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The Uncertain Future of American Medicine

The Uncertain Future of American Medicine

“This is the beginning of the end of the private practice of medicine in America.”

If you guessed that someone famous in March 2010 made this statement, after President Barack Obama signed into law “The Patient Protection and Affordable Care Act,” you would be wrong. An everyday doctor, my father, said this to his family after President Lyndon B. Johnson signed Medicare into law in July 1965.

My father was not correct. Far from being the beginning of the end of the private practice of American medicine, this law ushered in what we old-timers now longingly refer to as the “Golden Age” of medicine. In the beginning, (of Medicare law) doctors could charge whatever they wanted for their services, no matter how absurdly high the price, and as often as they wanted. Not only were they often reimbursed at this level, but the more you charged, the more you would get the following year under an economically illogical system, known as “usual and customary.”

Decades later, as the costs to administer Medicare Part B escalated, the payment system morphed into a more fixed methodology and continues to evolve today. However, as with any monopoly, which Medicare certainly is, costs to consumers are dictated and non-negotiable. However, unlike other monopolies, like a cable company, Medicare pays the providers — doctors and hospitals — rather than the end user: the patient. Private insurers pay doctors and hospitals largely based upon what Medicare pays, no matter how arbitrary it might be. Cataract and open-heart surgery are reimbursed differently if you live in Miami, than if you live in Fargo, N.D.

No matter how many IOU’s Congress writes to cover the burgeoning cost of Medicare Part A, B, D, etc., we all assume that this program is never going to go away. It will be tweaked, like higher deductibles, co-pays for Medicare Advantage programs, raising the eligibility age, and so forth. But the essential facts are that the typical Medicare beneficiary will receive many times in benefits whatever he paid in during his working life. When Medicare was first passed into law, there were about six workers for every person over the age of 65. In 2012 that ratio is now down to 4:1 and falling. People are living longer and demanding ever more sophisticated and costly procedures. The current system is not financially sustainable.

And now entering the scene is The Affordable Care Act. Passed under presidential duress, this massive overhaul of the American healthcare system has yet to be fully functional. It is still unknown if the very linchpin of the law, the individual mandate, will survive a constitutional challenge before the U.S. Supreme Court this year. However, I will argue that this ruling may be irrelevant. Much like a poison or virus is injected into the blood stream, the long-term effects of “Obamacare” will continue to ripple through our society for years to come.

From the moment I heard President Obama say, “If you like your insurance and doctor, then you can keep it,” I knew his intent was opposite of this statement. The end game here is a single-payer system based upon a Canadian or British health system. Rules, regulations, and costs to private insurers will become prohibitively high to the point that they will simple stop their medical insurance business.

I plan to retire in two years, so this latest scheme to “reform” American healthcare, won’t directly affect me. However, I fear for the effects on patients and future doctors. I support true competition as the way to drive down health care costs, not less. For example, in 2000 when I had Lasik surgery, it cost $2,500 per eye. In 2005, when I had to have an idea redone, it was only $1,200. And that is because insurance did not cover it. The cost of the procedure was simply responding to the increasing supply of Lasik surgeons to the demand, which became level.

I do not profess to know if the next few years will birth the “beginning of the end” of medicine, as we know it. I am however, certain that the more centralized the payment and delivery of healthcare becomes, and the less competitive, the more the costs will be and the less access to it we will all have. I hope that I am wrong.

Find out more about David Mokotoff and our other Practice Notes bloggers.

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