The Senate Healthcare Bill: Throw It Up On A Wall And See If It Sticks

In a recent article published in The Atlantic Jonathan Gruber, an economist from MIT was enthused over the Senate’s healthcare bill because of its kitchen sink approach to the problem of rising healthcare costs. “I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here….I can’t think of anything I’d do that they are not doing in the bill.” This quote is a distillation of the problem I have with the whole healthcare reform effort. It seems like a case of throw it up on a wall and see if it sticks.


From the beginning of the debate and the resultant bills in Congress there has been no thought put into the root cause of the high cost of healthcare. As usual the players who were allowed to sit at the table were the ones who had the most to lose if the status quo really changed. Special interest groups (i.e., unions, hospitals corporation, medical insurance industry, pharmaceutical industry, and the AMA) each flooded Washington with money and controlled both the argument, and the perceived solutions for the mess that has become our healthcare system. At no point were physicians on the front line who deliver patient care or patients who are victims of the health insurance maze given a voice in the process let alone a seat at the table.

The reality is that the government’s insertion into healthcare has led to the high costs that we are living with today. It began when the Medicare reimbursements to physicians were disconnected from the costs of delivering quality healthcare. For over 10 years the reimbursements for physicians has dropped every year while the cost of supplies, malpractice premiums and overhead expenses have continued to rise. This is the underlying engine for the cost shifting to both insured and self pay patients that we have seen over the years. It has become an untenable situation leading physicians to seek paid positions in hospitals, form large single and multispecialty groups, opt out of the system and move towards a concierge model or leave the practice of medicine completely. Overall, this has led to a fracture in the doctor patient relationship, and a rise in the number and clinical expansion of providers such as physician assistants and nurse practitioners in an effort to fill the gap left by the physician’s need to see an ever increasing patient load per day to keep the doors open.

In addition, the range of services that are eligible for reimbursement has narrowed so that doctors are offering Medicare patients less service. This problem will only get worse if the congressional reform bill is passed. Expanding who is eligible for Medicare, controlling what medical services will be covered, determining standards of medical care through task forces (like recent recommendations about mammograms), and expanding the powers of the HHS secretary are all examples of the government expanding its role into healthcare delivery. It is hard to imagine that the involvement of the government will lead to a different outcome than what is happening with other government run entities like the postal system, Medicare and Social Security, each of which is an example of inefficiency and is either losing money or is in the process of going bankrupt respectively.

There are six arguments in favor of reform that have been stated as fact that will actually work against true healthcare reform.

1. Medicare coverage is less restrictive than commercial insurance

In reality, Medicare has a higher denial rate compared to the top commercial insurance plans. Expanding Medicare will lead to less choice in the form of an ever decreasing panel of physicians who actually take it and less coverage for services.

2. Medicare for all will improve access to doctors

Nationwide about 25% of doctors no longer accept Medicare. In some large cities like NY that number is as high as 30%. In 2010, Medicare has announced that they will no longer pay for consultations. That means that specialists such as cardiologists, gastroenterologists, ophthalmologists will lose over 25-30% of their reimbursements. This will likely have a chilling effect on access of Medicare patients to specialists. If and when the commercial insurance companies adopt this payment system, it may also lead to less access to specialists for all insured people.

3. There is a shortage of primary care doctors

There is a shortage of physicians. Less people are choosing to go to medical school and because of that an increasing number of students who attend foreign medical schools are matching at US residency programs. It is difficult to ignore the fact that the growth in the number of medical schools in the Caribbean (from 4 in the 1970’s to approximately 60 today) and a growing relationship between these medical schools and US residency programs has likely been tied to the need to fill empty residency slots.

4. Health care costs are driven by specialists who perform procedures

Healthcare costs are driven by many factors, but one of the major problems is the emphasis on treating chronic disease. Another factor are the administrative costs of insurance companies which account for approximately 23 cents of every healthcare dollar is spent. The treatment of chronic disease will be difficult to contain. For example, it is estimated that the cost of treating diabetes will be three times higher and increase to 336 billion by 2035.

5. Rising healthcare costs can be disconnected from Tort reform

The practice of defensive medicine is a powerful driving force in rising healthcare costs. It must be included to achieve real reform and bring down costs.

6. Medical technology is a cause of high healthcare costs

Taxing medical devices could have a chilling effect on innovation and access to state of the art medical devices (e.g., the hardware for knee/hip replacements) that make our healthcare system unique.

As it stands now, the healthcare reform effort by Congress will not achieve its stated goals. 30 million more people will carry insurance by mandate. However, it is not likely that they will get what they pay for. There will be a decrease in: 1) easy access to physicians; 2) access to recommended services/testing, and 3) access to state of the art medical devices. By contrast the insurance industry will get a boost in customers without having to take on increased risk from those people age 55-65 that choose to enter the expanded Medicare program instead of purchasing private insurance.

The rules of the game have not really changed. Insurance companies will still be able to deny payment AFTER the procedure has been pre-certified, they can still play games with computer claim software to underpay physicians for services rendered, they can still arbitrarily pay claims late, they can collude with each other since they are exempt from anti-trust laws, and they can raise premiums and shift the burden of costs to patients at will with deductibles and co-insurance fees. The only difference now is that they just get a bigger pool of insured from which to collect premiums.


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