Obamacare’s Hangover: 40 percent Pay Cuts for Doctors/Hospitals

Obamacare relies heavily on Medicaid as a means to ensure universal coverage. Medicaid needs doctors, and to lure doctors into Medicaid, the Affordable Care Act temporarily increased reimbursement rates to doctors and hospitals — for 2013 and 2014 only. The party’s over, and Medicaid is about to initiate massive pay cuts. And so the hangover begins.

The New York Times reports the following on 12-27-14:

Just as millions of people are gaining insurance through Medicaid, the program is poised to make deep cuts in payments to many doctors, prompting some physicians and consumer advocates to warn that the reductions could make it more difficult for Medicaid patients to obtain care.

The Affordable Care Act provided a big increase in Medicaid payments for primary care in 2013 and 2014. But the increase expires on Thursday — just weeks after the Obama administration told the Supreme Court that doctors and other providers had no legal right to challenge the adequacy of payments they received from Medicaid.

The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.

This is what happens when the federal government fixates on “covering everyone” without regard for the consequences. The purpose of the “Affordable Care Act” was to make sure everyone is covered, immediately. Of course, this was largely accomplished by making it easier for everyone to be on Medicaid. Mission accomplished. Now it’s time to deal with the consequences.

The White House says Medicaid is contributing to the “largest coverage gains in four decades,” with 9.7 million people added to the Medicaid rolls since October 2013, bringing the total to 68.5 million. More than one-fifth of Americans are now covered by Medicaid.

Aside from bankrupting the federal government — which was already bankrupt before, mostly because of unsustainable entitlement programs like Medicaid and Medicare — it also places a greater burden on doctors and hospitals to accept Medicaid.

While it’s true that Medicaid rates were temporarily increased, sooner or later the increase will go away. As the Times indicates, Medicaid reimbursement rates “will plunge back to 2012 levels, widely seen as inadequate.”

For decades, the federal government has fixated on covering people. It started with Medicare, which guaranteed coverage for everyone at age 65, and then Obamacare essentially finished the job, by making sure everyone is either on Medicaid or some other “private” insurance plan with premiums inflated by all the government mandates and regulations.

We have to get past this idea that government actually can cover people. When we say, “the federal government has now made sure everyone is covered,” via Medicaid or anything else, we take it for granted that everything else will remain the same. Doctors and hospitals, we assume, will be reimbursed at the same rates; they won’t be. They’re actually going to take pay cuts. Doctors and hospitals, we assume, will continue to be able and willing to take Medicaid/Medicare; they won’t necessarily be willing, or even be able, particularly with declining reimbursement rates and new patients flooding into the system. What then? And if doctors’ conditions are systematically deteriorating as the federal government controls more of health care, then what does this mean for patients?

A survey by the Ohio State Medical Association found that some Ohio doctors began accepting Medicaid patients because of the rate increase in 2013. Ohio doctors who were already participating in the program said they had accepted more Medicaid patients after the rate increase. And almost 40 percent of Ohio doctors indicated that they planned to accept fewer Medicaid patients when the extra payments lapsed.

Government does not go by market forces. It operates by political realities, meaning personal pull and behind-the-scenes deal making. Customers –or patients, in the case of medical care — have no say in the matter, as in voting with their pocketbooks or going to competitors who offer a better deal. That’s how we all choose restaurants, grocery stores, television stations, gas stations and brands of clothing, computers or phone service. It’s precisely the removal of these rational market forces that has been the explicit goal of federal legislation and policy for the last 50 years or more — and Obamacare was merely its culmination, its icing on the cake. Market forces in health care? Why, we’re told, that will never work …  and it’s morally repugnant, to boot.

Witness the results of government monopoly in health care.

Nobody pays when the government — having passed the legislation it wanted — now drops the rates of reimbursement by 40 percent. Only doctors pay. And patients will pay, as well, when those rates go down (and they will, if not in 2015, then in 2016, or 2017, for sure — or when the federal government finally goes bust with all its debt.)

Granted, we can pass a law — and I predict it will happen — requiring doctors and hospitals to take the government plans. Or maybe the government plans will be all that’s left, at a certain point. But how is any of this good for patients? How are resentful, tired and overworked doctors and hospitals supposed to keep saving lives and utilizing their brains under conditions of this kind? Will we pass a law to motivate them?

Here’s an unusually candid answer from one government official, according to the Times article:

Joseph A. Reblando, a spokesman for Medicaid Health Plans of America, a trade group, said, “The fee increase was a good idea in concept, but it was built on an antiquated system in which doctors were paid a separate fee for each service.”

In other words, the future for doctors and hospitals is they’re paid a flat rate. One size-fits-all for various types of illnesses and procedures, so long as all the patients are seen and “treated.” We’ll herd them through like cattle, saying we “gave them treatment” regardless of the quality, skill or levels of incentive involved.

Americans don’t yet grasp just how ruined medical care is, from the perspective of how we currently (sometimes) know it. We’d never expect football players, baseball players, lawyers or CEOs to work harder at declining rates of pay.  If they fled their fields in droves, we’d say, “Of course they’re leaving. Who wants a pay cut?” We’d never expect a federal takeover and monopolization in any of these fields to improve life for anyone. Yet we’re expecting this to work with life-or-death providers of medical care. All so the politicians can congratulate themselves and say, “Look at us. We covered you.”

The question remaining to be answered in coming months and years: Covered us with what, exactly?

There’s no easy way out of this mess. Millions of Americans are now dependent on Medicaid or Medicare, and doctors and hospitals are increasingly trapped as well. It’s misleading to blame all of this on Obamacare, since these were the federally-mandated trends in health care before Obamacare more or less finished the job.

It never should have come to this, and it always should have been a free marketplace. Our politicians are control freaks, and they don’t want to liberalize, loosen up or even allow for the creation of a free marketplace in medicine. They expect us to believe that Medicare and Medicaid — like the sun — will always be with us, and could never, ever go away. But it’s simply not so, as these massive pay cuts for the people who provide our health care demonstrate. These programs might always exist in name, but that tells you nothing about how they will actually function in practice, assuming they function at all given the way they will be treating the providers of medical care.

We’ve got to face facts here and stop debating how government can best monopolize health care. It can’t, and it shouldn’t. Liberate yourself from the myth, so we can move on to tenable and rational solutions. We should be looking at ways to privatize and open up the free market for medicine. Yes, people must be responsible for ultimately financing their medical care, as they will be anyway once these programs — and the federal government itself — eventually goes bust. (The pay cuts are evidence of that happening.) But if people are to be self-responsible, they must possess the same tools and choices they have with respect to buying other things in the marketplace. It’s way past time to give people the choices required to live self-responsible lives in this most important of areas.

Something for nothing is an illusion. The life-or-death importance of medicine does not change this fact.


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