• Why is this so hard to understand? (Part 2)

    One of the most baffling things to me in all the talk about health care reform is how the same people who complain that we need to cut Medicare spending are often the same people who complain that doctors are reimbursed too little.

    Every dollar spent by Medicare is going into someone’s pocket. Every dollar spent it someone’s revenue. We’re not piling it together and burning it. So even when we discuss “waste”, we’re talking about someone’s earnings.

    When we seek to spend less money, someone has to earn less. There’s no way around that. It may be that everyone in the health care system will make a bit less money. It may be that some sectors are hit harder than others. Efficiencies can be found to offset those lost revenues so profits don’t get affected, but someone is going to get less money if we reduce the amount spent on care.

    Since providers make up so much of the Medicare money, it’s likely that they will see less coming in if we reduce spending. So, yes, it’s likely that Medicare cuts will lead to doctors and hospitals earning less from Medicare.

    Many providers acquiesced to the ACA because the reduced earnings from Medicare would be supplemented by increased earnings from previously uninsured individuals. So it was a tradeoff that was acceptable to them.

    Now, if you’re totally against reducing provider payments – or think they should go up – that’s fine. But that will cost more money.

    So you can be for reducing Medicare spending, or you can be for increasing Medicare spending (increasing payments), but you can’t be for both.

    Part 1 is here. (When Medicare spending goes up, seniors’ premium costs go up.)


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    • Excuse me.
      Why do we keep assuming that the feds have to pay the whole bill? What about patients? We need to change the law to allow providers to balance bill patients and get rid of these ridiculous price restrictions (I’ve mentioned before that I’ve seen a 7% increase in Medicare payments in 12 years).
      It will reduce utilization of expensive services. It will cause providers to keep prices down with competition. It will also recognize the actual cost of providing care and will promote the growth of less expensive primary care (which we all want to see happen).
      Why is this so hard to understand?

      • Medicare has more bargaining power and more knowledge about medicine than individual seniors or insurance companies.

        Primary care is a small part of Medicare spending. The real money is in expensive procedures, concentrated in a relatively small number of patients.

        Pushing more costs onto seniors doesn’t reduce spending in any meaningful way. To the extent people don’t get relatively inexpensive initial care due to cost concerns, they can end up with much more expensive care due to lack of treatment. Penny wise and pound foolish.

        These issues have been covered extensively on this blog. They’re not very hard to understand.

      • Absolutely.

        After all, if I decide the price of treatment for a heart attack is too much, perhaps I’d rather spend the money on a new car.

        It’s only anecdotal, but I don’t think I’ve ever heard of a case where someone declined important medical care because it was too expensive. (Which is not the same a declining care because they can’t afford it.)

        I’m also unware of people shopping around for the best price on urgent care, but perhaps that’s just a Canadian thing.

    • I think there are two classes of doctors. Those who provide primarily cognitive services (pediatricians, family practice, etc.) and those who do a lot of procedures (surgeons, intervention cardiologists, etc.).
      The cognitive service doctors typically earn much less money ($100,000 to $200,000 per year) than the procedure specialists who earn two to ten times as much.
      I would argue that procedure based specialists are overpaid and their fees should be cut. This is also where most of the excess costs for unnecessary/ineffective/dangerous procedures lie.
      Cognitive docs probably shouldn’t be cut (and one could argue that some low paid docs should earn more).

    • “When we seek to spend less money, someone has to earn less. There’s no way around that.”

      Unfortunately, that’s not how it works in the real world.
      Have you been to a doctor lately? What will happen (and is already happening) is that if you can’t pay, you will not receive any service. Doctors and hospitals will demand obscene payments upfront (ask me how much I needed to front the doctors to deliver my baby – it was like I was dealing with the mafia and we are talking about a newborn here). And if you can’t pay, too bad. So ultimately, 99% of the population will be unable to afford decent healthcare, if government spending is cut. Hospital CEO’s and doctors will not earn any less, under this scenario. They will simply treat far fewer patients at vastly inflated prices.

      • I am sorry that is purely anecdotal and speculative. I am sorry if this is true and you had to deal with such a situation however there is loads of data on the ACA that says otherwise. The author doesn’t need to see a doctor to determine his main thesis. If you are going to come on here and refute him please have something that can express what you say more scientifically and preferably through a notable source.