Monday, December 13, 2010

Does Obama care mean Medicaid type care for most-except the rich,

Tyler Cowen, economist from George Mason University,gives his views in this commentary which describes the effects of different payment schemes for medical services.


"Wealthy people will always be able to buy most of what they want. But for everyone else, if we stay on the current course, the lines are likely to get longer and longer.The underlying problem is that doctors are reimbursed at different rates, depending on whether they see a patient with private insurance, Medicare or Medicaid. As demand increases relative to supply, many doctors are likely to turn away patients whose coverage would pay the lower rates.


Since private insurance pays more per service than Medicare which pays more than Medicaid, physicians will increasingly attempt to structure their practices so that they can see more of the higher paying patients and less of the lower paying ones. This trend will increase with the pressures on demand for medical services brought about by ACA. Millions more patients will have insurance cards, more on Medicaid and more receiving cards from the insurance pools but there cannot be a corresponding increase in the number of physicians available to treat the new patients.

Simply put, more docs will restrict the number of Medicare patients they will treat. In fact, as the numbers of Medicare patients in a given internists practice increases the less viable is his practice from an economic viewpoint.I can illustrate that point with an anecdote from personal ( well second hand) experience.

My brother, also a retired doc, was recently told by his internist ( who also is approaching retirement ) that one of his partners "has to retire" because his Medicare patient load in his practice has reached the level at which he can no longer meet the income volume requirements of the practice. This, according to the back of the envelope calculations for that particular practice setting, is 42%.A recent survey by Merritt Hawkins quoted here, reports that 87% of physicians surveyed indicated that they will close or restrict the number of Medicare patients in their practice with a slightly higher number reported in regard to Medicaid patients.

Cowen continues saying:

Most people would end up with low, Medicaid-like reimbursement rates, and would endure long waits and low-quality service. But wealthier people could jump the line by paying more. Think of “Medicaid for everyone” but the rich.

Someone described Obama care as "robbing Peter to pay Paul" with Medicare patients playing Peter and Paul being the previously uninsured who gain insurance cards from the legislation. But with the effects of the looming shortage of primary care physicians it looks like both Peter and Paul can look forward to longer lines and poorer quality care. So while Peter gets robbed, Paul is paid little or nothing.

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