AP, NYT again show how ObamaCare backfires as reform

posted at 2:55 pm on April 4, 2011 by Ed Morrissey

Just in case anyone has forgotten, the Associated Press and New York Times ran stories this weekend on how the new ObamaCare law distorts incentives and backfires in the effort to truly reform health-care costs.  We’ll start with the AP, which looked into the novel innovation among doctors that creates de facto health insurance plans, based on the model used by law firms and retainers.  That allows the wealthy to ensure access while locking out others, especially Medicare patients whose reimbursements don’t cover the costs of care:

Every year, thousands of people make a deal with their doctor: I’ll pay you a fixed annual fee, whether or not I need your services, and in return you’ll see me the day I call, remember who I am and what ails me, and give me your undivided attention.

But this arrangement potentially poses a big threat to Medicare and to the new world of medical care envisioned under President Barack Obama’s health overhaul.

The spread of “concierge medicine,” where doctors limit their practice to patients who pay a fee of about $1,500 a year, could drive a wedge among the insured. Eventually, people unable to afford the retainer might find themselves stuck on a lower tier, facing less time with doctors and longer waits.

Medicare recipients, who account for a big share of patients in doctors’ offices, are the most vulnerable. The program’s financial troubles are causing doctors to reassess their participation. But the impact could be broader because primary care doctors are in short supply and the health law will bring in more than 30 million newly insured patients.

Most doctors negotiate fees with larger insurers based on volume they expect to receive from being part of a network.  If the government starts dictating terms between insurers and providers, as will have to happen with the state-run “exchanges” and the blizzard of coverage and cost mandates imposed in the individual-policy market, they will have much less negotiating room.  The retainer structure allows them to guarantee a certain level of income, and patients with the means to guarantee access and timely care.

The AP is confused about Medicare and Medicaid in this piece; it’s the latter that adds 30 million enrollees, not the former.  But the impact on provider access is the same, or even worse.  That is a direct consequence of adding demand while artificially keeping prices low, a situation that guarantees shortages.  Instead of increasing clinic care and improving health, the new law will paradoxically send more patients to emergency rooms instead, increasing actual costs.

The NYT gets the difference between Medicare and Medicaid correct in its article, and explains that the flood of new enrollees will likely mean less care and more problems:

Eight-year-old Draven Smith was expelled from school last year for disruptive behavior, and he is being expelled again this year. But his mother and his pediatrician cannot find a mental health specialist to treat him because he is on Medicaid, and the program, which provides health coverage for the poor, pays doctors so little that many refuse to take its patients.

The problem is common here and across the country, especially as states, scrambling to balance their budgets, look for cuts in Medicaid, which is one of their biggest expenditures. And it presents the Obama administration with a major challenge, since the new federal health care law relies heavily on Medicaid to cover many people who now lackhealth insurance.

“Having a Medicaid card in no way assures access to care,” said Dr. James B. Aiken, an emergency physician in New Orleans.

Why?  Because Medicaid’s reimbursements to providers are so unrealistically low that providers can’t afford to take on many Medicaid patients.  For those that do, doctors shift costs to private insurance by keeping their rates higher than necessary where they know they can collect.  As ObamaCare crowds out insurers, providers will lose the ability to recoup those losses, and they will instead refuse to take Medicare and Medicaid patients altogether.

But hey, the news isn’t all bad.  ObamaCare has helped one industry in particular:

From Washington to California, the year-old health law, with its layers of complexity, is setting off a gold rush for high-priced lawyers and consultants. It’s “a full employment act for health-care consultants,” said Ian Morrison, a founding partner of Strategic Health Perspectives in Menlo Park, Calif.

Much of the activity — and the prospect of glitteringly high fees — is swirling around a widely discussed provision that encourages doctors, hospitals and insurers to team up in treating patients. Initially, these “accountable care organizations,” as envisioned in the law, will treat only Medicare patients, and will get bonuses for providing better care at lower cost. But if they work, ACOs will likely spread to private patients as well. …

Lobbyists, lawyers and consultants are holding frequent ACO conferences — and finding them oversubscribed. Some consultants are charging from $25,000 for a day of strategy sessions to $1 million to actually implement the strategy.

Gorman Health Group, a 150-person consultant firm based in Washington, charges $25,000 to $100,000 for an ACO strategy, which is usually done in conjunction with other work, said founder John Gorman, who was a Medicare official in the Clinton administration. Among the topics discussed: whether the health system has to make major cultural changes to become an ACO.

The Camden Group charges about $30,000 to $100,000 to advise health systems on how to get ready to become an ACO, said Steve Valentine, the firm’s president.

Lady Logician concludes:

This is what happens when you pass a 2000+ piece of legislation that you have to “pass in order to know what’s in it”…a piece of poorly written legislation filled with bad execution and good intentions.  It is time to scrap the ObamaCare and start over – with real reforms that do not demonize service providers…a bill that takes care of those in real need while making sure that those needs can be met tomorrow and into the next century.

We need to eliminate third-party payer systems, not entrench them.  ObamaCare took a leap into the exact wrong direction, and the longer we wait to repeal it, the tougher it will be to provide for real reform.


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