The first thing that should be perfectly clear is that healthcare is different than any other marketplace. There are numerous players, including doctors, hospitals, specialist providers, government, insurance companies, drug and device companies, pharmacies and lawyers, who theoretically work as advocates for good patient care. At the center is supposed to be the patient. But let’s face it, from a purely free-market capitalist business perspective, all the players in the industry are going to do what is in their own best interest and those interests are frequently in conflict with what is best for the patient or the healthcare system itself.
When you need medical services, you’ll pay almost anything to save or extend your life! You don’t go to the emergency room for a heart attack and negotiate your treatment cost before submitting to by-pass surgery! Obtaining life-saving services at the nearest hospital is what you do. It’s not like shopping for a car, where at least you have the option of walking out or postponing your purchase, if you don’t agree to the price.
The other thing to recognize about the healthcare system is that most of the dollars we spend are at the end of life. Five percent of the population accounts for more than half the annual cost of healthcare. Eighty percent of the population in the United States is healthy and does not spend significantly on healthcare.
Today we have a system that revolves around reimbursement rates for services rendered (a fee for service system). That came about thanks to the creation of Medicare, which started in 1966 with a $75 billion budget. This year Medicare will cost us nearly $600 billion. That is quite a number and a major reason we are running a gigantic federal deficit. Medicare and Medicaid currently account for 23 percent in Federal spending.In today’s system the question healthcare providers most what to know is “who is paying” for services to determine what can be charged. If you are a Medicare patient, you pay one price, if you are privately insured, you pay a different (usually higher) price, if you pay cash, that’s yet another price. If you have no insurance, you pay full boat, file for bankruptcy, and the provider writes it off a ridiculously inflated amount as uncollectible. Onerous medical bills are the single biggest reason people file for bankruptcy in this country.
Imagine if you went to the grocery store and the Cashier had different prices depending upon how you are paying. The scene would play out something like this. Cashier: “And how are you paying for your groceries today: cash or card?” Shopper: “I’ll pay by card.” Cashier: “In that case your groceries will cost $1,000. Just slide your card here.” Shopper: “Hold on a second, what if I pay cash?” Cashier: “If you are paying by cash, the bill comes to $200.”
The concept of charging different prices depending on who is paying or how you are paying is ludicrous, but that is essentially how our system works today.
Why does the payer matter? Because different insurances offer different reimbursement rates negotiated with providers. Medicare offers non-negotiable, take it or leave it reimbursement rates, decided by committee, on a fee for service basis. Never mind that the reimbursement rates Medicare offers may not reflect market forces of supply and demand. Keeping rates low is politically popular, so the government has, by fiat, for example, reduced the rates it pays primary care physicians to the point where no physician can make a reasonable living working on his own in private practice, as they once did.
What results is, effectively, invisible medical breadlines. We don’t see people lined up outside a doctor’s office waiting to get in, but try to get a non-emergency appointment to see a primary care physician and you’ll find the earliest date is three months hence, if you can get in at all.
The system is beginning to fail at the worst possible moment as more and more qualified physicians retire along with the aging baby boom population. You are already beginning to see nurse practitioners substituting or being mixed in with fully licensed, board certified medical doctors. This is not a knock on nurse practitioners, but a recognition of the reality that we simply don’t have sufficient numbers of fully qualified people entering medicine to look after our aging population. It’s a looming disaster unfolding before our very eyes.
To be continued…..
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