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Unintended Consequences Of Medicaid Reform

Stanley Feld MD.FACP, MACE

Everyone will be paying for the increased costs associated with Medicaid changes. Patients and taxpayers will conclude that President Obama’s healthcare reform act was a complicated bureaucratic mistake.

States want to limit Medicaid eligibility criteria. States have large budget deficits that are not permitted by their constitutions.

President Obama wants to increase enrollment in order to cover 16 million uninsured. States are also decreasing reimbursement by at least 10-17% to hospital systems and physicians. The result will be for participating providers to drop out of the Medicaid program.

Physicians have the option to drop out of Medicaid. The present physician shortage will intensify as more physicians drop out of Medicaid.

“No one can force doctors to accept Medicaid patients. It’s their right to decide what insurance to accept, if any.

Hospital systems by law cannot drop out of Medicaid. If President Obama does not give them a waiver as presently requested by 29 states several things can happen.

  1. There will not be enough physicians to service the increase in hospitalized Medicaid patients.
  2. Hospitals will be forced to hire physicians. The shortage of physicians will require hospitals to pay more to physicians than the reimbursement.
  3. The cost of service to hospitals will be higher than reimbursement.
  4. It will require hospital systems to cost shift to the private sector.
  5. Hospital systems will try to do this by demanding increased payment from the healthcare insurance industry.
  6. The healthcare insurance industry will raise rates. Many are already raising rates because of the anticipated changes and the decrease in enrollment for private healthcare insurance.
  7. Employers are decreasing the amount of coverage resulting in higher out of pocket expenses to employees.
  8. Employers will have incentive to drop private healthcare insurance completely and pay the penalty.
  9. This will result in a further skyrocketing of healthcare premiums for employers.
  10. Consumers will be forced to buy into the public option.
  11. Everyone will pay more for health care

How is this going to play out?

Texas is a prototype. Fiscal responsibility and a balanced budget is the goal. Texas wants to avoid a state income tax and be business friendly. The state has calculated the more business the more tax revenue and the more employment. More employment means more sales tax and property tax revenue.

The Texas House Republicans’ budget is going to reduce Medicaid funding to balance the budget. Republicans control the State House. The annual growth of the state’s $8.3 billion Medicaid program is not sustainable nor will it permit a balanced budget.

“Local hospitals facing a possible 10 percent cut in Medicaid fees plan to pressure commercial health insurers for better rates, which could drive up costs for everyone.”

There will be cost shifting with Medicaid cost cutting.

“What will happen is fewer physicians will take Medicaid patients, and patients will then go to the emergency room,” said Sandy Lutz, managing director of PricewaterhouseCoopers’ Health Research Institute in Dallas.

North Texas doctors accepting Medicaid already are in short supply. Only 39% of Dallas physicians are accepting Medicaid.

This cut will not allow doctors to meet their overhead,” said John Holcomb, chairman of the Texas Medical Association’s committee on Medicaid and access to care.

“Why would someone take a 10 percent cut and keep scheduling Medicaid patients when they could schedule a commercially insured patient?” Holcomb asked.”

More on this story

Medicaid reimbursement to hospitals will be a fraction of reimbursement needed to cover expenses. Hospitals would then try to recoup expenses from private health insurers.

“We’ve grown into a health care system where we’re forced to depend on private insurers and employer-based insurers to pick up the tab the government does not pick up.”

The healthcare industry and the hospital systems negotiate hard deals. The hospital systems eventually get a small increase in reimbursement. The increase in reimbursement is passed on to the employers at a multiple increasing the healthcare insurance industry’s profit.

“Obviously health plans like us resist that cost shift as much as possible,” said Darren Rogers, president of Richardson-based Blue Cross Blue Shield of Texas.

Employers have been decreasing the level of coverage to employees while increasing the co-pays and deductibles.

As President Obama’s healthcare reform act progresses, employers will be discontinuing healthcare insurance coverage for employees. It is cheaper to pay the penalty than it is to provide healthcare coverage.

Employees will end up paying for individual coverage at an increased premium with after tax dollars. Presently employers pay for premiums with pre-tax dollars. The result will be a decrease in employees’ discretionary income. Consumer spending will decrease. Jobs will not be created and unemployment will increase.

The wheels are starting to fall off. President Obama has not thought this out very well.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • Tom in NH

    The closer we get to employers eliminating healthcare coverage and pushing all the cost onto the employee, the closer we get to a national healthcare one payer system. If the costs keep increasing for average Americans, there will be a revolt against the current system and the greedy insurance companies. Why is it that it costs us $1500-2500 for an MRI but in Japan it’s $160? Because no one is sticking up for us. Not the government, not the insurance company, not the hospital, not the doctors, and not the employers. Maybe this is Obama’s plan afterall?

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The Wheels Are Coming Off Proposed Medicaid Expansion

Stanley Feld M.D.,FACP,MACE

I have repeatedly said President Obama’s goals are correct. His strategy is wrong. I have thought at times that he wants his healthcare reform act to fail so he can replace it with a system of complete socialized medicine. His proposed changes will not repair the healthcare system.

President Obama’s healthcare reform act as it relates to Medicaid is a good example of how the house of cards could collapse.

1. The federal government cannot afford to increase its budget deficit with added entitlements.

2. In 2014 President Obama is going to increase the Medicaid entitlement to an additional 16 million uninsured people.

3. His plan is to decrease reimbursement to physicians and hospitals for Medicaid services.

4. Reimbursement for physician services is too low presently. Some physicians have figured out a way to make a living on reduced Medicaid reimbursement. Many of these physicians are being investigated for Medicaid fraud.

5. Physicians are dropping out of accepting Medicaid compounding the physician shortage for services to Medicaid patients.

6. The result will be limiting access to care and a rationing of care.

7. Meanwhile the healthcare insurance industry is expecting a 40 billion dollar windfall profit at the expense of the federal government, state governments, physicians, hospital systems, Medicaid patients and taxpayers.

President Obama’s plan absolutely makes no sense. It does not repair the dysfunction in the healthcare system.

Individual states have figured it out. Thirty three states have requested that they be permitted to limit Medicaid expansion.

The signatories say that swell in enrollment will make the program unmanageable. Another problem for states: An extra $26 billion they got from the federal government last year to prop up Medicaid expires in June.”

The federal government pays 57% on average of states’ Medicaid costs. States cannot afford to pay the remaining 43% because Medicaid costs and enrollment are rising each year.

Medicaid enrollment rose to 47.8 million people in 2009 from 42.6 million in 2008, according to the Census Bureau”.

Just imagine what the effect of adding 16 million to the Medicaid entitlement rolls will do to state budgets. Investors are not interested in buying bonds from states that will fail on their debt obligations.

States have to balance their budget by law. Most state legislators and governors have not balanced their budgets. California, New York and Massachusetts have been the worst offenders.

Most states are in a trap because of the growth and inefficiencies of state government agencies. Adding to the inefficiencies are the liberal pension plans to state employees. The pensions are excessive because the salaries during work were supposed to be lower than the private sector. The expansion of Medicaid just makes budget deficits worse.

Under the current requirement, a state effectively can’t change its Medicaid eligibility rules until it has one of the new health-insurance exchanges created by the overhaul law”.

The only choice states have is to cut services. Arizona has started to limit Medicaid coverage for organ transplants. Last week Governor Brewer said she is considering dropping Medicare coverage completely.

Texas Governor Rick Perry has threatened to pull out of Medicaid.

Texas estimates that it will cost an additional $9.1 billion to retain its current Medicaid service levels through 2013.

In 2014 the additional costs will escalate even further. If Texas tried to cut those costs it would have to cut provider rates by 48%. Provider rates are below the provider expenses presently. Reducing provider rates by 48% would increase the shortage of Medicaid providers even further

In New York, Democratic Gov. Andrew Cuomo is considering a cut of about $2.1 billion in the state’s projected spending on Medicaid in the upcoming fiscal year.

At least a half-dozen states have publicly discussed withdrawing from the Medicaid program altogether.

The long term state government inefficiencies and funny bookkeeping in order to keep states afloat are finally catching up.

America is on about page 900 of “Atlas Shrugged”. The added weight of expanding the Medicaid entitlement could be the last straw.

President Obama’s healthcare reform act has also challenged states’ rights. States are hesitant to relinquish its states’ rights to the executive branch of the federal government. President Obama has total regulatory control over a healthcare reform act. States do not want to hand over that power.

The judicial challenge by over thirty states protesting the constitutionality of the insurance mandate is about states’ rights. It is also about local state government representing the interest of its citizens freedom of choice.

The issues in the healthcare bill are complex. They are presented by the traditional media in a confusing manner. President Obama created a bill that will not repair the healthcare system. It will make our healthcare system worse.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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South Carolina Wants To Opt Out Of “Obamacare”

Stanley Feld M.D.,FACP,MACE

The Medicaid expansion of President Obama’s healthcare reform act is going to increase state spending significantly. Individual states are required to balance their budgets. They currently have significant budget deficits. President Obama’s healthcare reform act will increase these budget deficits despite federal assurances of increased aid.

Neither the states or the federal government can afford to increase their budget deficits. President Obama has ignored this fear of increased deficit spending.

He is making a mistake. He is expanding Medicaid which is a defective system. Instead, his healthcare reform act should be changing the Medicaid system so it works.

The profits of the healthcare insurance industry will increase at the expense of state budgets and ultimately taxpayers. The healthcare insurance industry is expecting a forty billion dollar a year windfall profit from President Obama’s expansion of Medicaid.

We have already seen President Obama cave in to the interests of large corporations and unions. He has given waivers to McDonalds and others for their Mini Med insurance coverage. Minimal wage workers are ripped off by Mini-med insurance coverage for the benefit of the employer and the healthcare insurance industry.

The newly elected Republican Governor of South Carolina Nikki Haley is a feisty lady. She refuses to be marginalized as a Tea Party candidate by the traditional media.

Governor Haley was among a group of newly elected governors, most of them Republicans, who met with President Obama and Vice President Biden in early December 2010.

She asked President Obama to consider letting South Carolina opt out of this year’s federal health care overhaul.

She told President Obama that South Carolina could not afford the health care mandate. She told President Obama his healthcare reform act would cripple small businesses in her state.

Would you at least consider South Carolina opting out of the program?"

She continued and pushed him further. She said his healthcare reform act challenges her duty to protect her state’s rights. She then asked him to consider repealing his healthcare reform act.

"I respectfully asked him to consider repealing the bill," she said, to which he clearly stated he would not.”

President Obama then told her he would consider letting South Carolina opt out of the healthcare reform act. He said if the state could find its own solution that included a state exchange, preventing companies from bumping people for preexisting conditions and allowing insurance pooling he would consider letting South Carolina opt out.

On the surface, President Obama’s request is reasonable. It fulfills his goal toward achieving universal coverage. It does not deal with affordability of care or quality of care. .
"I think it’s something we go back to South Carolina and start crunching," she said. "This is about saying we’re going to fight this every step of the way and use every option possible."

After the meeting, she was asked if President Obama was listening to her and was serious or was he humoring her.

She said,

"It was a level of communication where we felt like we were being heard," she said.

In early January, 33 Republican governors and governors-elect plan to send a letter to the White House and congressional leaders asking them to remove a part of the health-care overhaul law.

"The effect of the federal requirements is unconscionable," the governors wrote. "The federal requirements force governors to cut other critical state programs, such as education, in order to fund a ‘one-size-fits-all’ approach to Medicaid."

It could be that President Obama was humoring Governor Haley.

President Obama ought to start listening to the will of the people with the passage of a house resolution to repeal President Obama’s healthcare reform act, and additional states joining in Florida’s constitutional challenge of the law.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Entitlements Do Not Save Money

Stanley Feld M.D.,FACP,MACE

President Obama’s healthcare reform act is about to be repealed by Republicans in the House of Representatives. Democrat’s say this is a meaningless gesture. I do not think so. The House of Representatives is expressing the will of the people. The Harry Reid and President Obama will be exposed as ignoring the will of the people.

President Obama’s healthcare reform act will not Repair the Healthcare System. His new entitlement for 32 million people will not save money or reduce the deficit.

President Obama promised his healthcare reform act would provide universal access to care to all Americans, be affordable to both the government and its citizens, and increase the quality of medical care

“Of all the claims deployed in favor of Obama Care, and there are many, the most preposterous is that a new open-ended entitlement will somehow reduce the budget deficit, insure 32 million more people, and save money too!”

Americans have experience with open ended entitlements. They never save money. Most Americans understand that government cannot subsidize coverage for tens of millions of people and simultaneously reduce the deficit

The Democrats’ spin machine started working immediately as the Republicans prepare to repeal ObamaCare.

“Health and Human Services Secretary Kathleen Sebelius chimed in that "we can’t afford repeal,"

ObamaCare will cost at least $2.6 trillion over the next 10 years. Is this a bargain for taxpayers? Presient Obama’s healthcare reform act does little to Repair the Healthcare System.

ObamaCare is setting up Accountable Care Organizations (ACOs). In my opinion, ACOs have little chance of being effective. ACOs will create a system of salaried physicians owned by hospital systems. All physicians have to be integrated into the system in order for the ACO to have a chance. Physicians’ productivity will decrease. ACO will create incentives for secondary stakeholders. There will be few incentives for primary stakeholders. .ACOs will generate regulations that will increase “paperwork” and decrease direct patient care. It will increase government control over the lives of patients. It will not reduce costs.

President Obama released a statement saying repeal will “explode the deficit.”

Meanwhile, other Democrats have taken up arms about House procedure. The GOP adopted a budget rule that says repeal doesn’t have to be "paid for," and the press corps is treating this exemption as a scandal against Washington decency.

The CBO was manipulated by the numbers given to it by the Democratic House of Representatives to score ObamaCare. I would not be surprised if the numbers change if Republicans request a rescore with different numbers. The Democratic controlled congress has gamed the CBO’s budget conventions.

The CBO is required to "score" the numbers presented to them by congress no matter how unrealistic.

The party in power at the time (Democratic Party) makes believe that the CBO’s forecasts are carved in stone. All the score really shows is that politicians have rigged the budget rules to hide the true cost of entitlements.

Americans now understand the congressional process. The congressional disrespect is the reason the polls are unfavorable toward congress. Americans want the truth.

President Obama managed to pass his bill despite the opposition of the majority of the American people. Americans continue to oppose the bill today even though the facts in the bill have become a blur.

“Gallup reported yesterday that Americans favor repeal, 46% to 40%.”

How did gaming the CBO budget scores make President Obama’s healthcare act seem to save money?

1. President Obama’s healthcare law uses 10 years of taxes to fund six years of subsidies.

2. Social Security and Medicare revenues are double-counted to the tune of $398 billion.

3. A new program funding long-term care frontloads taxes but backloads spending.

4. The law pretends that Congress will spend less on Medicare than it really will, in particular, through an automatic 25% cut to physician payments that Democrats have already voted not to allow for this year.

5. President Obama had the law shift the government doctor fix out of the healthcare budget

These are just a few of the tricks used by President Obama to get the CBO to score his healthcare reform budget neutral.

Richard Foster, the chief Medicare actuary separately published analyses of the Medicare and Medicaid spending that would have be devastating to President Obama’s healthcare law. He revealed the true cost. His report was not widely covered by the traditional media.

Doug Holtz-Eakin, a former CBO director and an economist has pointed out that ObamaCare creates an incentive for businesses to drop employee coverage. Employees will be forced into the private insurance market using after tax dollars or Medicaid. This was obvious to me from the start. The results will explode the federal and state deficits far more than the CBO projects. It will also result in a decrease in access to care as well as rationing of healthcare.

“ Entitlements are always sold as modest and "paid for," then years later everyone suddenly discovers that they are "unaffordable" without digging deeper into the pockets of the middle class. How do you think Medicare and Medicaid got to their current pass?”

When will our government ever learn? President Obama should be fixing the core problems in the healthcare system. Instead, he is creating an opportunity for increased government control over healthcare and greater healthcare insurance industry profit at the expense of consumers (taxpayers).

President Obama should try a consumer driven healthcare system and the ideal medical savings account.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Loser Pays; Everyone Wins

Stanley Feld M.D.,FACP,MACE

President Obama has done nothing about Tort Reform. Either he does not believe tort reform is part of the healthcare systems’ cost problem or the lobbyist for the plaintiff’s attorneys have gotten to him and the Democratic Party.

He humored Republicans when they brought up tort reform up at his “bipartisan” healthcare summit last year. He said he would take tort reform under advisement and think about developing some pilot programs.

Previously, I mentioned that I am not a Governor Rick Perry (R Tx) fan for several reasons. Lately, he has come up with some practical ideas. He could convert me.

In 2003, Rick Perry and the Texas legislature unenthusiastically changed tort reform laws in Texas. The revision has changed the liability climate in the state for businesses and physicians. Texas rewrote everything from class-action certification to product liability. One big success was eliminating the asbestos-silica litigation scam.

Rick Perry and the Texas senate rewrote the medical malpractice laws, ending plaintiff attorneys’ practice of venue shopping for friendly judges. They also put a cap of $250,000 on noneconomic damages like pain and suffering.

These reforms have been great for the legal climate in Texas. The reforms limited plaintiffs attorneys profitability on frivolous liability claims. Texans believe that because of these reforms and the lack of a state income tax, Texas is the country’s best state for job creation.

Before tort reform, Texas was considered the state in which to initiate law suits of all kinds. We had the “Kings of Tort” in Texas. Medical malpractice rates have fallen by 27.5% on average since 2003. It is no longer profitable for malpractice attorneys to file a frivolous law suits. The result has been a 60% increase in the number of doctors applying to practice in Texas. The overall population of the state has only grown 14%. Texas no longer has a shortage of obstetricians or emergency room physicians.

Rick Perry has been impressed with the results of his tort reforms. He now wants to extend his state’s impressive tort reform record.

Mr. Perry is proposing a British-style "loser pays" rule, which would require plaintiffs to pick up the legal costs of their targets if they lose their suits.

Almost all of America’s economic competitors in the world follow this standard. “Losers Pay” as a deterrent to law suits decreases the cost of doing business resulting in lower prices and a competitive advantage for business. “Loser Pays” would deter junk lawsuits.

Trial lawyers and their Democratic codependents have blocked states from making this revolutionary improvement to U.S. civil justice.

It would add an extra disincentive for the tort industry to bring suits that Texas law already defines as "groundless." The lawyers and firms that file such claims would pay an additional penalty, a downside they would have to weigh against their chances of personal enrichment.

The previous changes in malpractice reform have helped end the Texas physicians shortage in rural areas.

Twenty-three counties now have their first E.R. doctor, 10 their first OB-GYN. Hospitals are reinvesting the malpractice savings in scarce services like neurosurgery and neonatal units and expanding access to care.”

The earlier success in Texas with tort reform has opened the eyes politicians and produced advocates in Oklahoma. Even Democrats have been forced to agree to some legal reform. The lawyers are lining up to fight the “loser pays” initiative. Limits on damages have worked wonders for the state economic growth in Texas.

“Loser pays” will increase job growth and economic development even further.

Republicans picked up 16 governorships and at least 675 state legislative seats throughout the nation in November. The new state governments are looking at the progress in Texas. They are starting to follow Texas’ lead.

America will not need President Obama to do the right thing regarding tort reform. The states will get America out of its damaging litigation mess.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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The Consumer Electronics Show (CES) With My Son Brad


Stanley Feld M.D.,FACP,MACE

I love going to CES every January. I go to Las Vegas the day before the show starts so I can be in the exhibit hall early the next morning.

I also like to arrive the morning of the day before the show to avoid the long taxi lines at the airport. The Las Vegas airport taxi line is the worst.

I check into the hotel and leave my bags. I enjoy walking the Strip. I wander into the casinos. I study the players at the slot machines, the blackjack tables, the roulette wheels, and the craps tables. I watch the people play and study their reactions.

During my walk on the strip and in the hotel shopping malls I am always looking for a new deli to test their hot pastrami sandwiches.

This year I ate at the Carnegie Deli in the Mirage. The Carnegie Deli has lost its tall. Cindy’s Deli in Dallas, owned and run by Koreans, make a better hot pastrami sandwich.

After five miles of walking around I was tired. When I got to my room at 4 pm, I put my head on the pillow and was immediately asleep. Next thing I knew it was 5.45 pm.

Brad told me he would be working on his next book with his partner Jason Mendelson after 2 pm. He invited me to hang out in his room while they worked. Dinner was at 7 pm. I got to his room at 6.15 pm. We hung out and talked until dinner.

The incredible thing about my relationship with Brad Feld is that he always teaches me something. His perceptions are keen. He has the ability to evaluate issues he is interested in holistically.

The Foundry Group invites colleagues to dinner during the two nights they are at CES. They invite principles in companies they have invested in, VCs they have invested with, angel investor they know and some journalists they know.

I was the oldest person at the dinners. Everyone was under 50. Many are under 40. Most everyone knows of me through Brad’s references to my blog in Feld Thoughts. One person even said I was an icon and a legend.

How can you beat that?

The dinner at Bouchon was wonderful. The guests were great.

Brad went out of his way to introduce me to people I did not know. All the conversations I had were intellectually stimulating. All of them fascinated me. They were all focused on their work. They all had a very optimistic view of the future. I believe they all understand they represent America’s future.

On Thursday, I got to the convention center early. Brad was on a panel at 10.30 am. The topic was “Government policy and technology.” I wanted to see the CES best picks and scope out the exhibit halls.

The first booth I hit was the WIRED Magazine booth cosponsored by AMD. They were having a contest for who could construct the best WIRED magazine cover page. Below is the cover I made.

clip_image002yone            WIRED call off the contest in mid-stream. Everyone was using the contest to promote his or her product. Isn’t that what magazine covers do?

Brad’s panel consisted of four bureaucrats and him. Brad was the only one that got it. I was not the only one in the audience who came to that conclusion. During a convoluted debate about software patents Brad received an ovation from the audience when he declared that software patents should be eliminated.

Brad and I walk the floor of all three exhibit halls for the next five hours. Each exhibit hall was at least the size of 2 football fields. Each exhibit hall was covered wall to wall with exhibits. I love going around with Brad because he is a “speed looker.” I usually touch every stone. I have concluded that “speed lookers’ ” comprehension is better that slow lookers.

My conclusions from CES:

1. It looks like all 80 of the tablets exhibited are me too’s.

2. LED TV’s are getting bigger and bigger and thinner and thinner.

3. 3D TV is going to continue to have problems.

4. Internet video streaming of TV shows and movies is going to take over.

5. I wish I had invested in Netflix.

6. Cable companies must start to reinventing themselves.

7. Google is going to take over the world.

8. Microsoft will have to figure out a different business plan.

Dinner was at Nobu. I am not a big sushi fan. I am afraid of raw fish. However, this was a sushi orgy. I was sitting next to Brad. He taught me how to enjoy sushi. Actually, the sushi was great. As an additional benefit, I have not yet developed liver fluke.

My trip to Las Vegas proved to be a great learning experience. Brad, thank you for hanging out with me. Thank you for providing the opportunity for me to meet some very exciting people.

I love you.


The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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State Medicaid Coverage -A Cash Cow For The Healthcare Insurance Industry

Stanley Feld M.D., FACP,MACE


The healthcare insurance industry is preparing to capitalize on a $40 billion opportunity to run Medicaid plans for states when President Obama’s healthcare reform act adds 16 million people to the Medicaid roles in 2014.

Do the math. $40,000,000,000 divided by 16,000,000 people is a net profit of $2,500 per patient after expenses.

“Medicaid, the state and federal program for the poor, has become a growth area for big insurers.”

Citigroup research group estimates that presently the overall healthcare insurance industry’s net profit is about $56.5 billion per year. The addition of 16 million enrollees will add $40 billion dollars in net profit to the healthcare insurance industry’s bottom line.

The positioning of both major healthcare insurance companies and smaller companies has been proceeding quietly, as they want to stay below the radar of public detection.

California will have 2 million new enrollees. Texas will have 1.9 million enrollees.

The healthcare insurance industry is preparing bids to provide administrative services for each state’s Medicaid program. Most states are experiencing budget crises and find it is cheaper to outsource the administrative services of their Medicaid programs.

The healthcare insurance industry manage coverage of 70% of Medicaid enrollees, or 33.4 million people, up from 56% in 1999, according to Sanford C. Bernstein.”

States let contracts lasting five years. The states want to contract with vendors now so they do not experience disruptions in 2014 when the Medicaid expansion occurs.

The healthcare insurance companies are trying to customize their plans to win their bids.

Medicaid is one of health insurers’ few bright spots, as their margins are pressed by regulatory crackdowns on premiums in their traditional policies. Gail Boudreaux, UnitedHealth’s executive vice president, told investors last month that: "The Medicaid space is a significant long-term growth opportunity for us. It’s a big market that’s getting even bigger." UnitedHealth pegs the value of new bids or expansions over the next three years at $40 billion.”

Many healthcare insurance companies are jumping in to capture the Medicaid business. UnitedHealth and WellPoint(Blue Cross/Blue Shield) are at the head of the class. Smaller companies such as Amerigroup, Centene and Molina claim their specialized focus gives them an advantage over the larger companies.

"Understanding the state as a customer is quite different than understanding what GE or IBM want as a purchaser," said John Littel, Amerigroup’s executive vice president of external relations.”

President Obama did not think out his plans for Medicaid very well. His healthcare reform act has done nothing to repair the problems in the Medicaid insurance system. In fact, the funding demanded of the states has resulted in a decrease in funding of vital safety net city and county hospitals.

What remains is an expansion of a system that has failed to provide adequate care over the last 40 years. The defective design of the Medicaid system is responsible for its failure. It makes no sense that by expanding the program by 16 million uninsured people it will produce a successful program. Expanding a failed system will not solve our universal healthcare goals. It will only expand our federal and state deficits and provide more profit for the healthcare insurance industry.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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Rationed Care: It Is Here Already

Stanley Feld M.D.,FACP,MACE

Rationing of healthcare and restricting access to medical care is here already. It is here even before President Obama’s healthcare reform act goes into full effect. It has resulted from decreasing reimbursement for Medicare services and terrible reimbursement for Medicaid services.

President Obama plans to expand Medicaid to provide services to the uninsured. The states cannot afford to pay for Medicaid at present levels. Adding 32 million people to its roles will lead to a further decrease in reimbursement and further delays in access to care.

Presently, there are not enough physicians accepting Medicaid to take care of the Medicaid patients. When physicians accept Medicaid patients they use physician extenders to help take care of the increased volume necessary to survive the decreased reimbursement. It also raises a government red flag. The result is investigating those physicians for fraudulent billings. This discourages more physicians from taking care of the Medicaid patients.

America is progressing at an unprecedented rate toward increased rationing and decreased access to medical care. I imagine President Obama’s plans to replace physicians with lower levels of “healthcare providers.”

It would be very easy to fix the healthcare system using appropriate measures. I do not think that repairing the existing healthcare system is President Obama’s goal. His goal is to make the entire population dependent on the central government.

It will not work. Wealthy people will always be able to buy most of the medical care they would need. If we stay on the current course, everyone else will experience long lines, decreased access to care and rationing of care.

President Obama, through regulations could try to mandate that all physicians see all patients as a condition for renewal of their medical license.

This would represent government control over individual rights and freedom of choice. It would be unconstitutional.

“The underlying problem is that doctors are reimbursed at different rates, depending on whether they see a patient with private insurance, Medicare or Medicaid. As demand increases relative to supply, many doctors are likely to turn away patients whose coverage would pay the lower rates.”

Medicaid reimbursement is 40-80% of the reimbursement rate of Medicare. Private insurance is higher than Medicare. The preference for patient load is obvious private insurance patients first, then Medicare and finally Medicaid. Physicians are not accepting Medicaid patients and are starting to close their practices to Medicare patients.

President Obama’s new health care legislation is likely to speed this process. Under the new law, tens of millions of additional Americans will receive coverage through Medicaid or private insurance. This will intensify the lack of access to medical care. We have seen it in Massachusetts after the state passed its healthcare reform bill. (Romneycare)

“Ideally, higher demand for medical care would prompt increases in supply, which in turn would lower prices and expand access. But the health care sector does not always work this way.”

Physicians are highly regulated and in that manner restricted in supply. The Association of American Medical Colleges estimates that the United States could face a shortage of 150,000 doctors in the next 15 years.

President Obama probably figures he will add to the supply with substitute physicians. The problem is when people are sick they want a physician.

President Obama’s healthcare law will result in promoting individual private insurance coverage. The plan going to offer subsidies to many individuals that could not afford or obtain private insurance previously.

An unintended consequence is that his healthcare reform act will create incentives for employers to discontinue providing employees’ insurance coverage. Employers’ will pay the modest penalty which will force employees to buy healthcare insurance from federally subsidized healthcare insurance exchanges.

Employees will pay for the healthcare insurance with after tax dollars at a reduced rate. It will reduce consumer spending for other things. The government subsidy will strain the federal health budget even further. The winners will be the healthcare insurance industry and employers. The losers will be consumers and the government.

The American system of federalism, with its checks and balances and slow policy evolution, has many strengths, but it has also helped create this crazy quilt of health care reimbursement rates. The more demand-side pressure is placed on medical supply, the more Medicaid and Medicare reimbursements rates will determine who and what is rationed.

Singapore’s healthcare system is a sort of ideal medical savings account. The government requires workers to save 10 percent of their income for medical care. Consumers pay for medical care from those savings. The government pays for any of the expenses beyond those savings. The Singapore healthcare system has had success in controlling costs and access to care.

Singapore’s healthcare system is a consumer driven system. Consumers become responsible for their care and have incentives to save money for their medical care. The ideal medical savings account system is a cleaner system.

The real issue is there are many things that can be done to the healthcare system to align incentives, decrease abuses and reduce costs.

President Obama’s healthcare reform act is not doing any of them. He is going to make things worse. A healthcare system must be created that will be driven by consumers. We must give consumers incentives to control their health and healthcare dollars.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

  • Gavanw

    Great analysis, and I was not aware of Singapore’s system until now. Unfortunately, most people are idealists and don’t care to explore the technicalities of government-run healthcare. Hopefully the realty sinks in sooner rather than later.

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It Is All About Trust And Respect

Stanley Feld M.D.,FACP,MACE

President Obama removed the provision in his healthcare reform bill last year dealing with reimbursing physicians for end of life counseling. There was great citizen uproar about this provision. It was viewed by many as a first step toward rationing of medical care.

When a proposal to encourage end-of-life planning touched off a political storm over “death panels,” Democrats dropped it from legislation to overhaul the health care system.”

Sarah Palin call the provision the creation of “death panels.” A government “panel of experts” would decide whether Medicare would pay for treatment of patients deemed hopeless. The panel of experts would decide regardless of the patient’s wishes.

Sarah Palin’s term was criticized as “sensationalistic.” The criticism is correct. However, in a sound bite society you have to use effective sound bites to get attention. The eliminated provision illustrates the truth about a world of finite resources and infinite entitlements.

Entitlements are ever expanding as our population expands. The government cannot afford expanding our entitlement programs. Yet President Obama’s healthcare reform act is going to expand the Medicare and Medicaid entitlements to cover 32 million uninsured.

One way out is to decrease benefits. This is the administration’s plan.

Another way out of the mess is to attack the root of the problems. America could create a consumer driven healthcare model. America could also develop of system of logical tort reform. Government could subsidize those consumers that qualify for subsidies. Consumers should own their healthcare dollars as outlined in the ideal medical savings account.

I have objected to President Obama’s healthcare reform act. It puts all the power of medical decision making in the hands of the executive branch. HMS and CMS create rules and regulations without congressional oversight. The most recent revelation portends provisions to come.

President Obama’s administration has achieved the same end of life goal by regulations produced by Dr. Donald Berwick chief of CMS, starting Jan. 1.

“At a stroke, Medicare chief Donald Berwick has revived the "death panel" debate from two summers ago.”

Medicare will enact the same policy removed from the bill through the power of regulation. Congress has had no input. This is the first step in a never ending series of future steps President Obama will take to control our freedom to make healthcare choices. The regulations seem benign on the surface.

“The office of Oregon Democrat Earl Blumenauer, the author of the original rider who then lobbied Medicare to cover the service, sent an email to supporters cheering this "victory" but asked that they not tell anyone for fear of perpetuating "the ‘death panel’ myth." The email added that "Thus far, it seems that no press or blogs have discovered it, but we will be keeping a close watch."

President Obama has used a number of trick plays on congress and Americans to further his agenda. One trick President Obama pulled was his appointment of Dr. Berwick during congressional recess without congressional hearing after withholding the request for congressional hearings for 3 months.

Dr. Berwick now slips through a regulation about reimbursement that Congress explicitly rejected. Unfortunately for Dr. Berwick an email was leaked illustrating scheming with his political patrons to duck any public scrutiny.

“Expect many more such nontransparent improvisations under the vast powers ObamaCare handed the executive branch.”

An administrative representative immediately stepped in and declared the rule-making is not coercive. He claimed the rule gives seniors more autonomy, not less.

The facts are that if the medical experts in Congress haven’t decided that some treatment or service is worthy of the fee schedule, then the program won’t pay for it even if it is in the best interests of patients.”

The two most expensive occurrences are the birth of premature infants and the last 30 days of life. As a society, we will have to learn how to deal with these facts. Society must be innovative in dealing with these tragedies to the satisfaction of all. As a society, we also have to conquer obesity and the onset and management of chronic diseases.

Unfortunately, President Obama’s methodology is wrong. He has demonstrated an arrogance and disrespect for the American people. The American people now understand his methodology. They have experienced his multiple trick plays and have lost trust in him and his administration. There is a perception that he disrespects the will of the people he has been elected to serve. President Obama will not achieve his goals as long as the perception exists.

The Democratic Party has experienced this mistrust during the midterm elections. Nonetheless, President Obama and the Democratic Party continued to show their disrespect for the will of the American people during the lame duck congressional session.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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