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LETTER: GOP scheme to convert Medicare to voucher program is lunacy

Thursday, April 28, 2011 | 3:43 p.m. CDT; updated 9:20 p.m. CDT, Monday, May 2, 2011

Among the many dangerous provisions of the Republican budget plan is the scheme to convert Medicare to a voucher program that would funnel billions of taxpayer dollars into the coffers of insurance companies. This inane proposal would inevitably either dramatically increase expenses or reduce coverage for recipients, and probably do both.

Currently, Medicare pays out 97 percent of its receipts to cover medical services for recipients. In contrast, insurance companies pay out only 70 to 75 percent of premiums received to cover medical care of enrollees. The other 25 to 30 percent is diverted to executive salaries, investor dividends and administrative costs, which include efforts to avoid paying for covered services. Thus, to provide the same services currently covered by Medicare, additional federal dollars will be necessary. Because the whole purpose of this “reform” is to reduce federal expenses, drastic reductions in services will most likely result.

The Patient Protection and Affordability Act requires insurance companies that participate in exchanges to devote 80 to 85 percent of their premiums to cover patient medical services, and the companies are whining about that target. Obviously, they will not come close to Medicare’s current level of efficiency.

Changes in Medicare are needed, but depriving recipients of services while enriching insurance companies is certainly the wrong approach.

Robert Blake, MD, lives in Columbia.


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Comments

Jimmy Bearfield April 29, 2011 | 11:45 a.m.

How many physicians would willing to have their pay cut to European levels in order to reduce the cost of care?

(Report Comment)
Gregg Bush April 29, 2011 | 1:45 p.m.

Your question is immaterial to the letter, JB, and shows an incredible bigotry toward physicians. In my career I've worked with hundreds, and those that think of the sick or injured as profit vehicles are outliers. Your question reveals the perversity of for-profit medicine.
Furthermore, physician compensation is not the primary driver of health care costs. The overwhelming majority of physicians want the best outcomes for their patients, and casting dispersions on their professionalism and service to the public is pathetic.
In order to maintain profitability, private health insurance companies have created a bureaucratic maze enviable only by Terry Gilliam's Brazil or Douglas Adams' Vogons. And those bureaucratic mazes eat up the resources that should go into proper diagnoses and interventions that lead to positive outcomes.
It is the basest of fearmongering to promote the fiction of the pauper European physician. And if you're not promoting that fantasy, then your comment is meaningless and a distraction from consequential work. People's lives are in the balance, and there's no time to entertain such drivel.
Dr. Blake, an excellent letter.

(Report Comment)
Jimmy Bearfield April 29, 2011 | 2:13 p.m.

Gregg, your red herring attempts to distract from the elephant in the room, which is that physician pay is a significant portion of health care costs. Don't misinterpret that as a claim that doctors are greedy. Instead, it's a fact. The same can be said of many (most?) other industries. For example, in the newspaper business, salaries and other compensation historically are the largest expense.

Keep in mind that even if all private insurance company profits were seized, they would not be even a drop in the bucket toward paying for universal insurance. So clearly savings have to come from other sources, too.

When I ask how many physicians would willing to have their pay cut to European levels in order to reduce the cost of care, I'm referring to comparisons such as this: www.bmj.com/content/334/7587/236.full.

(Report Comment)
frank christian April 29, 2011 | 3:09 p.m.

Jimmy - In Gregg's world, on that cloud, where ever it is, everyone who thinks of earning a profit is perverse, greedy and generally considered to be untouchable.

When liberals finally have to admit that things are amiss in their gov't and they pretend that changes should be made one can always count on a statement similar to that of Dr. Blake's final statement: "Changes in Medicare are needed, BUT....."

(Report Comment)
Gregg Bush April 29, 2011 | 5:08 p.m.

Your pretension to know me or my journey is arrogance. Your baseless claim highlights your ignorance. I defend physician compensation, and you counter with nonsense. But enough about the internet stalking troll, and to JB's salient points.
While the article you provide seems compelling, it's scope is too narrow - a single, aged data point does not a trend make. I will suggest the "elephant in the room" that you see is nothing more than a dwarf pachyderm.
Nevertheless, there is a case to be made for looking at cost controls from all aspects of health care delivery including physician compensation. Although, even if physician compensation was the primary driver of health cost inflation, Dr. Blake's larger point that eliminating Medicare and its guarantees in favor of a voucher as subsidized entrance fee into the casino of for-profit health insurance is notable and worthy of reflection.

(Report Comment)
Jimmy Bearfield April 29, 2011 | 5:40 p.m.

If it really were a dwarf pachyderm, then the "doc fix" wouldn't be so large: 25% during the health care reform politicking. Yet Congress keeps avoiding the elephant in the room. For example, it punted the rate cut at least five times in 2010 alone. I agree that slashing physician pay won't single-handedly rein in health care costs, but it will make a significant contribution, which is why it will be on the table.

At the very least, there will be a push to reduce compensation for specialists. That effort will be partly to help reduce costs and partly to encourage more people to become general practitioners by reducing the financial incentives that come with being a specialist.

(Report Comment)
Jimmy Dick April 29, 2011 | 6:30 p.m.

Historically the individual states are even worse than the federal government when it comes to using funds for their designated purposes. As a result the federal government began to attach provisions and requirements to the funds so that they would go where they were supposed to and yet states still kept using them for other purposes. In a perfect world either system would be fine, but this isn't a perfect world. Giving the funds to the states via vouchers is a bad idea.

(Report Comment)
Ellis Smith April 30, 2011 | 5:20 a.m.

I Corinthians 13:11: "When I was a child. I used to speak as a child, reason as a child; when I became a man, I did away with childish things." - "The Open Bible," New American Standard (annotated).

How about that! Scripture CAN be applied to certain popular modern political beliefs. No wonder the Bible is sometimes referred to as "the good book."

(Report Comment)
Mark Foecking April 30, 2011 | 6:27 a.m.

Gregg Bush wrote:

"In order to maintain profitability, private health insurance companies have created a bureaucratic maze..."

Why is it more profitable for insurance companies to add administrative costs with this maze, and why would said bureaucratic maze be any worse than Medicare's?

I agree that replacing Medicare with gov't-subsidized private insurance will not save money. The issue is far more the cost of health care, not who pays for it. I would say the fundamental driver of health care costs is patient expectations, and the reaction of the medical profession to them.

We have a lot of expensive, high-tech diagnostic tools, we have added many layers of care personnel in addition to the traditional doctor-nurse-pharmacist triangle, and we have an ever-expanding range of intervention (drugs, therapies, surgeries, etc.) for an ever-widening spectrum of diseases. It's only to be expected that health care would be expensive. The trick is to trim costs without trimming care, and I'm not sure there are too many ways to do that which would be acceptable to a lot of patients.

DK

(Report Comment)
Ellis Smith April 30, 2011 | 7:32 a.m.

@ Mark:

While the functions are not the same, certain similarities can be drawn between costs of health care and the costs of higher education. First, as most Americans are aware, those costs have risen much faster in recent years than the costs of most goods and services. Secondly, the federal government has been involved in both, in the case of higher education significantly in federally-backed student loan programs (also Pell grants, etc.).

There IS, however, at least one striking difference between the two. In health care we have, as you've noted, a significant increase in technology, which does represent higher costs but which allows the medical community to better diagnose and more effectively treat medical conditions.

Is there a similar increase in educational VALUE at America's public and private universities? Certainly the COSTS have risen, but what about the benefits (to those seeking education)? I would argue that one need not leave Columbia, Missouri to answer that question.

Bureaucracy, in both cases, has a lot to do with escalating costs. Medical diagnosis and treatment = good; academic teaching and research = good; bureaucracy = BAD!

BTW, would someone explain again what an academic dean is? We did away with them, as unnecessary. (One person still has the name "dean" in his title, but that's being done for external and political purposes.) Also, two campuses of University of Missouri System use the academy system of management and two do not. Why? Academy system amounts to receiving receiving extra FREE help - taxpayers and students should love that!

(Report Comment)
Gregg Bush April 30, 2011 | 9:22 a.m.

"Why is it more profitable for insurance companies to add administrative costs with this maze, and why would said bureaucratic maze be any worse than Medicare's?"
A reasonable question. Regarding the former, the maze is to set up roadblocks to deny insurance claims.
Here's an article regarding rescission -
http://articles.latimes.com/2009/jun/17/...
If these added administrative costs were not adding profitability, then the stockholders should run-out the directors. Alas, the investors don't care as long as they get their cut.
Regarding the latter, Medicare doesn't extract wealth from their capital pool to pay investor dividends. Therefore, Medicare can pay out more a higher percentage of their capital pool in the form of benefits.
"The issue is far more the cost of health care, not who pays for it. I would say the fundamental driver of health care costs is patient expectations, and the reaction of the medical profession to them."
I don't disagree with this, my gut tells me the same thing. Nevertheless, I know people who actually study this and will defer to their expertise.
I think we agree this is a complex issue and deserves a thoughtful solution.
I'm reminded of Wall Street from 1987. While I disagree with Gordon Gekko's conclusion in the famous speech to Teldar Paper's shareholders, I concur with his premise. In part, "Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents."

(Report Comment)
frank christian April 30, 2011 | 10:41 a.m.

If a paper company with 33 VP's can lose 110M$ in a year, wonder how much, PPACA with 159 new offices, agencies, and programs can lose? These are just ones so far identified. It is being stated that no one can accurately tell, how many new, useless, entities will evolve from this "affordable" health care overhaul.

(Report Comment)
Jimmy Bearfield September 16, 2011 | 12:15 p.m.

The Sept. 16, 2011, Post-Dispatch editorial "U.S. doctors' pay is much higher than their European counterparts" is an example of what I was referring to when I wrote, "At the very least, there will be a push to reduce compensation for specialists." Some excerpts:

"The research . . . clearly illustrates what should be obvious about the disproportionately large percentage of the U.S. economy — 16 percent — that goes to health care: We spend more in the United States for doctors' services because U.S. doctors charge higher prices than doctors in other countries."

"The researchers found no evidence to support other explanations for higher prices in this country. 'Higher physician fees — rather than the higher costs of practicing, the volume of services provided, or medical school tuition expenses — are the main drivers of higher spending for physician services in the United States.'"

"A reasonable case can be made that primary care doctors ought to be paid more, not less, for example, to help make the specialty more attractive to young physicians."

My first post asked, "How many physicians would willing to have their pay cut to European levels in order to reduce the cost of care?" Considering that the P-D isn't the only major media outlet questioning physician pay, it might not be long before there's enough of a grassroots movement that politicians force them to make a choice: take European-level pay or find another country to work in. In a single-payer system, the government has that power.

I'm not arguing that physicians make too much. Instead, I'm arguing that they're terribly naïve if they believe that they won't be forced to take deep pay cuts soon.

(Report Comment)
mike mentor September 16, 2011 | 3:47 p.m.

@jimmy
My biggest fear about Obama care is that the best physicians will not accept government mandated pay levels the same way they don't now by refusing to take patients on medicare. Except i don't think the doctors will leave. They can practice here and just charge those that can pay what they want in cash. So, we will end up with the best doctors working only for rich people thereby hurting access to the best care for the vast majority that have access to the best doctors currently through private insurance.

(Report Comment)
Ellis Smith September 16, 2011 | 6:16 p.m.

Perhaps we should stop and remember the situation at the collapse of the late and unlamented* Soviet Union. It was well documented, and received a considerable amount of American and European TV coverage at the time.

The Soviet medical system had deteriorated to something resembling that of a Third World country - both care wise and equipment wise. Among the problems was ridiculously low pay for physicians, to the point that many of the remaining physicians were female. Now there's certainly nothing wrong with female physicians, but one reason there were few male physicians was males could find jobs that paid better than physicians were paid in the Soviet medical system. An example given was driving a taxi!

Granted that it's a LONG way from what American physicians are currently paid to the situation mentioned above, but if someone intends to "balance the health care books" by systematically reducing physicians' fees that might not be a smart idea. Move carefully!

*-Well, by most of us anyway.

(Report Comment)
Derrick Fogle September 16, 2011 | 8:22 p.m.

Recent articles have placed our current healthcare cost control mechanism - the ICD-9 coding system ( http://www.icd9data.com/ ) and all it's attendant administrators and claims processors - at about 20-25% of total healthcare cost.
http://economix.blogs.nytimes.com/2008/1...
http://www.dallassouthnews.org/2011/07/2...

Private insurance company profits add another 5-7%.

Drug company profits add another 10-15%.

Excessive lawsuits and tort add another 5% (in places where tort reform has not taken place. In Missouri, tort reform has taken place, and it lowered healthcare costs by just shy of 5%)

Excessive CYA testing and lab work adds another 10-15%.

Physician pay, another ~5%.

The above list roughly accounts for the "twice as much" the US pays, compared to most other industrialized nations with 'universal' healthcare.

On top of all that, we have this crazy third-party payer system, where insured consumers get the best "deal" by making the most use of the system. Likewise, the physicians get the best "deal" by pushing treatments, adding more line items to claims. On the other end of the spectrum, uninsured consumers don't spend squat until they wind up in the emergency room, turning the classic ounce of prevention into the expensive pound of cure. The lost productivity hurts, too.

Until the consumer is the defacto payer, instead of having some shadow 3rd party involved, the system will continue to spiral out of control. OTOH, until there's some kind of across-the-board basic healthcare for everyone, we will continue to pay for the pound of cure, instead of the ounce of prevention.

It seems like a voucher system would address both of these problems, until you realize that the voucher system proposed just adds another 3rd-party payer to the already wacked-out system we have.

What we need is simple, basic, administrative-burden free basic healthcare for everyone, and optional private catastrophic insurance for the
'beyond-the-basics' stuff. We need real medical savings accounts too, not this nutjob annual 'spend it or lose it' capped amount crap. That would really help bring the sensibility of 1st-party payer back to the table.

For the record, I am OK with a voucher system. It would suck, but almost certainly pop the medical-industrial complex bubble; the biggest and longest lasting financial bubble in our economy at this point. Sure, a lot of people will die. It's emotionally devastating, but financially attractive. I feel wealthy enough, from a health perspective, to take that gamble.

(Report Comment)

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