Stanley Feld M.D.,FACP,MACE

Congress is not focused on the main problems in the healthcare debate. It is focused on the vested interests of secondary stakeholders. The people with the most money always win.

It is time for the people to speak out for their vested interests. They are trying via the Tea Party. For some reason the media is threatened by the Tea Party. The media has tried to marginalize the Tea Party. I do not think the media will be successful.

The American healthcare system has many problems. Accountability for medical care is one of them.

Millions of dollars have been spent by hospital systems trying to form an Accountable Care Organization. Why? Everyone thinks that is where the money is going to be. Accountable Care Organizations will not be the answer.

Effective repair of the healthcare system can only be accomplished when all the stakeholders are accountable for their part in the delivery of medical care. Those stakeholders include patients, physicians, government, healthcare insurance companies, and hospitals.

Accountable Care Organizations hold physicians and hospitals accountable for making patients healthy. Patients are the stakeholders who must be accountable for their own healt care. Patients are the only stakeholder that can force the other stakeholders to be accountable for their part in the healthcare system.

Accountable Care Organizations (ACOs) are in reality a rehashed version of the failed HMO model of the 1980s. The government must reduce the cost of healthcare. It would like to eliminate waste in the system. Electronic medical records will help except the government is wasting money trying to implement the electronic medical record. It will fail using the present implementation system.

The government’s thinking is Accountable Care Organizations will integrate the healthcare delivery system and eliminate waste. The government would rather deal with one organization rather than individual physicians. The government will give millions of dollars to private hospital systems. The hospital systems will hire physicians. It will then call itself an integrated system. The integrated system will be rewarded financially when it keeps patients well.

Ignored is the fact that the distribution of funds will be a source of bitterness between physicians and hospital systems. Hospital systems are going to own physicians skills and intellectual property. Physicians are becoming wise to the scheme. This conflict will create waste and increase costs to the healthcare system.

Once the federal dollars dry up, these entities will fail under the weight of their own bureaucracy. Patients are now being given a free ride at the taxpayers’ expense. They will develop an insatiable demand for free medical care. The administrators of these failed entities will stash away their generous salaries and add no value to the delivery of medical care. This is what happened with HMO’s. The public and physicians have not forgotten this experience.

Medicaid is a failed model. Yet 16 million more people will be added to its role under President Obama’s healthcare reform act and be taken care of by ACOs.

We will create a larger underclass of people dependent on the failed Medicaid system. Rather than being a nation of hard working independent people responsible for their own well-being, America is increasingly becoming a nation of people expecting hand outs the national budget cannot afford.

The purpose of an effective healthcare system is to keep our citizens healthy. You accomplish this by promoting the principles of good health and giving incentives to citizens to be responsible for their health and healthcare. It will not be accomplished by making people dependent on the government and its inefficient bureaucratic structure.

America must develop a healthcare system that:

1. Provides education about maintaining good health and early recognition of disease.

2. Diagnoses disease early with efficient testing.

3. Develops a treatment strategy that educates patients to participate in their care.

4. Encourages good health and healthcare choices to minimize the need for more health care.

This can be accomplished in a consumer driven healthcare system using the ideal medical savings account. It will be less costly and more efficient than the complicated structure President Obama’s healthcare reform act is in the process of creating through Accountable Care Organizations.

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

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.”

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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.

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.