The (Health Insurance) Universe in a Nutshell
Monday, May 3, 2010 at 6:51PM 1. WWII & FDR – Feds have problems grappling with wages and prices. Health Insurance becomes a
pre-tax benefit of employment. (We start to pay for our own health care with other peoples’ money, disturbing Market Forces.)
2. 1966 – In spite of AMA concerns about socialized medicine (AMA still represents most physicians), Kennedy’s assassination provides trigger for passage of Medicare, which becomes Health Insurance driver for those over 65 AND other insurers. For many years, system is ‘cost-plus’ - Medicare pays a beneficiary a stipulated amount for service ‘X’ and physicians have choice of either accepting Medicare fees (“signing up” for Fed fee schedule) or charging patients what they can afford above and beyond physician’s personal fee schedule. This works well for physicians and patients, but not for Feds. Medicare costs quickly mushroom beyond all predictions.
3. Nixon Administration– The Advent of the HMO (Health Maintenance Organization) Industry. Doctors begin to become employees instead of private, ‘shop-owner’ entrepreneurs. Formerly unadulterated Physician advocacy for patients now grapples with split allegiances. Markedly different HMO ‘Ethics’ arise (Capitation: flat fee per year for each of a doctor's assigned patients, irrespective of ANY treatment - or none. Some HMO’s recoup funds from MD’s if they spend ‘too much’ on drugs for their patients.) Brave New Ethical World of HMO’s begins to split AMA, which cannot represent both physician ‘camps.’ AMA begins to lose physician representation.
4. 1984 - Reagan Administration: “DRG” system put into place. Hospitals are paid flat fee, based on diagnosis for any Medicare admission, irrespective of length of stay or severity of condition/ services rendered. Patients begin to be discharged ‘quicker and sicker.’
5. 1990 Fee Physician Freeze - After AMA asks physicians to Voluntarily freeze their fees for one year, Price Controls are set into place by Feds for all Medicare patients. Along with these fixed fees for EVERY covered medical service/procedure, a new, lengthy, complex rule-book (a ‘Rubik’s cube’ puzzle) is developed - and mandated - for purpose of billing Gov’t. for all Medicare patients. For first time, ALL doctors are required by law to code, and submit, TO THE FEDS - all claims filed under Medicare.
[Correction- Dr. Richard Amerling has informed me that the voluntary fee freeze, which was supposed to last one year, actually went into effect in 1984, and the RBRVS (Resource Based Relative Value Scale), price-fixing and reducing physicians' fees, went into effect in 1990. JS]
Pay Attention Now!
A. In the past, a doctor could elect to "accept assignment" from the government for his Medicare claims (doctor agrees to accept Medicare payment as payment in full). For a time, doctors felt there was some wiggle room if they wanted to avoid threats of bankrupting fines for inadvertently miscoding by NOT accepting Medicare money. (At this juncture, All Medicare payments are price controlled, whether or not a doctor ‘Accepts Assignment.” Accepting Assignment just means he is guaranteed (?) to be paid by the Gov’t. with a slightly lower fee than if he does NOT accept assignment. Of course, patient pressures have obvious consequences.)
B. In the past, a Medicare Beneficiary was defined as a covered person who received payment fromMedicare. Fortney ‘Pete’ Stark, head of House Way and Means Subcommittee on Health, changed the definition of “Beneficiary” to one who is merely COVERED by Medicare. The New Rules said that if a doctor didn’t want to accept Medicare money, he had to 'withdraw' entirely from Medicare (even if he hadn’t actually enrolled). If he did so, from that time forward, No Medicare patient he treated would be reimbursed one cent by the Gov’t.
So, if we wanted to see our Medicare patients, we were forced to accept Gov’t. money.
Hang on now: A Supreme Court Ruling says that if the Gov’t. funds any entity, in part or in whole, it has the right to control any aspect of that entity.
Think about this – long and hard.
The Gov’t. takes the position that seeing Medicare patients is ‘voluntary,’ even under such circumstances. Yours truly almost went bankrupt when he told his Medicare patients he would be leaving this new system. 90% of my patients said they would continue to see me, but only 10% did. For two weeks my income equaled my expenses (NO salary at all). I closed my office, moved ten miles north where high schools were still open and acne patients were once again available. I joined health plans (which I had studiously avoided) and rebuilt a practice – after 14 years – almost from scratch.
6. Clinton Era – Attempted passage of Universal Health Insurance Plan Fails. IF it had passed, it would have been illegal to use one’s own private funds to pay for services NOT covered by this plan!!
Yes, you read that right.
[Note: The AMA, having lost many physicians from its roster by this time, obtained the Monopolistic publishing rights for the Code Book used by every physician in the country for every service/procedure he or she performs for each and every patient (not just Medicare). Curiously enough, these codes are altered yearly, forcing all doctors to buy new codebooks on an annual basis. THIS is now a major moneymaker for the AMA. Is it any wonder the AMA endorsed Obama’s Health Care Plan???]
7. Obamacare – Endgame? What does it hold in store???
Joseph Scherzer, M.D.
Reader Comments (6)
Dr Scherzer
Excellent summary of how we slid down the slippery slope of government intervention and takeover of medicine.
This should help doctors see how important AAPS vs Sebelius is to their livelihoods. Now is the time for all doctors to ante up both time and money in support of our lawsuit to declare Obamacare unConstitutional.
Keep up the great work.
Dr George Watson, President, Association of American Physicians and Surgeons
Another thank you for the history lesson moving the US on the road to Universal Health Care.
As a Pharmacist I early-on observed the federal intrusion into my practice with Medicaid, created on July 30, 1965, through Title XIX of the Social Security Act. That federal intrusion changed and expanded the "welfare state." Initially as a young pharmacist I just saw it as a methodology replacing the city and county bureaucracy with different regulations and claim forms. I soon saw it take over an increasing component of the business.
I believe that it needs to be included into your list.
Please also consider two additional government intrusions into the practice of medicine - the Veteran's Administration and the Indian Health Service. Could either be measured as effective delivery of health care versus "traditional medicine?"
Excellent, brief 'timeline' of Medicare's evolution in the political arena. I would add that there is also a subplot, as in any human organization, to the A.M.A. issue as it applies to how doctors treat/mistreat each other. Some doctors have advanced up the 'ladder' of political leadership within the A.M.A., and in state and local medical societies, with a goal of personal gain or sense of self-importance; and there has been a tendency to ignore/disregard the will and needs of their constituent members. This can have such a devastating effect on the success and morale of physicians, as they feel powerless to have their collective 'voices' honestly portrayed to the public and through the mainstream media. The AAPS, and websites such as this, do a great service to the docs 'in the trenches' across the country! (if you haven't done so already, visit www.PhysiciansAgainstObamacare.org to cast your votes in the brief poll)
Great summary, I have printed it for use as talking points with some of my more "motivated" patients.
For me the solution was simple, I opted out of Medicare in 2000 and now see those patients for $40 cash. They seem to be my most loyal, most efficient users of health care resources to date.
Dr Scherzer, I feel that I must expound upon one thing in your post. I was told by a "reliable" source (namely, one of the Texas Medical Association's delegates to the AMA) that protecting the income from the AMA's coding system was not a consideratiion in the AMA's misguided decision to endorse ObamaCare. (This conversation was a result of my being the author of a resolution from my county med society to the TMA to have the TMA call upon the AMA to divest itself of the coding system and get back to its proper role of representing physicians. This resolution was naturally voted down at the annual TMA meeting.) I informed Mr. Delegate that there were many physicians who believed that it most certainly was the main consideration, and that if it truly wasn't, then the AMA had one heck of a PR problem to solve. He did not take kindly to my suggestion.
I read the report carefully and although I am not a physician I too am deeply interested it the topic. I had hoped to read an acknowledgement that the economic burden on the average American for medical expenses has become insufferable and see a plan on how to rein in the cost of health care but I did not so I can't resist commenting.
In contradistinction, I would argue that our current dilemma did not begin as the timeline here suggests but rather, it began in the 1960's with Dr. Milton Friedman's pontification of Greed and free market Capitalism as conjoined and perforce America's two greatest assets. Clearly besotted by Ayn Rand's hedonism, Friedman and his decades of devotees since, drank the Kool-Aid as well and besotted, they missed the truths that Rousseau so cogently detailed in "The Social Contract," truths that have proven to promote social order and to be sure Greed was not among them. Written way back in 1762 Rousseau's arguments were prescient! Clearly, Friedman got it wrong. Greed, by definition, is excess. And our current financial meltdown underscores the baseline fallacy in Friedman's argument. Moreover, no untampered evidence has been produced that supports Adam Smith's equally self-servings argument that a mystical, invisible hand truly reaches out to pull the common folk up by his or her bootstraps. After two financial meltdowns in less than a century brought about by greed and laissez-faire capitalism, it has become crystal clear that Smith's, Rand's, and Friedman's arguments in support a laissez-faire governmental approach is not only untenable but mere sophistry and hence continuing on such a path offers US in the US nothing but more of the same.
Clearly, we are in need of a health care system that does not either disenfranchise folks or, once stricken, leave them destitute from an unpayable debt. Having said this, punishing legitimate health care professionals is NOT the way to go. I view the current congressional Health care plan as grossly flawed but it is, in my opinion, a crucial first step to one that we can all agree on is fair and equitable. Perhaps it is time that the AMA step up to the plate and offer a plan that all Americans can embrace. Few would disagree that health care must be made universally affordable. Unfortunately, big money interests have purchased our Congress and hence control how American public policy is formed. Let us not forget that some of the most prominent influence peddlers are health insurance providers and they too must be reined in.
It is unarguably a fact today that one serious illness can be financially ruinous for a large portion of American families and this is unacceptable. On a personal note, my brother, a hard working man with health insurance, amassed a $100,000 bill before he eventually died of an asbestos related cancer leaving his wife and young children with a bill she could not pay down. My sister, after battling recurring bouts of breast cancer for 10 years and after tons of failed medical procedures died, leaving an unpaid bill of upwards of $40,000 even after she had paid off exorbitant sums out of pocket for her treatments. And recently I found out that my brother's two daughters while growing up never went to a doctor when sick because he could not afford health insurance; and these situations are not isolated to my family but are commonplace in every community in America today.
I would argue further that those of us who have the intellectual capital and have achieved financial success must insist that our government keep the promises so eloquently stated in the preamble to our constitution and "promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity." These sentiments were not scribed as an exercise in wordsmith but were cherished as a moral imperative.
To those folks who would argue that Americans are not entitled to affordable health care services, I would forcefully rebut that as tax contributors, ALL the people are not only entitled to a public health option, but our government is morally obligated to allocate tax dollars for programs that best supports all of our people's social needs. After all, this is what good governance in a democracy is all about.