Why Doctors Hate Medicare Today

The reason doctors hate Medicare today is simply because it, and only it, has the power to limit the unsustainable growth of doctors’ income. Doctors call Medicare’s efforts “governmental intrusion” in healthcare and “interference of the doctor/patient relationship”; patients and taxpayers call these efforts the major driving force for quality, affordable healthcare delivery.   American patients and taxpayers are finally starting to see the results of these efforts and that is why doctors hate Medicare today.   Underneath the politically- correct rhetoric used by doctors lies the real reason those obsessed with income want government out of healthcare—money!

doctors hate Medicare

The History of Why Doctors Hate Medicare Today

Doctors’ obsession with increasing and maintaining high income levels has a long history. In the early 1960s, doctors fought Medicare legislation. Why? They thought that it was the stepping stone to “socialized” medicine.   To doctors, “socialized” medicine means one thing—a threat to their income and their ability to control the prices that they charge for their services.

During the first decades of Medicare, doctors were pleasantly surprised to learn how much of a cash cow Medicare actually turned out to be.  Medical doctors grew rich thanks to a fee-for-service reimbursement model that rewarded “quantity over quality” care and allowed doctors to charge the vaguely-defined “customary, prevailing and reasonable” fees.  In addition, Medicare increased doctors’ business because elderly people were finally able to afford the cost of health care.

Unfortunately this lucrative business anomaly did not last forever.  As doctors grabbed every opportunity to increase income, the government had to rethink its laissez-faire stance toward healthcare businesses.  It became obvious to our government that the healthcare community needed “intrusion” because of greed and its lack of putting the patient first without oversight.

Our federal government has been able to contain the growth of Medicare spending, not because Medicare is “socialized” medicine (it is not), but rather because it is represents such a large group of healthcare consumers.  This gives our government the negotiating power that comes with a large insurance risk pool (55 million beneficiaries in 2015) to demand lower Medicare reimbursement rates than “customary, prevailing and reasonable” fees.   If doctors want the Medicare business, they have to accept the prices that the Medicare program pays for its beneficiaries. Because of these efforts, Medicare today has reimbursement rates that are the second lowest (next to Medicaid) in the country.

As doctors got rich, Americans were being forced to pay the highest healthcare costs in the entire world–more than double what people in other industrial nations pay.  To add insult to injury, Americans must pay this cost premium while getting a lower quality of care!  This situation blunts growth in our economy and sends American jobs overseas.  The only ones that benefit are the doctors and other healthcare businesses that took advantage of this financial opening.

After the early Medicare program money grab, our federal government has tried various measures to rein in Medicare costs and improve quality of care over the years.  Heavy special-interest lobbying was always on hand to thwart any effort that would impact doctors’ pocketbooks or make them accountable for quality.  With the tightening of the purse strings and demands of accountability, doctors love of Medicare was rapidly changing.

The Factors that Led to Why Doctors Hate Medicare Today

In the past, doctors have been able to successfully contain Medicare’s cost containment efforts, but today three factors out of their control are putting severe pressure on doctor’s lucrative income stream.

  1. Demographics. Baby-boomers, the largest demographic in the United States, are reaching Medicare-eligible age in large numbers. To the doctor-businessman, this means that a large number of his/her customers are replacing their employer-sponsored health insurance (with its higher reimbursement rates) with Medicare (with its lower reimbursement rate). This will mean less money per hour worked. In addition, the growth rate of the population aged 65+ is much higher than the growth rate in the general population. This means that doctors will not be able to simply threaten to stop servicing Medicare patients (as they have done repeatedly in the past) without hurting their bottom line. This looming demographic effect (see the figures below) will put a squeeze on doctors’ income.demographics and why doctors hate Medicaredemographics and why doctors hate Medicare
  2. Obamacare (PPACA) and other Healthcare Reform. Thanks to the passage of Obamacare (PPACA) in 2010, Medicare cost containment and quality improvement efforts have been accelerated. Thanks to healthcare reform laws like the HiTECH Act of 2009, our government has finally started demanding that doctors be accountable for the quality of their service.
  3. Employers piggy-back on Medicare Cost Containment and Quality Improvements. Roughly half of all Americans get their health insurance through their employers. The high cost of providing health benefits for employees keeps wages down, blunts job growth, sends jobs overseas, and keeps employers from investing for economic growth. The efforts by Medicare filter down to these employer-sponsored health insurance plans that do not enjoy the same one-on-one negotiating power that Medicare has to contain costs and demand quality improvements. Without the efforts by Medicare for its beneficiaries, the many employer-sponsored health insurance plans would be much costlier than they are today.

Why Doctors Hate Medicare–The Bottom Line

The reason doctors hate Medicare today is simply about money!  Medicare, with its huge price negotiating power, has accelerated its cost containment and quality improvement efforts thus creating a serious threat to the growth of doctors’ future income.  Because of demographics, the threat to stop servicing Medicare patients is less effective to blunt cost containment. The Medicare program stands in the way of doctors’ maximization of income.

What are doctors obsessed with income to do?  Obviously, stopping government healthcare reform efforts aimed at cost containment and quality of care improvements, particularly those in the Medicare program, would remove the threat in the immediate future. This can be accomplished by taking original Medicare and dividing the risk pool into smaller groups with less negotiating power (already underway through Medicare Advantage plans).  This can also be accomplished by dismantling original Medicare altogether to remove the government’s efforts at cost containment and quality of care improvement at the source.  The repeal Obamacare (PPACA) and other recent healthcare reform laws that have accelerated the locomotive of cost containment and quality of care improvement would also serve the interests of income-obsessed doctors.

Come January 2017, Representative Tom Price,  the new Secretary of the Department of Health and Human Services (HHS) will take over the governmental department whose mission it is to “enhance and protect the health and well-being of all Americans”.  As a third-generation medical doctor, Dr. Tom Price will have to put the interests of the American people over those of income-obsessed doctors. Is he capable or even inclined to accomplish this task?

We have been on an accelerating path toward affordable, high quality health care over the past several years and Dr. Price is in a pivotal position to either continue the trend or to stop it in its tracks.  Americans interested in Affordable Health Care and Beyond for ALL Americans  must be vigilant in the coming months and years to make sure that Medicare and its cost-containment and quality improvement efforts are not halted or even undone altogether. The very existence of Medicare and its many benefits to the American people may come under threat just so that doctors can continue to enjoy the high incomes they have come to believe are their due.

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