Comment E-mail Print Bio Archives

In the quest to find sufficient savings in the nation's current health care system to pay the costs of implementing Obama's proposed health care plan, the program's proponents have focused on the Medicare system as the most likely target, claiming that a combination of curtailing fees for service and eliminating or reducing fraud and abuse would produce around $1.5 trillion in savings.

How realistic is that?

On the surface, it may seem like a possibility, what with Medicare expenditures estimated to reach $572.9 billion in 2010. And, although the total projected Medicare expenditures in that year amount to around 38 percent of the $1.5 trillion in savings that are needed, it would be necessary to literally eliminate the Medicare program in its entirety to pay the full cost.

Looking at the situation a little further, we find that $40 billion of the total Medicare expenditures is paid for physician services. That's just under seven percent of the $579.2 billion in projected 2010 Medicare expenditures, and is very small percentage of the $1.5 trillion in savings that are needed.

You may wonder how payments to hospitals and doctors for services to Medicare patients can be cut at all, but that's actually the easy part, because the Medicare program simply dictates the prices it will pay for health care services to seniors. There are no real arms-length negotiations. Instead, using a complex system of ranking the relative complexity and therefore the cost of the wide variety of services that both physicians and hospitals provide, the government decides how much it will pay, regardless of the true cost to the providers.

Breitbart.com reported (July 17, 2009), "The White House is asking Congress to give the executive branch more power to limit Medicare's rising costs" by creating an "independent" advisory board that would recommend changes in Medicare's reimbursement rates for hospitals, doctors and other providers. It's clear that the Obama administration plans to reduce health care costs by dictating lower prices for services. However, what the White House does not understand or is unwilling to recognize is that actions have consequences. People do not just accept government dictates. They respond by changing their behavior. In this situation, if doctors' fees for services to Medicare patients are reduced to the point that it becomes unprofitable to continue, many of them will stop accepting new senior patients, while others may opt out of the Medicare system altogether. That has already been happening in California, where doctors' fees for services to MediCal patients are so low that many physicians no longer treat them.

How, then, can the health care plan respond to the need? Does the government punish them in some way?

Once the government starts down the slippery slope of dictating not just prices but the services that health care providers must offer to the public, there will be no turning back, and the unintended consequences are certain to decrease, not increase, the services that will be available to the public. We need only to look north to Canada and across the pond to the UK to see what happens: health care rationing; long, often interminable waits to see a doctor or be admitted to a hospital; fewer diagnostic resources, such as CT Scanner and MRI's, life-saving drugs, and availability of health care professionals. It's not unusual for patients to die of diseases like cancer before they can see an oncologist or be admitted to a hospital.

>> Continued -- Page 1 2