Written by Stephen Hyde
Health-reform bookmakers currently favor the Senate bill over the House version as bicameral, unipartisan, unconference-committee participants conspire in a C-Span-free White House to extrude their secret sausage. One of many unfortunate consequences of the Senate bill-according to a new report from the government's own Center for Medicare and Medicaid Services (CMS)-is likely to be a significant shrinkage in the ranks of medical providers willing or able to treat Medicare patients.
The Senate's proposal to insure the uninsured would require Medicare benefit cuts of $541 billion to pay the lion's share of health reform's $882 billion ten-year cost.
CMS projects that fully 20% of doctors and hospitals participating in Medicare's Part A inpatient benefit program will become unprofitable as a result. According to CMS' chief actuary Richard Foster, "Providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries)."
Many doctors are already refusing to accept new Medicare patients. In 2007, 17% of Medicare-age consumers reported having "a big problem" finding a new primary care physician, as opposed to 13% only two years earlier. A 2008 study by the Texas Medical Association found that only 38% of Texas primary care physicians and 58% of all the state's doctors were taking new Medicare patients, versus 78% for all doctors in 2000. Nationwide, the study reported that only 600,000 of the country's 1.5 million doctors are willing to treat Medicare patients. With America's aging baby boomers projected to nearly double our over-65 population by 2030, Medicare's provider supply curve is bending decidedly downward.
Many doctors who haven't pulled out of Medicare have nonetheless figured out that if the program won't pay them reasonably for their normally billable services, they'll just do more of them. Many now require a chargeable office visit for many minor matters, such as prescription refills, that they previously handled for free over the phone. Their message to Medicare: "Remember all the stuff we used to do for free because you paid us okay for the other stuff? Well, if you're going to stop paying us fairly for the other stuff, we're no longer going to do the free stuff. One way or another, you're going to pay us, at least as long as we agree to continue playing your game at all."
Medicare's skewed reimbursement formulas have particularly hurt doctors specializing in geriatrics. These are doctors who are almost completely dependent on Medicare for their income. The average income for specialty-trained geriatricians was $163,000 in 2005. Compare that with the $170,000 they could have made as general internists, without having to go through all the extra training. Medicare's payment bias toward acute short-term, rather than chronic long-term, treatments further handicaps these doctors.
Because of Medicare's arbitrary preference for certain specialties, others are in danger of going out of existence entirely. About 140 of the remaining four hundred neuro-ophthalmologists-an increasingly critical specialty for elderly patients with otherwise undiagnosable eye diseases-will be reaching retirement age over the next decade. With their Medicare reimbursement rates already cut by some 20% since the 1980s, these doctors are unlikely to be replaced. New doctors are simply choosing higher paying surgical or other specialties. Additional specialties facing acute shortages include endocrinology, rheumatology, and pulmonology.
Low Medicaid rates for poor children (also substantially dictated by CMS) have likewise created major shortages in pediatric subspecialties by reimbursing them an average of 30% below Medicare's already low adult specialty rates. The average pay for a pediatric rheumatologist who treats children with debilitating rheumatoid arthritis was only $115,022 in 2007. Thirteen states report having no doctors in the subspecialty. Since the current median salary for general pediatricians is $154,295, you can readily understand why so few of them find it worthwhile to undergo three additional years of subspecialty training.
Unless Medicare (along with Medicaid) is dramatically reformed to allow market pricing to respond to actual patient demand, CMS' monocratic price regulation promises to deliver ever-greater shortages of doctors for an increasingly elderly-and ill-population. On top of that, Medicare's Part A trust fund is projected to run completely out of money in only seven years, and there's no plan to fix it-or even a plan to plan to fix it. The Congress and White House are in full-dress denial as they whistle past the Medicare graveyard on their blinkered quest to unleash yet another unsustainable entitlement program, this time for America's uninsured.
What is so tragic is that it's all fixable. There are solid proposals to repair Medicare (and Medicaid's) problems, but they get no notice from our lawgivers. As for finding doctors for America's Medicare patients, the late Nobel laureate economist Milton Friedman got it right: "If you put the federal government in charge of the Sahara Desert, in five years there would be a shortage of sand."
Stephen S. Hyde has been a public company CEO and chairman and board member of numerous health care companies. A successful health care entrepreneur, consultant, actuary, insurance expert, medical group CEO, and federal government managed care regulator, he has nearly 40 years of experience in virtually every major aspect of health regulation, insurance, and care delivery.