AMERICA’S AFFORDABLE MEDI-SCARE,
By Boris Shusteff
September 13, 2009
In 1909, Henry Ford remarked about the Model T : “Any customer can have a car painted any color that he wants so long as it is black.” Ninety years later this statement has been reincarnated by the American Congress in HR 3200, the bill dubiously titled “America’s Affordable Health Choices Act of 2009.” Anyone who reads it carefully can easily rephrase Ford’s quip: “Any American can have the health insurance that he wants so long as it is the public health insurance option.”
Of course the document does not say this explicitly, but this is easily deduced from the text of the proposed bill. Sure, Section 102 is subtitled “Protecting the choice to keep current coverage,” but the spirit of the proposed reforms is completely different.
First, the options of private insurers are drastically curtailed by the warning in subsection (a): “Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective day of coverage is on or after the first day of Y1” [The Year 2013] (16). Next, the issuer is warned that the new law will prevent it from changing “any… terms or conditions, including benefits and cost sharing, from those in effect as of the day before the first day of Y1” (16). And on top of this, there is a grace period, after which the Commissioner – the Health Care Czar – will decide whether existing “grandfathered” plans will be allowed to fight for their life or will be eliminated altogether: “The Commissioner shall establish a grace period whereby, for plan years beginning after the end of the 5-year period beginning with Y1, an employment-based health plan in operation as of the day before the first day of Y1 must meet the same requirements as apply to a qualified health benefits plan” (17).
Having placed the “grandfathers” in shackles by cutting new enrollment and forbidding premium changes, the bill now puts the final nail in the coffin of existing private insurance: “Individual health insurance coverage that is not grandfathered health insurance coverage … may only be offered on or after the first day of Y1 as an Exchange-participating health benefits plan” (19). What is more, the clause that seems to exclude “grandfathered health insurance coverage” is merely a fig leaf, since after Y1, grandfathered plans will only be able to enroll “dependents of an individual who is covered as of such first day”(16). Considering the mobility of the American labor force, such that many Americans do not work for long in any one place means the country will arrive at a situation where the vast majority of Americans, including all those who decide to change jobs after Y1 will be able to choose only an Exchange-participating health plan.
And now let us take a look at the much-touted public health insurance option. Without calling it outright what it is –Medicare – the bill tells us that “the Secretary shall base the payment rates… for services and providers… on the payment rates for similar services and providers under parts A and B of Medicare” (121). The bill further explains how the provider network will be established: “Health care providers participating under Medicare are participating providers in the public health insurance option unless they opt out in a process established by the Secretary” (124).
Now it becomes even clearer that private insurance options are doomed, and will be unable to compete with the public health insurance option. How can it be otherwise if “Medicare payments to hospitals are equal to only about 68% of private rates for the same services [and] … physician payments are equal to only about 81% of private payments” (according to data from research by the Lewin Group performed for the Heritage Foundation in mid-July). What makes the playing field even more uneven is that that the Government, as the provider of the public health insurance option, does not have to think about the bottom line. The example of Medicare speaks for itself: it is a $466 billion program serving 45 million people that “will be insolvent by 2017,” according to the latest Medicare/Social Security Trustees report.
But that is not all; financial woes are not the only ones that haunt Medicare. It is so mired in bureaucracy and regulations that physicians are leaving it in droves. Among other flaws, the system has at least two major problems: the astonishing amount of paperwork and one-size-fits-all healthcare delivery. The number of requirements and regulations changes constantly, making it impossible for doctors to keep up with the rules set up by pen pushers. The Damocles sword of punishments and fines drives doctors to leave the system, rather than endlessly fight the bureaucracy.
Therefore it is not surprising that already in 2000 the American Academy of Physicians and Surgeons (AAPS) warned at its 6th annual “Medicare Patient Freedom Day” that “for the sake of patients and integrity of the profession, doctors should get out of Medicare.” Just a few selected morsels of information clearly illuminate this exodus. According to a study conducted by the Houston Chronicle mid-2008 “only 58 percent of Texas physicians are taking new Medicare cases, and only 38 percent of primary care physicians are doing so.” And The New York Times noted on April 1st that “of the 93 internists affiliated with New York Presbyterian Hospital , for example, only 37 accept Medicare, according to the hospital’s Web site.”
The situation is clearly going to become much worse when the Congress, in its efforts to slow the rapid rise in cost of the financially troubled Medicare program, puts into effect substantial across-the-board reductions in Medicare’s payment rates for physicians that are already pending without proposed reforms. According to a letter written on March 27 to several chairmen of House Committees by Congressional Budget Office (CBO) director Douglas Elmendorf, Medicare payment rates “will be reduced by about 21 percent in January 2010 and by 6 percent annually for at least several years thereafter. By 2014, the cumulative reduction in the rates will be about 40 percent.”
An extreme reduction in physicians’ payments is already looming in 2010 due to the postponement of a 10.6 % cut that was fought off last year by medical professionals. However, the cut was simply put off, and doctors were warned that they were only delaying the inevitable. At that time already, on June 27, 2008, James King, M.D., the President of American Academy of Family Physicians stated that “in March, the Medical Group Management Association reported that nearly 24 percent of physicians in all specialties had begun limiting or not accepting new Medicare patients; 46 percent would limit or stop accepting new Medicare patients with the implementation of the 10.6 percent pay cut schedule for July 1”. One may only guess how many doctors will opt out of Medicare or will become financially insolvent when the 40% cut becomes effective.
To add to this mess, the proposed Health reform will throw another wrench into the barely functioning mechanism. While the bill offers no solutions whatsoever to the dangerously diminishing numbers of primary care doctors that accept Medicare, The Lewin Group estimates that the government will need to cover an additional “103.9 million people under the new established public plan” within 3 years. This means that even without taking into account the inevitable physicians’ exodus the number of patients per doctor will increase by more than 230% (!).
Robert Moffit, Ph.D., Director of Domestic Studies at the Heritage Foundation wrote in a position paper on April 22, 2002: “ Seniors’ reduced access to care and the deepening demoralization of doctors are rooted in the outdated structure of Medicare itself: a system of central planning and price reduction in which virtually every aspect of the financing and delivery of medical services to senior citizens is under bureaucratic control”. Today this outdated structure is being sold by the President to the country as a panacea and the magic wand that will resolve all the ills of the America’s Healthcare System.
The authors of the bill solemnly declare in Section 100 that their goal is to provide “quality health care… by building on what works in today's healthcare system”. To say that it is the pinnacle of hypocrisy would be an understatement. Especially after continuing to read Dr. Moffit’s paper, that suggests: “Instead of relying on Medicare’s systems of central planning and price regulation, Congress should enact structural changes that would enhance patient choice and control over health care decisions and move toward a more rational system. A model for such reform currently exists in the popular and successful Federal Employees Health Benefits Program (FEHBP), the patient –centered, consumer-driven system that covers Members of Congress, federal workers and retirees, and their dependents – altogether 9 million persons.” This program will be miraculously kept intact and unaffected by the proposed health care reforms.
“If you come to me with a serious set of proposals I will be there to listen. My door is always open,” said President Obama in the Sep. 9 speech, intended to sell these health care reforms to the public. Mr. President, how about providing coverage for all Americans under FEHBP, and switching the coverage for the President, Members of Congress, and their dependents to the public insurance option that you are proposing? If it is so great, wouldn’t you want to have it? And the American people -- well, they would definitely agree to have “more than a dozen competing plans that are routinely available to federal employees and retirees in any part of the country.” They will gingerly accept the FEHBP plans “all of which offer prescription drugs coverage, with the plans paying between 80 percent and 90 percent of the cost of coverage.” And by the way the physicians will not object to these plans either, since FEHBP “does not force doctors to labor under centralized government system of administrative pricing and price controls.” Really, wouldn’t it be fair if the FEHBP plans serve 300 million Americans rather than the meager 9 million?
(The numbers in parenthesis correspond to page numbers from the House of Representatives Health Care Bill – H.R. 3200 America’s affordable Health Care Choices Act 2009).
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Boris Shusteff is a Russian immigrant to the United States and a Freeman Center research associate. An electrical engineer by profession, he is also a senior chess master. His arrival to the U.S. has allowed him to plunge into the reading and study of major Zionist and Jewish works unavailable in the former Soviet Union. This in turn has led to his writing of articles on these subjects which are relevant to events today.
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