spends
more per person than any other state. Yet it doesn’t have the highest
quality of care in the nation—far from it. Will Massachusetts be able
to contain health care spending and makes its universal health care
plan affordable? Schroeder wasn’t hopeful.

This week-end I’ll post again, describing what the third speaker,
Michael K. Gusamo, Asst. Professor of Health Policy and Management at
Columbia’s Mailman School of Public Health had to say when comparing
heath care in the U.S. to other countries, and finally, my own reasons
for believing that, if we have the political will, it’s possible to
slow health care spending and create a sustainable, affordable health
care system—and why Massachusetts is not the place to begin the
experiment.

20 thoughts on “Massachusetts Health Reform: The Canary in the Gold Mine?

  1. Any plan that not only attempts to force the population to buy into a for profit system but also subsidizes such a system with government taxes is a set up for catastrophic, expensive failure. The implication that the problem is as simple as a “fee for service” problem is unfortunately short sited. First we must develop and use precise definitions, are we funding universal health care or universal health coverage? They are not one in the same, ask anyone who has anything other than top of the line insurance (tri-care for instance, responsible for our soldiers). Then we must define what universal health care is (assuming we go for that rather than coverage), should bo-tox be covered? As far as fee for service being one of the major problems in cost, well, I went bankrupt charging fees for my service, so if that is the case we are in a whole world more trouble than we can even for see.

  2. I love the reference to the fellow who didn’t want to pay higher taxes because he thought the government should pay instead. It reminds me of times in the past when my late father-in-law (a semi-skilled, low income blue collar shipyard worker) would suggest that the government should provide more social services, including healthcare, for low income people who needed it. When I asked who he thought should pay for it, he always had a four word answer – “Let the rich pay.” In the next breath, however, he would say that his daughter and I, who fell into the lower end of what politicians defined as high income or rich, already pay way too much in taxes. Go figure.
    At the end of the day, I think the broad middle class will have to pay to finance healthcare for the broad middle class and the poor. While taxes on high income people are virtually certain to rise significantly after 2009, there are nowhere near enough of them to provide the funding needed to pay for universal health insurance.
    While I’ve written on this before, I think it’s worth repeating. We need to confront every healthcare interest group to identify what it is prepared to give up in money and/or power in the short run in order to develop a fairer, more cost-effective and sustainable healthcare and health insurance system in the long run. If I were dictator, my list of suggestions would be as follows:
    Consumers – Give up the tax preference for employer provided health insurance and treat it as ordinary taxable income instead. The standard deduction could be raised to cushion the impact on moderate income people. The result will be higher taxes on the middle class.
    Hospitals – Cooperate in rationalizing inpatient capacity in regions where there is excess capacity. Develop package pricing for a complete episode of care for procedures that lend themselves to the concept. Embrace price and quality transparency as well as P4P.
    Doctors – Embrace both price and quality transparency and P4P. Work with your medical specialty societies to develop performance metrics that you can live with. Accept competition where appropriate such as retail clinics staffed by NP’s and PA’s. Do a better job of weeding the comparatively small number of less competent doctors out of the profession.
    Drug Companies – Be more sensitive when pricing patent protected drugs, especially the ultra expensive specialty drugs to treat cancer. Support comparative effectiveness research.
    Device Manufacturers – Support comparative effectiveness research.
    Insurers – Streamline and simplify your offerings to reduce both administrative costs and confusion among both providers and consumers as to what is covered and what isn’t. Further industry consolidation would probably also be helpful. Embrace price transparency.
    Lawyers – Support specialized health courts to bring more objectivity and consistently to the medical dispute resolution process.
    Government – Develop a reasonable mechanism to subsidize the cost of insurance for low income people. Fund comparative effectiveness research and use it to make better decisions as to what CMS will pay for and not pay for. Make living wills or advance medical directives a condition of insurance in order to minimize futile and often unwanted care at the end of life. Make sure that hospice and palliative care is adequately reimbursed.
    I think, at the end of the day, the doctors will be the most important interest group because they drive virtually all healthcare spending through hospital admissions, ordering tests, prescribing drugs, consulting with patients and doing procedures themselves. At the same time, they have a decades long history of opposing any reform that might threaten their power, their independence or their income. That has to change, and the sooner the better.

  3. I have been patiently pointing out for some time now that we can’t possibly succeed with universal health care when we refuse to discuss how it will be paid for and how much that will cost. Everyone wants a “chicken in every pot”, but we want it to be a free chicken, not one we had to buy.
    Once you start talking about cost along with the product, you have a much easier time selling people on the idea that health insurance is not the answer, whether subsidized, mandatory or regulated. When you discuss costs you look for minimum costs, and that cannot possibly include non-value added services, which health insurance is.
    We need to be honest with people and talk about the entire problem, starting immediately.

  4. I have been patiently pointing out for some time now that we can’t possibly succeed with universal health care when we refuse to discuss how it will be paid for and how much that will cost. Everyone wants a “chicken in every pot”, but we want it to be a free chicken, not one we had to buy.
    Once you start talking about cost along with the product, you have a much easier time selling people on the idea that health insurance is not the answer, whether subsidized, mandatory or regulated. When you discuss costs you look for minimum costs, and that cannot possibly include non-value added services, which health insurance is.
    We need to be honest with people and talk about the entire problem, starting immediately.

  5. I think the issue is to list the problems people think we have and then to vote on which problems are current priorities. Solve those first. Leave the rest until later.

  6. Thanks for you comments.
    Let me start with Vaughn and dr. matt, because they are both suggesting that what we need is not so much health insurance as Health Care.
    As Dr. Matt puts it: “are we funding universal health care or universal health coverage?”
    Meanwhile, Vaugh questions just how much value for-profit health insurers are adding to the system: “Once you start talking about cost along with the product, you have a much easier time selling people on the idea that health insurance is not the answer, whether subsidized, mandatory or regulated. When you discuss costs you look for minimum costs, and that cannot possibly include non-value added services, which health insurance is.”
    I agree that for-profit health insurance only adds a middleman without adding a great deal of value. (Some not-for-profit plans do, I think, add value–by “managing patient care” in a way that aims, not at saving dollars, but at improving the patient’s health.
    But in general, I agree–what we need is health care for everyone–not health insurance for everyone. But I don’t think Congress is ready to simply abolish the for-profit health insurance industry.
    At some point, however, Congres might be willing to let Medicare compete wtih for-profit health insurers–by opening Medicare up to everyone, and letting
    Americans choose between buying health insurancer from a private insurers, or buying health insurance from Medicare. (If their employer now helps pay for their insurance, he would contibute the same amount, but pay it to Medicare instead. If the individual earns too little to afford Medicare, it would be subsidzed by the government.)
    Many health policy experts believe that Medicare could offer more comprehensive coverage at a lower cost because it doesn’t have to pay for advertising; it doesn’t have to pay lobbyists; it doesn’t have to pay its top administrators multi-million dollar salaries; and it doesn’t have to generate profits for shareholders.
    Over time, many Americans might decide that they preferred Medicare . .
    Dr. Matt– On the question of fee-for-service care, I have to disagree. That form of piecemeal payment does encourage doctors to do “more”-more tests, more procedures, more hospitalizations . . Not ever doctor responds to those financial incentives of course. But it’s hard not to–at least at a subconscious level.
    Also, the way our fee-for-servcie system is structured, doctors are paid a lot more for doing something aggressive (surgery, chemotherapy, etc.) than they are for doing something that involves talking to and listening to the patient (palliative care, the preventive care that a family doc offers, diagnosing a patient based, not on tests, but on old-fashioned diagnosis techniques . . .)
    I’d prefer to see doctors paid for keepiong patients well–and for outcomes–rather than
    being paid for how many procedures they perform. Medicine should be about quality, not quantity.
    See my second post regarding the Mass. Medical Conference where I talk about how Medicare spends far more in certain parts of the country where
    patients undergo more procedures, tests, surgeries, etc.–and yet outcomes are no better. Often they are worse.
    Barry– a great story about your father-in-law!
    And I agree with most of your points. Let me take them one by one:
    First, on who is going to pay. It depends on what you mean by “the broad middle-class.” Median income for a household is around $53,000 to $55,000 dollars. That is not a lot of money if you are trying to raise a family, pay a mortgage, save for college and save for retirement.
    If you look at graphs on
    income that break the country down into 5 groups, you’ll find that people in the middle earn
    somewhere between roughly $35,000 and $70,000, with the median average in the low $53,000 range.
    These are also the people who pay the highest percentage of their income into Social Security.
    Compared to the upper-middle class (roughly, people earning $75,000 to
    perhaps $125,000) and the rich (people earnign $125,00 to ???million a year) what I would call the true middle class (in the $35,00 to $75,000 range) are paying more than their fair share of taxes.
    (Note these numbers are all rough, and the value of the income depends on where you live. In Manhattan, probably upper-middle class would include people earinng $80,000 or $85,000 to $150,000, for instance, but you get the idea.)
    The true middle class also get fewer tax breaks because they have much less invested in the stock market (so don’t benefit from the capital gains tax cut) are less likely to have a million-dollar mortgage (and so can’t deduct as much interest), and are less likely to own their own business (with the accompanying tax breaks.)
    Bottom line–I think the upper-middle class (the people earning $75,000 to $125,00 jointly, and the rich (those earning more)than $125,00–or perhaps more than $150,000 should bear most of the burden of paying for national health reform.
    There are a suprisingly large number of people in this country with a joint income of say $225,000 to $400,000 or $500,000. While the family earning $65,000 may not be in a position to pay more taxes, these people can.
    And I think that large and medium-sized employers should contribute as much to a national health care fund as they are now contributing now to fund insurance for their own employees.
    Taxing the rich would mean rethinking the capital gains tax cut and take a closer look at inheritance taxes.
    When it comes to asking every healthcare interest group to give something up, I geranlly agree with you. We have to insist that drug-makers and device-makers submit their products to “comparative-effectiveness reserach” and Medicare (and other insurers) should refuse to pay for products that are not better, but much more expensive.
    We also have too many hospitals beds in some parts of the country–before expanding, hospitals should have to show that their community truly needs the expanded services it plans to offer.
    In terms of streamling administrative expenses for doctors and hopsitals, I would love to see a requirement that insurers all use the same forms for reimbusement. This would make it much easier for health care providers to get paid, and much harder for insurers to use forms that are so complcated that a doctor needs two or three people working on them full time in order to get paid.
    Your ideas for what government should do are also good ones (though I’m not sure you can force people to make living wills. For religious reasons, some people would oppose this.) But you can encourage people to make living wills, make it easier and cheaper to do so, and insist that hospitals follow the wishes expressed in those wills.
    Finally, I agree, doctors need to lead the reform by doing their best to avoid unncessary tests, procedures,hospitalizations, etc. More doctors need to urge patients to try physical therapy before having orthopedic sugery; to try drug therapy (while simultaneously changing their diet and exercise patterns) before having heart surgery etc.
    Of course doctors say they feel a need to practice “densive medicine” which sometimes involves overtreating. But your suggestion that malpractice cases should be heard by specialized health courts is a good one. I think the “juries” should be made up of medical ethicists, doctors, nurses and other health care specialists who are in a position to judge whether the doctor was doing his or her best to help the patient.
    Lay juries just don’t have the knowledge to do that, and are likely to respond in a more emotional way . . .

  7. My solution to the problem is the reincentavize primary care. Right now only 20% of medical students are entering a primary care field due to the complete lack of reimbursment from the scheme known as RVU. RVU reimbursment heavily favors procedural medicine and has left cognitive medicine behind. The ACP did an eloqent study last year showing the inverse relationship between access to primary care and cost of medicine. Not surprising, as primary care declined, regional costs increased.
    I propose a nation health care policy to rejuvinate primary care. This is of course all about money, and the lack of medical students entering primary care is all about money.
    Right now, there is a medical crisis of enormous consequences. Primary care doctors are leaving the medicare system at a time when baby boomers are just now entering the system.
    I propose a $300 above the line tax credit to all medicare recipients who provide proof of payment to a primary care provider. In my utopian system primary care providers would completely remove themselves from the medicare reimbursement scheme that is controlled by specialty interest. They would charge an Access fee of $30/month (less than the cost of internet access), or $360/ year which would be almost fully funded by a $300 dollar for dollar tax credit by Uncle Sam.
    With 45 million medicare recipients, this would equate to a 13.5 billion dollar program of funding access to primary care. This pales incomparison to the 250 billion annual medicare price tag and it would in part be funded by the removal of all primary care docs from the medicare system. In other words, primary care wold no longer bill medicare for their fees, an immediate cost savings.
    Instead I envision primary care docs competing directly with each other, in the community on a cash only basis for patients to fill up their clinic. In my proposal, I would envision a physician could take on a 1000 patient panel, seeing each patient on average 4x/ year for 4000 encounters/ year. Using a 46 week work year, and 8 hours of patient contact per day, this would allow the primary care doctor to average 27 minutes per encounter, which far exceeds the average 10-15 minutes now.
    I have envisioned a primary care physician earning a very fair amount (which I’m sure no primary care doctor would complain) using a clinic fee schedule of $25 cash payment for an office visit. The numbers on a 1000 patient panel paying $360/year for “access”, which is an essential dollar for dollar tax credit, in addition to $25 office visits, cash only, would generate $460,000 year for a primary care physicians office. Over head would plummet witout billing an collection, decreased office supplies, billing clerks, denials.Using a rough 50% overhead, and probably less, a primary care physician could comfortably enjoy a take home of $230,000 conservatively. This I believe is far compensation for primary care. NO more spending half the time with making sure you “play the game” on billing. Just plain medicine. 27 minutes per visit. For $25.
    The return on investment by medicare of this 13.5 billion program would be immediate and vast, trickling down through the rest of the medicare part B and part A programs. Decreased referrals and unnecessary proceduralization of the patient. Decreased hospitalizations through increased primary care prevention and intervention. What primary care docs need more than anything is TIME. Nothing else will fix the problem. And time is not currently a reimbursable procedure. I am convinced, you give a primary care doctor more time to think (that’s what they went to residency for 3 years to learn) and your medical cost structure will be shifted downward.
    I envision the same program for private insurance. If a primary care doctor can conceivable operate a healthy clinic with 30 minutes to see each and every patient for $25, their incentive to see private insurance disappears. I envision private insurance removing primary care reimbursment as well, with the same type of access plan supplanted by a pretax fee from an HSA or a company reimbursment based on lower premiums from the HSA plan.
    The beauty is that with a small amount of government help, you can turn primary care into a thriving, industry in the entrapreneural spirit. No government control Help the patient help themselves. This is a capitalistic model encounraged by a token investment in primary care. Great change will happen. I am convinced of that. Regional competition will cut costs, patients have guaranteed access and choice and specialists can continue to opperate in a decompressed state, but still funded from a medicare system that will be decompressed as well.
    I would love to hear your thoughts. I am a board certified internal medicine trained hospitalist with great interest in the financial implications of health care. I recently entered the blog world as well. Hope to see you there.
    http://thehappyhospitalist.blogspot.com/

  8. Happyhospitalist-
    This is an intriguing
    suggestion.
    You are absolutely right that we need more
    internists and family docs.
    And fewer med students are taking that route because
    reimbursements for family docs and internists are low enough that it can be
    very hard to make it financially–especially if you consider the loans that most med students carry.
    (I am strongly in favor of full scholarships for med students who become family docs or internists, and agree to work in a region that needs internists for a certain number of years after graduation. )
    The idea of patients being able to see an internist for $25 for 30 minutes is very attractive–especially if patients get a $300 tax credit for seeing general practitioners.
    But here is my concern: in cities like New York (or L.A. or D.C. or Boston or San Diego, or . . .a great many other cities)
    the cost of renting office space is high enough that I’m not convinced the internist could make the salary you describe if he
    charges $25 a patient.
    I’m also not convinced that the internist needs to give up on Medicare. Unlike private insurers, the reimbursement forms for Medicare are relatively simply–and, more importantly, there’s just one form. And it’s not designed to delay payment.
    I can imagine an internist who takes Medicare patients needing only one office person–a
    receptionist who also processes the Medicare reimubursement forms–perhaps after hours. Conceivably (depending on how busy the practice is), a part-time person would be needed to do the Medicare forms.
    But doctors tell me that dealing wtih Medicare
    is so much easier than dealing with private insurers. They are usually paid in 30 days, no questions asked.
    Finally, the Medicare Payment Advisory Commission (MedPac)–the independent commission that advises Congress on
    Medicare spending–recently recommended that internists, family docs and others who provide cognitive medicine (listening to and talking to patients) should be paid more–while some specialists should be paid less.
    As you know, we tend to
    overpay for the most aggressive medicine and underpay for preventive medicine.
    I would like to hear more about your ideas.

  9. Maggie,
    I would actually like to see Medicare compete with private health insurance on a level playing field basis.
    The present Medicare system is financed by a combination of a 2.9% payroll tax (split evenly between the employer and the employee) on all wages, beneficiary premiums for Part B and Part D and general federal revenue. General revenue now finances almost 45% of the total program’s cost. At the same time, Medicare is able to get away with shifting costs to private payers to some extent.
    I would like to see a public alternative, if there is to be one, structured as follows: It will be a complete insurance package – hospitalization, physician services, tests, drugs, etc. It would have a different name and would be considered a different contract from existing Medicare. If it attempts to pay the same reimbursement rate as existing Medicare, providers could refuse to see patients with that insurance if they think the reimbursement rates are inadequate but continue to see seniors with existing Medicare coverage. To compete fairly, the public insurance option would have to cover all of its costs out of premium revenue with no subsidy help from general federal revenue just as the Postal Service does today.
    I disagree with your view that private insurers don’t add much value. My employer self-insures. We pay one of the non-profit Blues less than $20 per member per month (PMPM) for claims processing, network access and disease management. That works out to less than 6% of premiums for administrative services, and one could argue that disease management is really a healthcare cost and not an administrative cost. Large, self-insured groups deliver health insurance to their members very efficiently. I doubt if a public system could do the job for less, especially since they rely on the private sector now for claims processing which is the most significant administrative expense. The individual and small group market is a different matter, but the solution, I think, is to get those people into large groups, not to replace private insurance with public insurance.
    With respect to how the financial burden is likely to be shared between upper income people and the middle class, under the current system, approximately 170 million people (including family members) get their health insurance through an employer. Whether they know it or not, all of these employees are paying the full cost of that insurance in the form of lower wages than they would otherwise be paid if the employer were not paying for health insurance. If the employer provided insurance model were ever replaced with a completely taxpayer funded system, there is no way that the entire burden or even the majority of it could be shifted to high income people on top of the incremental cost of covering the 47 million currently uninsured. One way or another, the middle class will bear a significant share of the burden of paying for health insurance even if taxes on high income people are raised significantly in 2009, which I think is very likely.

  10. The $25 is just an example. It would be set by market forces. In the heart of New York, that fee may be $50. It may be $100. It is what every the market decides. That is the beauty of the system.
    I disagree with continuing to bill medicare. Medicare reimbursement is subpar and that is why medical students are avoiding primary care with all costs. The shift is reimbursment from the fixed pot called Medicare part B would have to be soo massive for and enticement of medical students into primary care that the RVU committee and specialty services would never allow that. The hit to their income would far exceed any allowable amount in order to increase primary care to a fair amount.
    The best practice of medicine occurs between the patient and the doctor, no billing, no nothing. That is 27 FULL minutes of medical care, with a cost structure that is decreased 10-20% immediately by having no third party payer rejecting your claim by their rules. You own the rules. You charge the patient what they are willing to pay.
    Do you think a primary care physician is worth $25 for a 30 minute visit? IF you answer yes, you will pay. If you answer no, you will not. The market will decide what is fair. Me personally, I think paying your doc $50 an hour is so cheap that it doesn’t even require discussion. 7 years of intense studies and opportunity cost of money and life in ones second decade of life and we have folks who believe that $25 is too much. Insurance is just that. It was never meant to pay for everything, nor should it ever be meant to pay for everything. Health care is a cost of living. This is my opinion.

  11. I’ve always thought that state implemented solutions would be good proving grounds for seeing what will work nationally.
    I’d like to know more about that group that doesn’t qualify for subsidy but won’t purchase.
    Are they temporarily without coverage and don’t need it right now? Are they young and healthy? Do they feel like IF something happened they’d get care anyway? Are they already paying cash? Have they been discouraged by media reports about the lack of Dr. in Massachusetts and feel like they’d be wasting their premiums?
    My thought is that the insurance being offered is way too expensive and that the penalty is going to have to be stiffer.

  12. Maggie, I also envisioned the program for those not of medicare age to achieve a tax break through the use of HSA money. I envisioned it as also allowing certain less fortunate individuals economically (based on the poverty level), as also being able to claim the tax credit.
    If you bring cheap access to primary care, subsidized by a government program a National Primary Care Initiative, I imagine the entire cost structure of medicine being shifted downward. Primary care would be reimbursed by cash only low cost ($25 in my example) office visits, supplanted by a $360 (or what ever the market bears) access fee, most of which would be credited back to the patient in the form of a tax credit for the poor/medicare, or achieving a tax benefit in the form of an HSA.
    As primary care access increases, and primary care reimbursement increases, and time with the patient increases, there is less cost both in the cash only system with no involvement of a 3rd party, decreased billing, overhead etc… There is less visits to the ER–>decreased costs. There is less hospitalization–>less cost. There is less referals to specialists and the proceduralization of the patient–>less costs.
    If you wanted to give every single person in the United States a tax credit of $300 for signing up (at their own choice) with a primary care physician, That would be a $100 billion dollar program. Of course I am not proposing this for everyone, as private industrie’s return on investment alone by this plan with decreased health costs should be enticing enough.
    I have proposed this plan on other sites and have yet to hear a sound argument against. Put the primary care physician in control with a fair reimbursment system, partially funded by a National Health Care policy, and you will watch the cost of medical care create a downward shift, with a simultaneous decompression. You will see a renewal of medical students joining the ranks with good pay, good hours and a sense of appreciation brought back into the field. In the end it will always be about money and that is the only thing that will bring medical students back into primary care.
    http://thehappyhospitalist.blogspot.com/

  13. Ginger, Happy Hospitalist and Barry–
    First. Ginger–
    Many of the people who don’t qualify for the subsidy and refuse to purchase insurance are young and healthy. Like many young, healthy people they feel they can gamble that they will stay young and healthy and they resent being told that they must buy insurance and help cover those who are either sicker, or not as lucky (and so wind up in an auto accident)
    To bring those people into the program, I think the fines would have to be stiffer–but this would be politically unpopular.
    Another group who may not be buying insurance are older people (roughl 55-65). Masschusetts lets insurers charge older customers twice as much as it charges younger applicants. As a result, a 60-year-old can be charged $352 a month for a policy that would cost a 27-year-old $176 a month.
    Some 60 year olds really can’t afford $352 a month–but aren’t poor enough to qualify for the subsidy.
    This is one reason why Massachusetts is exempting roughly one-fifth of its low-income uninsured from the mandate to buy insurance. Thus many of those who most need health insurance—the older, low-income citizens– won’t have it.
    But the problem in Massachusetts isn’t just that the fine isn’t stiff enough or that premiums for older citizens are too high. Insurance in Massachusetts is expensive because there is a lot of over-treatment in Masschusetts. Reserach shows that because there are so many hospital beds and so many specialists in Massachusetts patients tend to get too many unncessary treatments, tests and hopsitalizations.
    I’ll be writing a post about this today or tomorrow . . .
    Happy Hospitalist-I realize that $25 a visit was just an example, but even $100 a visit would not be enough for a physician to maintain a practice in N.Y.C.
    Consider the cost of real estate, equipment (pretty soon everyone will need electronic medical records), malpractice insurance, a receptionist, benefits for the receptionist, utlities, a cleaning service, an answering service (patients need to be able to leave messages in an emergency in the middle of the night . .. )and state, local and federal income taxes that would take roughly one-third of a physician’s gross income.
    Meanwhile, during the first 5 years of practice (or longer)that physician is probably paying off med school loans of $300,000 to $500,000.
    Right now, in Manhattan, primary care doctors who refuse to take any insurance whatsoever charge $300 to $400 a visit –more for a new patient. This is what “the market decides.” There are enough very wealthy people in N.Y. to pay this price out-of-pocket and the doctors who charge this much without taking insurance are considered, by many to be “the best” in the city.
    Whether they are or not is another question. But they are perceived as “the best” because they are the most expensive.
    Markets are not always rational, and particualry when it comes to healthcare, it is very hard to judge the quality of care. If the doctor doesn’t keep you waiting too long, if he seems concerned about your welfare,if your friends recommend him, if he doesn’t make you feel too badly about being 30 pounds overweight . . . this is how people judge doctors.
    I completely agree that we need more primary care and more primary care doctors, and I think your plan for delivering that care would work in some areas (mainly in rural areas which rents, salaries and the other costs of maintaining a practice are much less and where doctors are accustomed to earning much less.)
    Another way of increasing the number of primary care docs would be to provide full scholarships through med school to students willing to become internists or family docs, and willing to practice in an area where interists are most needed for, say, five years after graduating from med school.
    Barry– yes, I agree: many large corporations that self-insure can cover their employees quite efficiently for less–but this is because they are “cherry-picking” when they hire.
    Here is what I mean:
    most corporations try to hire healthy people, not so much because they are concenred about the cost insuring sick people (though that’s a factor) but because they want productive workers who have the energy to work hard and who won’t take a lot of sick days.
    In addition, in our service economy, the majority of employees at large successful corporations are middle-class, upper-middle class, or wealthy. I’ve worked at Dow Jones (owner of Barron’s and the Wall Street Journal) The New York Times and Time Inc. and I can report that 90 to 95% of the people you see in the building are white. Their clothing suggests that they are at least middle-class.
    There are some working class people working for these companies–the people who drive the trucks that deliver the newspaper, for instance, the people who clean the offices at night (almost invariably minorities) and some of the people involved in printing the paper or magazine.
    But we no longer use old-fashioned printing presses, so even these jobs are computerized and require the skills of college-educated workers.
    As we all know, poorer people are less healthy for a variety of reasons (see my post “Class”)
    Matters”) and so they are
    more expensive to insure.
    People often ask why corporations that self-insure don’t join with other companies (medium-sized as well as large) wheh buying insurance. If they had a larger pool of
    cusomers, presumably they would have more clout with insurers and could negotiate better rates.
    But corporations with upper-middle class employees don’t want to be involved with companies that have blue collar employees because they know that despite the larger pool, insurance would become more expensive.
    The person in charge of human resources at Pitney Bowes (a old-fashioned manufacturing company that does have a lot of blue collar workers) explains this in my book, Money-Driven Medicine.

  14. Maggie,
    Our company is in the heavy manufacturing sector of the economy. Between 80% and 85% of our active (as opposed to retired) workers are unionized. Many of our unionized jobs are physically demanding. Parts of our manufacturing process are hot while others have lots of heavy equipment moving around. Thousands of employees worked for the same employer for decades. Off the job, their lifestyles are often not the most healthy – many are smokers, social drinkers and enjoy fast food. Average cumulative medical costs incurred while employed are probably higher than the average for the age cohort from which they were hired. Due to the nature of the work environment, our per person healthcare costs are higher than average, but our administrative costs as a percentage of medical spend are as low as anyone’s.
    People with low socioeconomic status are in worse than average health whether they have health insurance or not, I suspect. A former CBO Director and current economics professor told me recently that low socioeconomic status is correlated with poorer than average health everywhere in the world. She claims that the health gap between the rich and the poor is just as wide, if not wider, in Canada as it is in the U.S. That doesn’t mean, of course, that we shouldn’t find a way to cover the currently uninsured. Of course, we should. I would not expect universal health insurance coverage to do much to close the health status gap between the rich and the poor, however.

  15. Maggie, I don’t think you quite understand my proposal.
    A primary care physician, under my proposal, could generate $760,000 in revenue seeing a panel of 1000 patients on average of 4x year, and charging them $100 per visit. Charging them $25 per visit would generate $460,000 of revenue per year.
    What kind of overhead are you talking about in a cash only primary care office in New York City?
    Are you telling me that a primary care provider could not survive in New York City with gross revenues of $760,000, or even $460,000 per year?
    There would be no billing/collections or third parties. You would gain a 10% drop in overhead right off the top line.

  16. Happy Hospitalist,
    I have to agree with Maggie, I opened my own practice in 2004 and closed in 2007. The overhead would not even be close to supported by your plan, I would also add that I have learned, the general population feels entitled to medical care. I can give you many specific examples but I will just say that I accepted cash customers (as well as accepting everyone) and offered both payment plans (as low as $10/mo) and barter. When I closed I was owed 20K in cash debt and not a single payment plan person came through on their agreement. In your scheme not only would the overhead not be covered, but the patient’s wouldnt come, they would pay thier one time fee and then go to the ER where they wouldnt have to pay out of pocket, or just show up at a specialists office for whatever system they thought was bothering them, they will find ways not to pay.
    Maggie,
    as far as fee for service, this is what I found in my practice, only the organizations that provide those special services benefit, i.e. the hospital owned practices, while I got a sad $2 to draw blood, the hospital lab got $10 to do the same thing, this translates through all specialities, I got 2K for ob care and delivery, while an obstetrician got about 3K for same care and delivery!! So, within the system fee for service increases cost, while within my small, solo owned, solo managed office it did not. When I closed, the CEO of the local hospital was quoted in the news paper as saying that many of the PCP offices they own did not turn a profit, one has to realize then that the hospital makes it’s money from the lab, radiology, and specialists it owns and very neatly, when you schedule 20-30 patients a day you are much more likely to use these services because the time you have to read, consider, discuss, examine and ponder a patient is…..well, inadequet to say the least. Finally, I am not sure what doctors told you that medicare was easy to deal with but I must adimantly disagree, they had different rules than everyone else, they used different codes, they laced thier visits with requirement that where not reimbursed and if you didn’t straighten out a billing discrepency within 90 days you eat the bill. i.e. you can provide preventative care in a physical every two years but must do a EKG and UA (neither of which you get reimbursed for, it a “bundled” charge) if you dont do these things you dont get paid for the physical. I would also add that you don’t really deal with medicare, you deal with a regional contractor that manages medicare funds, so it may be different in diefferent regions. I have written a book on my experiences and the current health care system but can’t seem to get it published, any suggestions.

  17. Dr. Matt-
    Thanks for your comments.
    You are right–it is very hard for a solo practioner to make it out there. Location can make all the difference since the cost of real estate, wages and state and local income states vary so widely around the country.
    As for Medicare, payments do vary regionally
    based on what Medicare has paid in the past in that region. In other words if you are practicing in an area with a history of higher reimbursements, your reimbursements will be higher gong forward.
    The Medicare Payment Advisory Committee does realize that Medicare needs to raise fees for internists and family docs and re-examine fees for specialists. (Right now specialist society’s make recommendatons about specialists’ fees. No surprise, they always suggest boosting them.)An unbiased third-party needs to look at the fee schedules.
    Finally, almost of the doctors I talked to about Medicare had someone in their office who handled insurance reimbursements. That person could fill out Medicare forms in his or her sleep, and the reports I have gotten from many doctors are that, in contrast to private insurers, Medicare doesn’t plant landmines in the forms that invite mistakes. Medicare usually pays within 30 days.
    But if you were trying to treat patients and do the paperwork yourself, I can see how it could have been too much.

  18. Thank you for aknowlegement. Filling out medicare forms is easier to some degree. However to really decide how much easier it is, you should talk to the person filling out the form and the person collecting the charge, rather than talking to the doctor who likely played minimal role in that portion of the process.

  19. My Dr. ordered me to have
    6 wks. Physical Therapy.
    Can I deduct the co-pay amts. from my Income Tax?

  20. I also do hope that health care reform to keep an eye on Massachusetts, works as a new health reform law to serve as a pilot program for the nation.