Misguided Health Care Reform: Expect Slower Payment, Worse Access
The Health Affairs article [gated, but with abstract] by Peter J. Cunningham and Ann S. O'Malley first discussed here by Devon Herrick, contains two nuggets of information that deserve more discussion. First, most of the proposed health care reform plans under discussion will slow payments to physicians and hospitals. Second, any reform plan that relies on putting more people into Medicaid will make it much more difficult for people to actually get medical care.
Medicaid already pays much more slowly than commercial payers. In Kansas, which had the shortest average time for Medicaid payments, the government paid in 36.9 days. Kansas commercial insurers paid in 29.0 days. In Pennsylvania, the government reimbursed in an average of 114.6 days. Commercial payers paid in 26.8 days. Of the 21 states surveyed, commercial payers took the longest in New York and Louisiana at 54.2 days and 54.9 days, respectively.
Given that net thirty days is the standard commercial bill payment requirement, even the worst commercial payers don't do too badly. Payment guidelines at McDonough District hospital in Macomb, Illinois say the hospital will hold private payers responsible for all payments if their insurer takes more than 45 days to pay. Illinois Medicaid averages 103.4 days to pay, the commercial equivalent of foreclosure.
In addition, Medicaid payment rates are absurdly low. Cunningham and O'Malley list Medicaid physician fees as a percentage of Medicare physician fees for the 21 states surveyed. The ratios range from 100 percent in North Carolina to 36 percent in New York. Five states have percentages between 80 and 90. Five states have percentages between 70 and 80. Six states have percentages between 60 and 70.
Medicare rates are already below cost by some estimates. In 2005, Margaretann Cross of Managed Care Magazine compared commercial allowable charges for specific hospital services to those of Medicare. The commercial plans paid 20 to 50 percent more. [link]
Expanding government programs like Medicaid encourages people to drop private plans to take advantage of it. For children in the SCHIP programs, as many as 60 percent of new enrollees will be previously privately insured. [link] Moreover, public plans typically couple uncontrolled demand for free services with very low payments to providers. This creates shortages that make it difficult or impossible for people covered by public plans to access health care. Following the 2006 health care reforms, shortages limiting access have become common in Massachusetts. Some physicians are now scheduling group appointments in which patients sit around a table waiting to be examined. A physician examines them one by one, through their clothing, and discusses their medical details aloud. [link] A medical privacy fig leaf is provided by requiring that group appointment patients sign agreements promising not to disclose information about others in the group.
Do lower payments reduce total expenditure? Not necessarily. According to StateHealthFacts.org, New York, the state with the lowest Medicaid reimbursement rates, also happens to have had the highest Medicaid spending per enrollee of any state in the nation ($7,733 in 2005). It also has the highest total spending ($44,712,222,361 in 2006), even exceeding California, which has twice as many Medicaid enrollees.
Linda, have you noticed that people on the left never seemed to be bothered by rationing by waiting.
Paying for care with time is okay. Paying with money is not okay.
If you put these people in an MRI machine you would probably find some physical basis for this bizarre way of thinking.
Ken, this is the result of Platonism. In the Platonic ideal world there is no commerce and therfore no need for money.
As for time? I suppose people could discuss philosophy with each other while they stand in line.
Hey, guys. this is getting a little heavy. I have a more down to earth observation.
Have you ever heard the legal maxim, “justice delayed is justice denied”? Why can’t we apply that same principle to health care.
I, too, am a Medicare repncieit and am reminded of the adage that there is a time to live and a time to die. I welcome a frank discussion of my options when confronted with a terminal disease. I do not demand that tens of thousands (or maybe millions)? of dollars be spent if it is simply a futile attempt to keep me alive in misery. If I have a chance and a good chance to live a decent life with treatment, then I hope that treatment will be afforded to me. If not, I hope I can face the end of life with courage and acceptance of the fact that death eventually comes to all of us. I would have liked to see a public option or a Medicare buy-in, at cost, for people under 65. It didn’t happen but maybe it will, in the not too distant future. When Franklin D. Roosevelt delivered his State of the Union address in January of 1944, he stated that all Americans should have the right to adequate medical care and the opportunity to achieve and enjoy good health. He died before his second Bill of Rights could be implemented. It took us years, after this address, to implement some health care reforms and my hope is that it is just the beginning of the realization of Roosevelt’s dream for all Americans for, as he said, Necessitous men are not free men.
Hello Nate, long time since I’ve teklad to you. Although I don’t necessarily agree with everything you’ve stated, your blog is very well written and thought provoking. On the topic of climate change, I couldn’t agree more with you. However, the major challenge I find with that (specifically cap and trade) is that if we force(i.e. tax) companies to emit fewer greenhouse gases, then the few remaining manufacturing companies will undoubtedly just pack up shop and start manufacturing jobs overseas. The average CEO doesn’t care about the American worker, and would just see it as another expense to do business here. Of course, there are solutions to this problem. Perhaps one answer would be to start taxing American companies doing their manufacturing overseas and giving bigger tax breaks to companies that stay at home in order to bring back/keep jobs for the dying American blue collar worker. While that concept seems simple, it is actually the opposite of what Bush did, which isn’t surprising. I’m curious what your idea is to solve this potential problem with cap and trade.As far as major health care overhaul, any reasonable person would say that we need it, but there are flaws in the bill that I think should be mentioned. Firstly, the republicans aren’t the only ones giving half-truths. one of my major problems with the bill is that it doesn’t address one major problem in the health care industry, which is tort reform. The reason? Just as republicans are in the pockets of health care industries, democrats are either in the pockets of malpractice lawyers, or were former malpractice lawyers themselves. A major reason why doctors are so expensive is because they need to pay hugely expensive insurance plans to cover themselves from sometimes ridiculous malpractice suits that get way to far in the legal system. Secondly, the idea of forcing insurance companies to take on people with pre-existing conditions is non-nonsensical. A friend of mine, who is management at an insurance company, put it like this, if you got in a car accident, and didn’t have any insurance, and then went to an insurance company to try and get insurance for the car and then have them fix it, do you think they would do it? While I know it may sound callous to compare people with pre-existing conditions to banged up cars, the analogy is accurate. After all, insurance companies are not NPOs, they work in order to make a profit, and there is no way to make a profit off pre-existing conditions. In fact, insuring those people would surely lead to many insurance companies going out of business. I believe the correct answer to the health care question would be to have a public option available only to those who cannot get insurance because of pre-existing conditions or because of lack of income. After all, only government could really afford such a cost. Anyways, great stuff.