The recent agreement between the Republican House leadership and President Obama to cut $38.5 billion from the federal budget during the rest of the year is a small step in the right direction of bringing federal spending under control. Since spending skyrocketed during past several years from about 20-22% of GDP to its present level of 25% of GDP, much more has to be done to bring federal spending back to its longer term share of GDP (for a way to approach this problem during next few years, see the Wall Street Journal April 4th op ed “Time for a Budget Game-Changer” by George Shultz, John Taylor, and myself).
A much bigger problem is presented by the expected growth in government spending on medical care and retirements during the next several decades. This growth is the main subject of Representative Paul Ryan’s recently released over 70 page “Roadmap” for entitlement control,and to a lesser extent tax reform. The report also includes cuts in defense spending and domestic discretionary spending that would help in taming the budget during the next half dozen years. Ryan's Roadmap is bold, creative, politically risky, and clearly highly controversial. On the whole, the Roadmap contains excellent proposals that, if enacted, would greatly improve the long-term budgetary situation of the federal government of the United States, and the long-run prospects for the American economy. I will briefly evaluate the main changes in health care spending.
1. The Roadmap proposes to provide a $2300 health insurance tax credit for individual tax filers, and a $5700 tax credit for joint and family tax filers. This tax credit would substitute for the present tax exclusion of employer provided group health insurance from employees’ taxable income. This is quite close to a proposal made by Senator McCain during his campaign for president.
The present system of tying health insurance to employment through special tax advantages is both expensive and wasteful. It also discourages job turnover by employees because they have to obtain new coverage after changing employers or taking time off from work. Eliminating the tax exclusion of employer health coverage would break the artificial advantage given to employer health insurance compared to other group plans and to individual coverage. My main objection to the plan is that tax credits eliminate an important source of taxable income, so it would be better that the $2300 and $5700 government transfers be tax deductible rather than tax credits. Since individuals and families with low incomes and low marginal income tax rates would benefit little from a tax-deductible transfer, they should be helped through special provisions.
2. The Roadmap would reform Medicaid for older recipients partly by substituting block grants to the states for the present system of matching state spending on Medicaid. This would force states to pay 100% of their expenditures in excess of their Medicaid grants rather than sharing these additional expenses with the federal government. The Roadmap would provide younger Medicaid recipients with health care debit cards that could be used only to purchase health care services and supplies. Families with incomes below 100% of the official poverty level would receive $5000 into their debit accounts (in addition to the proposed tax credit), while higher income families would receive smaller amounts. Both reforms of Medicaid are in the right direction because they introduce greater incentives to economize on medical spending by states, and by individuals and families on Medicaid.
3. Medicare is the most rapidly growing entitlement program, and the most difficult to reform of all the entitlements. Unfortunately, to make it more politically acceptable, the reform proposed in the Roadmap will only start after 2021 when 55 year olds today will be 65. It would have been much preferable to have it start in five rather than ten years. Under the Ryan plan, seniors would no longer enroll in a government health care program, but instead they would buy health insurance from private insurance companies that would compete for their business. To help them do this, seniors would receive federal subsidies in amounts that would depend on their incomes. For example, couples with incomes below $160,000 would receive the full standard amount, whereas couple with incomes between $160,000 and $400,000 would receive only half the standard. The standard payment would be the average amount Medicare currently spends per beneficiary, adjusted for health risk, for inflation, and for increases in the medical cost index.
There are several advantages to these proposals for Medicare compared to the present system. Competition among insurance companies will increase efficiency in the delivery of medical care, and thereby keep costs down. The subsidies will help lower-income seniors afford decent medical coverage, but higher income seniors would have to pay more of their own money for insurance rather than taxpayers’ money. In addition, individuals and families could buy more expensive coverage beyond the basic plans financed by the proposed Medicare grants, but they have to pay for that additional coverage themselves. A major weakness of the American health care system is that out of pocket expenses are such a small percent of total medical spending. This proposal helps to correct that distortion.
The Roadmap has the potential to bring major savings as well as better care to the market for health care. I do not believe that the sizable growth in the fraction of GDP spent on health care in the United States (and also in other countries) has been a waste of money. Both the young and old attach very high value to improvements in the quality of their life, and in their life expectancy. However, substantial efficiencies are certainly available through proper reforms in the health delivery system.
Politicians have been afraid to touch medical care as they call it part of the “third rail” of politics, which would involve monkeying with benefits to the elderly. Representative Ryan and his committee deserve great credit for putting forward a bold and specific plan. It can be improved, but if the main parts were adopted, it would be a big help to reining in long term medical expenses.
So, NEH, what would you propose to deal with the rising cost of health care? Do you believe in the critical importance of price in coordinating people and resources? What would you use to ration a finite supply of medical services?
Posted by: Christopher Graves | 04/12/2011 at 06:46 PM
Xaiver?? Adam Smith? He of the concept that capitalism be a tool of a democratic republic and not the false god Ayn Rand conned Greenspan into worshiping those many years ago of selfish and self centered "objectivism?" That guy?
Posted by: Jack | 04/13/2011 at 03:56 AM
Marc? I'm wondering what the "insurance companies" bring to the H/C table that makes them so worthy of having us all shooed into their gaping maw?
Recently I was wondering why the government doesn't give away the truly excellent software that handles VA patient's records. It's been several years since I had to fill out those papers common to the "private sector" and watch while a clerk typed my unchanging name and information into their computer. Naturally after mulling it for a while, I realized the VA doesn't have to bill 4,000 differing "insurance companies" many with very differing payment criteria.
Our (haha) private enterprise, "competitive" system employs 11 medical records clerks to Canada's ONE.......... and by observation, the ratio is about the same at the VA.
But........... then if we had an efficient delivery system what WOULD we do with all those clerks and the insurance company phone squabblers and perhaps lawyers and court personnel?
Posted by: Jack | 04/13/2011 at 04:08 AM
Chris, There are prices and then there are "prices". As for the "prices", this is a little recognized or controlled area known as "Gouging", that at times occurs in areas of short supply, but high demand. Or simply created to maximize margins (never underestimate the pernicious role that "profit" can play in any economic system) which goes beyond the simplistic model of supply/demand. This is one of the areas that must be controlled by regulation. Another important area within Health Care, is the modification of the Health Care model currently in use. Such as, instead of waiting until a serious condition develops and then treating it with expensive intervention procedures and expensive exotic drugs; a "wellness model" is utilized so that the serious condition development is either eliminated or lessened. Which results in decreased costs. Such are the reasons for curbing obesity, tobacco, alcohol, illegal drugs and other hazardous behaivors to health and wellbeing. But, this is somewhat covered in the Health Care Reform Bills.
Posted by: NEH | 04/13/2011 at 10:29 AM
NEH, welcome to Brave New World!
Posted by: Xavier L. Simon aka Xavier | 04/13/2011 at 12:18 PM
Jwalker, your point about economics 101 is well taken. I think the Becker quote you cite might be missing the point though. The interesting effects of the voucher system, to me, is not the effect it will have on private insurance company's choices but the effects it will have on senior's choices. If seniors must shop for private plans they might think twice about buying costly plans with lots of coverage. If this happens, spending on health insurance for seniors could go down and spending on health care services for seniors could go down. If seniors must pay for more health care services out-of-pocket they might think twice about purchasing care that may be unecessary or otherwise not worth the cost.
Posted by: P | 04/13/2011 at 05:57 PM
Thanks for your reply, NEH, and again, I agree with much of what you say. I certainly agree in the Wellness Model that you speak of. I am very supportive of Alternative Medicine, encouraging moderate exercise, regular medical check-ups, eating organic food, taking supplements to augment a sound diet. I attempt to practice these myself.
As for price gouging, that is going on now big time as people do not have incentives to shop around for the best price for traditional medicare care. This is due, in large part, to third-party payers relieving consumers of the burden of shopping around. Once the market discipline is removed, then, of course, doctors and medical clinics will jack up the price. If price controls are used to hold down prices, then we get the distortions of price that create shortages in particular areas that can work hardship on individuals who are in need.
Posted by: Christopher Graves | 04/13/2011 at 06:38 PM
Xavier, "Brave New World" or was Huxley just another paranoid in regards to the future? I much prefer Well's "Men like Gods" at least the outlook is more positive and doesn't create "Future Fear". Remember, we have crossed the dateline "1984". Now there is December 21, 2012; the end of the Mayan (?) calendar and the World as well. Solving all our problems! ;)
P, I have a better plan. Why not require all who reach the age of sixty to take the "Delta Pill". No more Senior health issues and costs and we can also then eliminate Social Security as well. Talk about cost savings. Hmm... maybe Huxley was on to something. ;)
Posted by: NEH | 04/13/2011 at 06:45 PM
Chris, "Shop around for the best price"? Who's got the time and energy to do that? If I'm sick or injured all I want to do is go the Doctor and get it taken care of. Not wander around the market place checking the prices for pigs, potatoes and peaches on a daily basis.
Posted by: NEH | 04/13/2011 at 07:04 PM
NEH, I am reminded that this is a blog about deficits. Let me predict, and I am very serious, with more than ten years of first hand experience dealing with countries that managed their fiscal policy like the US is doing now, let me predict that unless the US cuts it's spending with much bigger numbers than just 38 billion and soon, the Mayan prediction will become reality. Then no amount of "scientific" management or further taxing of those that bust their tails working 14 hours a day sometimes seven days a week to give you a job will make a difference.
As to your reply to Chris, it makes me wonder whether you are serious or just a name dropper here for the ride. He went out of his way to give you a reasoned, carefully thought out, and dispassionate explanation and you responded with a flip remark. Touché!
Posted by: Xavier L. Simon | 04/13/2011 at 08:38 PM
P sez:
"If seniors must shop for private plans they might think twice about buying costly plans with lots of coverage. If this happens, spending on health insurance for seniors could go down and spending on health care services for seniors could go down. If seniors must pay for more health care services out-of-pocket they might think twice about purchasing care that may be unecessary or otherwise not worth the cost."
If Ryan's ALL FOR THE RICH forces hold sway the "senior" will have not choice but to "shop" with his initially underfunded vouchette losing purchasing power as rapidly as has the min wage over the last couple of decades. "Paying out of pocket" might be fine for the more upper income of working folk........ but do remember the average teacher retires on $20,000, real retirements are increasingly rare and most SS recipients have less than $20,000.
Not much for high deductibles, "alternatives" or depending on the graces of the insurance plan even the "regular check-ups".
Those of Ryan's ilk are quick to denounce rationing, but even quicker to devise schemes that ARE dollar denominated rationing.
No good. Our "competitor nations" do better with less...... and making sure insurance companies and their grossly overpaid CEO's and managers continue to carve a chunk out of the H/C is a LOW priority in my view.
How about some suggestions that do not begin (and end) with "insurance companies?"
Posted by: Jack | 04/14/2011 at 04:36 AM
Xavier, Somewhat flippant, but deadly serious at the same time. ;) To adequately analyze Health Insurance policies and their prices requires knowledge and experience in Insurance, Medicine and Law far beyond the capabilities of the above average, average and less than average American. It ain't like buying "pigs, potatoes, and peaches at the Farmers Market on Saturday morning". Have you ever seen some of these contracts for Health Insurance? I can't even get through them and I consider myself of above average intelligence. Yet, they want the average American to do thier own pricing and contract negotiation. See a problem here?
As for the budgetary crisis, there is only one real solution to the problem (requiring the ability to transcend ideological constraints) and that solution comes in a two pronged approach as follows:
1. Revenues must be raised via:
a. tax revenues must be generated by reestablishing the tax base.
b. revenues must be further enhanced by reinstituting Tariffs, Duties and Customs (which provides protection to jobs including wages and salaries that makes up a large percentage of the tax base).
2. Expenditures must be drastically reduced by:
a. all line items in the budget across the board (there are no sacred cows) must be reduced by the percentage of the revenue shortfall now and in the future (austerity hurts and the pain must be spread equally across the board).
Posted by: NEH | 04/14/2011 at 11:34 AM
Jack, to the extent that a senior (or anyone for that matter) could not afford reasonable health coverage, I would hope they would receive a subsidy in order to do so. It is the fact that Medicare provideds a safety net to wealthier seniors that could afford their own coverage and out-of-pocket health expenses that puzzles me.
Posted by: P | 04/14/2011 at 03:38 PM
P: Let's see.... you'd favor taking a particular benefit worth something north of $15,000/year away from those of a certain income threshold? Most often this would impact those continuing to have middle or middle upper incomes in their retirement years. The higher one's income was......... the less such a loss would matter.
Better would be to increase Medicare taxes and continue to fund the program with the cost compressing reforms implemented by this Admin.
Also........ we'e "onto the game". While some SS recipients who continue to work in the wage field have their SS benefits taxed away, the same is not the case for those whose incomes are dividends, interest income etc......... nor the implicit income of living in a home (or homes) with no mortgage to pay.
Ha! heard a few "call-ins" from those of 55 or so, some already with chronic ailments who are looking less than kindly on having paid in during their young and healthful years, only to see Ryan's little scheme leaving them out there to be pecked to death by a the "private sector" (haha!) insurance company parasites.
Cheers! though and remember that OTHER nations, less wealthy than our own provides BETTER than Medicare coverage for all of their citizens. Why can we of "American excellence" not do the same or better?
Posted by: Jack | 04/14/2011 at 05:48 PM
NEH, what I am proposing is that people pay for medical care out of pocket, not through insurance. That way they can shop around for the best price and quality for routine care, tests, hospitals, and other non-emergency care. Even for emergency care, I shop around for the best quality by trying different ER's when the need arises. On my proposal, insurance would only be used for catastrophic care. Even then one can shop around for the best quality, and people do this now. They prefer certain doctors and hospitals. Certain hospitals have reputations in the community for certain kinds of care. Consumers of medical care can also evaluate their insurance and do. You can tell if they pay for needed care or drugs without a lot of hassle or they refuse to pay at all. If one is dissatisfied with a particular insurance company, then one can change insurance companies. I do not agree that people cannot evaluate their own health care.
Here is a response by John Goodman to a similar disagreement with market oriented approaches:
"Due mainly to pilot programs funded by the (not-very-right-wing) Robert Wood Johnson Foundation and administered by the (not-very-right-wing) Medicaid bureaucracy, thousands of homebound, disabled patients are managing their own budgets. They can hire and fire the people who provide them with services and they can use the money they don’t spend in other ways. Satisfaction rates in this program (called “Cash and Counseling” in most places) exceed 95% — something unheard of in any other health care program in the world."
http://thehealthcareblog.com/blog/2011/03/18/are-market-oriented-economists-wrong-about-health-care/#more-25810
There is some truth to what you are saying about the lack of information and consumer savvy if one is healthy most of the time and have little experience in shopping for health care, and then some health problem hits. But one can adjust fairly quickly if there is an on-going problem. For example, I picked up on evaluating ER's, hospitals, homecare, and insurance as my parents grew older and needed more care. I know what to look for and how to evaluate what I am seeing in my mother's care as well as my own. I also know how to effectively ask questions and hold doctors's and nurses' feet to the fire. If I get a lot of backtalk out of someone, I have them replaced or I move to another hospital. I have done this very thing. People need to be more assertive in dealing with medical professionals and these professionals need to defer to the patient more than some do. Some nurses and "techs" can be uncooperative and overbearing. I will not put up with that and will retaliate hard and fast by complaining or by removing my mother from their premises just like I do with any other business. By the way, I find Catholic hospitals generally to be better run and more responsive to patients ( I am not Catholic). People must get out of the habit of blindly deferring to doctors and nurses.
I had my own health problems that have given me experience in shopping for effective and compassionate health care. Traditional medicine could not identify or treat my problem. I still do not know what happened. I was suddenly hit by extreme fatigue and an inability to focus my thoughts for very long. This happened to me twice. The first time, the problem cleared up in about a year on its own. The second time, it lasted for years. Only after finding an Alterntive Clinic was I able to find a treatment that helped me. That clinic and another one that I patronized were full of people with problems similar to mine. They all said that Mainstream Medicine could not help them and most said that doctors did not take their problems seriously. While I improved, I was still not back to normal until I found a mainstream doctor who prescribed medication for me "off-label." Then I became allergic to the medication that helped me so much, and had to search for several years to find a doctor who could effectively identify and treat the drug allergy. He recognized what it was immediately without my saying a word to him as he entered the examination room and saw the rash on my skin. All other doctors of various specialties said exactly the same words, " I have never seen anything like that." So, one cannot be a "patient" and simply sit down and suffer passively. One must assertively and persistently enter this market as one would any other market.
I do believe that some people have a distaste for transactions and a tolerance for bureaucracy while other people's tastes are reversed. The more competition and a commercial quality are introduced into medical care the better as long as doctors do not get into attempting to bilk their "patients" (consider what the word 'patient' literally means--it means that the customer is completely passive). I do realize that the market mentality can go astray. When I moved to Dallas, I lucked into finding a very insightful and personable Internist. After a couple of years of my being his patient, he decided to go with a corporation called "MD-VIP," which provides 24 hour access and guarantees of same day or next day appointments or even home visits, but charges $1500 a year plus the regular fees. I changed doctors needless to say. This doctor I had to leave is a very kind person, but his wife seems more of a money-grubber. People who take this attitude can really goof up the works. If you have people with the Shylock attitude, the market becomes a nightmare.
But there are problems with a more bureaucratic system. There are certain doctors and nurses who are very compassionate and conscientious no matter what the system. John Goodman has found from his own systematic observations that excellent departments or wards in clinics or hospitals in socialized medicine systems can be high quality that function right next to others that are poorly run. He attributes the difference to the individuals who run these various offices. The problem in socialized medicine is that there is no systematic process to provide the proper motivation to those who are not highly motivated on their own. Government or organizations that are funded by government are simply not accountable on an individual basis. The big advantage of a market is that it holds people accountable--rewarding those who please their customers and punishing in a non-draconian way those who do not please their customers.
I do not want to see anything hyper-commercialized, but I do like the choices and control given to consumers in the market system.
Posted by: Christopher Graves | 04/14/2011 at 06:10 PM
NEH
Well said but there are a few simple facts; 545 reps and senators have created these problems to a large degree and now they are playing their silly poltical games about how to solve problems which they created. There is no dearth of economists who can sort out the mechanics of something approaching a rational analysis and program. But according to my research, all idiots are deaf.
Posted by: Jim | 04/14/2011 at 06:23 PM
Jim; Lob some of that blame on the voters, as the "Slop the hogs" campaign tactics of "no new taxes" has sold pretty well. Had Gore promised an unaffordable tax break instead of his complex, and smaller one that targeted middle class folk, he'd have likely gotten enough votes in FL or another swing state to have taken the election.
Posted by: Jack | 04/15/2011 at 04:02 AM
Chris: While reflecting on what the word "patient" means (passive? or patiently stacked in a waiting room?) I reflected too on only lawyers and docs having "practices".
Sounds like you've had a go around with health services, hope you're doing well.
Posted by: Jack | 04/15/2011 at 04:06 AM
"The mean amount of money changing hands from patient or insurer to the provider(s) for that Ct scan is $500."
......... A quick googling shows CT head scan prices all over the lot........ and apparently dropping. As the machine is around a million bucks (here and half that in other nations?) if it has a high utilization rate the per unit price should fall.
Instead of the real? or mythical "defensive med" is the over diagnosing due to the LOW marginal cost of operation, and a need to pay off the machine before it is made obsolete by the next model?
If the scans are more like $200 the equation of "worth" improves considerably.
Posted by: Jack | 04/16/2011 at 02:02 AM
Christopher Graves, I applaud your approach and suggestions for the healthcare system. That is the only way to fix it. But let me take up one of the problems you had because it illustrates very well what can and has actually gone wrong with a centrally managed healthcare system. It is about the internist you liked so much but moved on to a practice that charged a $1,500 yearly fee, a so called concierge practice. What that doctor did is to pursue a market solution to a problem created by government interference with the market. Many are doing the same.
As I’ve indicated in prior postings, I’ve sat in an oversight committee of a large private plan as a patient representative for more than twelve years. During that period I’ve tracked precisely a growing problem in internist remuneration as a result of which most no longer accept Medicare or Medicaid, many are leaving the field, new doctors are not entering it, and the few remaining are going into concierge practices. What we see is the effect on supply of price controls, which almost always leads to shortages.
Now, the government does not have price controls, at least not yet. What has happened, however, is that Medicaid and Medicare are so big that they effectively set the market price. Their remuneration rates weigh very heavily in setting the so call usual and customary rates that private insurers are willing to cover. After a few years of averaging the effect is a convergence to the price of the heavyweight in the field. That, by the way, is one of many reasons why I am so against any big enterprises in general, including particularly government enterprises like is the case with Medicare and Medicaid.
Okay, so here is what has happened to internists who have gotten the short end of the stick in remuneration from Medicare and Medicaid. A study by the health services school of Texas A&M (at the moment I don’t recall the details but do remember the huge conclusions) shows that today specialists can expect to earn $750,000 gross a year on average (doctor haters be careful, those are gross numbers out of which doctors have to cover all of their expenses including receptionist, accountants, equipment, insurance, etc., etc.) while primary care physicians or internists only earn $250,000. That is how very bad it has gotten and why the supply is shrinking rapidly.
Now I am not saying that the government or Medicare or anyone set out to mess up internists. It just happened. Go figure what logic was followed or is being followed to remunerate internists; I have some theories but they are just that, theories. In a way, however, the government inadvertently shot itself in the foot because internists can actually play the most significant role in reducing costs. They are supposed to be the coordinators of specialists.
I won’t go into it but for those of you who read “The Cost Conundrum,” the June 1, 2009 article in The New Yorker, you might recall how even the author, himself a surgeon, was impressed by how the Mayo Clinic handles patients. That is the model that the new law is designed to pursue through pricing incentives, and guess what, it is all based on improved coordination of medical services which is precisely what internists used to do, and apparently still do at the Mayo Clinic and to my knowledge at the MD Anderson Clinic and Medical Center in Houston.
My committee has been observing the problem evolve for many years, and studying whether and how our insurance might or should react. We hold membership meetings twice a year at which retired plan participants express their problems and this one has been growing steadily to where it now occupies the number one position. And we are not alone. In the hearings that led to the new healthcare law this was a subject of considerable controversy. Needless to say Republicans wanted market solutions and some of the senators illustrated with problems from their states that sounded almost identical to what I’ve been hearing from employees and retirees in my company for years.
The Republicans lost and instead of market solutions there will now be commissions that somehow will do better than the commissions that have been setting fees for many years. Note, however, that they only have general principles to pursue—mainly pay for outcomes rather than per unit of service—for which they will be running many experiments in the coming years. They are also hoping that very large conglomerates that can produce substantial economies of scale will emerge—those interested can see my earlier comments including a link to C-Span and a presentation by Harvard Professor and Obama adviser David Cutler.
Note the interesting combination: private conglomerates are supposed to pursue economies of scale based on incentives provided by the government instead of the market. However, the government is yet to design those incentives but to do so it now needs to form new commissions and run experiments. Ay! And many wonder why I am a skeptic!
Posted by: Xavier L. Simon aka Xavier | 04/16/2011 at 04:29 PM
Xavier: It seems that your numbers vary a bit from others I have seen.
It's really GP's who "got the short end" but........ I think a lowly office visit is $100 or more these days. Seeing just 4 per hour, which I think is low, gins up $3200/ 8 hour day. Even with golf etc one would think perhaps 200 days/year? for a gross of $640,000 plus "procedures" et all.
If the docs (often notoriously poor bizmen) do find themselves with only $25,000 left...... it's not THAT bad, all in all, but one supposes that the relative wealth of the surgeons and other specialists could create some lustful friction among them.
Well, I like to help the all EARN a bit more, but for now I'm a bit more interested in the plight of those who seemingly "missed" the rising tide of which the Docs appear to have surfed along nicely.
Posted by: Jack | 04/16/2011 at 09:36 PM
Xavier: Nearly forgot:
"Needless to say Republicans wanted market solutions........."
Really ripe! I got a real side ache causing belly laugh out of that one! Thanks!!
Posted by: Jack | 04/16/2011 at 09:39 PM
I have to say that I agree with Jack's most recent comments even though I do not doubt that concierge medicine is in the process of developing along the lines Xavier discussed. I suspect that internists are clearing a lot more than $25,000 per year. While there is no doubt that internists earn considerably less than specialists and are burdened down with a lot more paperwork and second-guessing from insurance companies than are specialists, which makes their practice of medicine less intrinsically rewarding, there is something wrong about abandoning loyal patients a doctor has had an on-going relationship with for years simply to make more $$$. I can see someone just coming out of Med School setting up his initial practice with these extra fees or launching out on his own after just a few years in a partnership but throwing out most of the patients one has cultivated and maintained a long-standing relationship with strikes me as disgusting.
In the case of the doctor whom I knew in Dallas, he was an older gentleman who had a large practice within a partnership. He launched out on his own and then announced the move to MD-VIP in stages over the course of about a year. It was only in the final stage of this announcement process that what was going on became clear. MD-VIP had meetings set up in a local hotel and the doctor's patients were invited to attend. In the session I attended, there was not an empty chair and people were standing in the back of the large conference room. There were numerous other sessions of the presentation. So, the doctor had hundreds of patients, if not more. A crucial aspect of the new practice was that there was a cap on the total number of patients so that he could attend to each patient in the new practice more carefully. Many of these patients had patronized this doctor for years. I was very upset and I had just had him as my doctor for two years. The people who spoke at the meeting were visibly upset as were many of those who did not speak. I still feel resentment over being abandoned. The representative from MD-VIP at the meeting and the one in his office came across to me as actors straight out of "central casting" portraying corporate type people--plastic and superficially pleasant while regarding the person before them merely as a means to an end. And we know what the end is...$$$.
This goes to a broader point. In the South, there is tradition of getting to know people one does business with. There is a personal relationship between the businessperson or professional and the customer. The cultivation of a personal relationship in business matters makes it less likely that either person will be taken advantage of. The lack of jaw-boning each other might allow the businessman to raise his prices from a hyper-competitive atmosphere but it also places an informal cap on how much he raises his prices when the market is in his favor. This balance between market forces and personal accountability also holds the businessman responsible for the quality of the good or service he offers for sale. No one wants his neighbors and friends to think he is holding out on them or trying to cheat them. This kind of personal dynamic is made more difficult with corporations, and it is one big reason I am in favor of abolishing the corporation.
So, we do need more market solutions in medical care, I agree. But these market solutions need to be tempered with a sense of empathy and personal loyalty shown by both the producer and the consumer of goods and services in any market, including medicine. On the other hand, a range of alternatives for consumers of medical services is needed to spur innovation and accountability. There is a fine line between balancing the impersonal forces of the market and the personal relationships necessary for a market to function in a humane way. In any case, I do not see governmental bureaucracies as playing a helpful role in this process.
Posted by: Christopher Graves | 04/17/2011 at 04:02 PM
Christopher, Jack, I suspect you are both confused with or ignoring the facts. Where did you each get your $25,000 figure? I wrote $250,000 gross, underline gross, on average per year based on a very large sample by a university. Those are hard facts. And Jack, if you think they can make $100 or more per 15 minute visit, as per your numbers, then you are sadly misinformed, but then I suspect you believe most doctors are Republican and that that places them in the bad people column as far as you are concerned. The current maximum allowed Medicare rate for a “short” visit is $80.49, and for a longer one full hour visit $161.67. And those are the new substantially improved fees as part of an effort to restore the position of internists, GPs or PCPs.
As to their working a full 8 hour day seeing four patients per hour, that is just not in the cards. Chris, your observation that the doctor you refer to wanted to have more time to spend on patients is probably much more accurate. I became fairly close to my GP of 25 years before he passed. I know for fact that in his later years he could no longer make ends meet. He was pushed by the system he worked in into seeing three patients an hour and that is probably what killed him, literally (a heart attack in his sleep). By the afternoon he was usually hopelessly behind; often he skipped lunch. He happened to be quite conscientious. In my case he would take my file home on the weekend every few weeks and call me Sunday night.
Now, the problem for healthcare is that when patients have complex conditions that require two or more specialists, coordinating their work can take a lot of time to research since each patient is unique and the conditions change over time. I know, I have five specialists who regularly prescribe. And I know for fact that what three, and perhaps four, of them are monitoring affects the other. My stomach problems are having a significant impact on my throat and lungs. One often tells me to tell the other this or that. That kind of disconnect began after my GP passed—he used to call one or another specialist when I visited which usually blew the twenty minutes he had allotted—and I was not able to get a new one that could or would dedicate the time necessary to coordinate the specialists. And that, by the way, also costs money; in the McAllen case of The New Yorker I looked for internists that coordinated including to avoid repeat procedures but I saw none. It has become so ridiculous and potentially dangerous (I could give you concrete examples of dangerous and unnecessary procedures done to me) that right now I am considering paying concierge fees out of my own pocket.
As I said, I have been researching the problem for twelve years, not just because of my personal situation but because it is impacting hundreds of colleagues who participate in the same private insurance plan and in later years a combination including Medicare. The conclusion of that research has been that the nature of medicine has changed dramatically as a result of the low remuneration of internists. Let me repeat that, the nature of medicine has changed dramatically with coordination and cost control being thrown overboard entirely. Chris, I can fully understand that you still feel resentment, but believe me, based on my experience, including with a GP with whom I became very close over 25 years, many of them can no longer make ends meet. You should give that doctor the benefit of the doubt: it could well be that he considered a more honorable course of action to be that of giving his patients the time he knew he needed to dedicate in order to live by his Hippocratic Oath.
And Jack, I know it is hard, nay impossible, for you to accept, that there are some business people out there who are actually good but that is the case with our private insurance plan. By private I don’t mean a private insurance company. My company is self insured through a fully funded plan and fund managed by staff although the benefits are set by the company’s board of directors and the actual day-to-day administration is done by a large private insurance company. In other words, it is our plan with our money. For those of us who are retired if the company folded tomorrow we would be fully covered for life. The new contributions by the company are to support active staff both while they are active and after they retire. We have all paid and continue paying a pretty penny out of our own pocket but, then, at least I have always known that I have to make my own luck.
Posted by: Xavier L. Simon aka Xavier | 04/17/2011 at 06:26 PM
Xavier, I appreciate your response to my and Jack's comments. As I said above, I do not doubt your analysis. But I do doubt that internists are losing money in a typical practice. I do not doubt that they earn less than specialists and suffer from more demands from patients and from insurance and Medicare. I just do not think that doctors should be motivated purely by maximizing income. In fact, I do not think anyone should. There are other considerations, especially for someone who has built up a trust over decades with people in their community.
If someone is losing money, of course, that is another matter, but just keeping up with one's colleagues should not be part of the calling of a physician.
Posted by: Christopher Graves | 04/17/2011 at 09:38 PM