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Medicaid: False Solutions vs. American Solutions
David McKalip, M.D.
Campaign
For Liberty
Tuesday, February 9th, 2010
In Florida, as in the rest of the country, Medicaid is on the
Ropes. Medicaid is the government run single payer system for
the poor. This fiscally unsustainable program created during
the 60's Great Society utopian dream is failing like all of
its other programs. Sadly it is the people who need the help
the most -- the poor -- that are needlessly suffering. There
are ways to modify the program so the government can provide
help that taxpayers can afford while allowing real help through
the best parts of our society: the free market and charity.
But it will require that politicians stop promising something
for nothing - promises that can't be kept.
Problems and false solutions
Medicaid's problems are numerous but action by Florida government
is appropriately motivated by its enormous cost. Medicaid currently
consumes nearly 29% of the Florida's $66.5 billion budget and
serves 2.9 million of Florida's 18.9 million people. This number
has grown more rapidly lately given Florida's 11% unemployment
rate, but unemployment is not the main reason for Medicaid's
problems. The state needs $19.1 billion ($19,000,000,000) to
serve the 2.9 million people who enter the program if they earn
less than 100% of the federal poverty level. The state budgeted
$17.5 billion for the 2009-2010, but now is about $1.8 billion
short which may climb to $3 billion. Now the health insurance
companies are vying to take over the $19.1 billion in spending.
They claim they can save money for the state by imposing "managed
care" models on the medical care these patients receive.
Unfortunately, the problems faced by Medicaid patients don't
stem from lack of management of their care by bureaucrats --
they stem from a failed economic model to help the poor: a government
program. But let's first dissect the broad principles of a managed
care take over.
Clearly, Florida's health insurance industry would enjoy adding
a gross revenue of $19.1 billion to its balance sheet and can
then plan on a guaranteed profit margin that will result in
another billion or so for its stock holders and CEO's. While
Profits in companies operating in a truly free market should
be celebrated, profits from taxpayers should be derided when
they rely on companies engaging in "rent-seeking"
behavior off of the government. This is also known as "corporate
welfare" or profiting from the rent paid by taxpayers to
a non-governmental entity. At some points, the bailouts will
start. Insurance companies control doesn't mean there will be
more money for patient care. In fact, under the mandated Medicaid
managed care model, available funds for patient care will actually
decrease as companies necessarily take unnatural profits for
their services from these limited funds. That profit will be
made by decreasing spending on patients.
The insurance companies, and governments, like to claim that
they can squeeze "efficiencies" out of the system
by ensuring that the "right care", is delivered at
the "right time" to the "right patients".
In this model, every episode of care will be given a global
or "capitated" budget. For instance, if the insurance
company arbitrarily decides it will spend no more than $10,000
on a patient's heart surgery over a 90 day episode, it will
do everything it can to force medical care to meet this budget.
They will offer incentives to doctors and hospitals who will
receive more money if they spend less on medical care. Voluntary
capitation system has its place in a free (voluntary) market.
But at some point advanced medical care actually does cost significant
dollars and no amount of bureaucratic planning or tinkering
can fix that without hurting patients. It also hurts the doctors
who won't compromise their professionalism with high volume,
lower quality care at cut-rate prices and interference in the
patient-physician relationship. The insurance companies and
government will seek to intimidate doctors into taking less
and punish them if they are deemed "inefficient" with
withheld bonuses. This is known as a "pay for performance"
program and requires the companies to withhold financial "incentives"
that actually came from lowering payments to all those doctors
who choose not to participate for many good reasons. In addition,
when insurance companies own all Medicaid dollars, they will
force doctors to accept them if they want to take private patients.
This will mean an increase in cost to private patients to compensate,
or doctors dropping out of some private plans and becoming unavailable
to private patients.
While the third parties to the patient-physician relationship
(government and insurance companies) claim they are acting in
the name of "quality", they are motivated only by
cost. In fact "value-based purchasing" programs have
been shown to lead doctors and hospitals to avoid higher risk
(sicker) and costlier patients and game the system to get a
good report card. Pay for Performance has actually been scientifically
demonstrated to have no beneficial effect on patient's actual
health or lifespan and has also been proven to hurt patients.
For instance, the government required all hospitals to publicly
report how frequently patients got beta-blockers within 24 hours
after a heart attack. This is a generally a good clinical practice
when doctors make the right decision about giving the right
patients the drug at the right time. The doctor. Unfortunately,
the committees and bureaucrats that created these policies prompted
automatic delivery of these drugs to patients in the emergency
rooms whether it was right for the heart attack patient or not
(to get a good report card). Sadly, there are patients that
should not receive these drugs- those with congestive heart
failure. They got them and went into shock resulting in earlier
deaths. As a result, the government committees "retired"
this "quality" measure -- but only after four years
of damage being caused to patients. There are many similar stories
about the failures of centrally planned and delivered medical
care by committee. These examples should teach everyone that
this is not the way to help patients. Such quality initiatives
should not be hijacked by insurance companies and government
as an excuse to justify a cost-savings or rationing program.
Medicaid patients also face tremendous problems accessing the
care they need. Right now these patients can't easily find specialists
and don't have rapid access to the same primary care doctors
others do. There reason is simple: Medicaid pays doctors 56%
of what Medicare pays. Medicare already limits the amount of
money a doctor can collect for their services to a price that
is lower than the cost of care. When Medicaid adopts nearly
half that rate, doctors disappear. It is thus hard to find neurologists,
orthopedic surgeons, neurosurgeons, cardiologists and pain management
specialties for them. They enter primary care situations where
nurses serve as the doctor. They also end up using the emergency
room about twice as often as even the uninsured (per the Urban
institute) since they can't get rapid and needed primary care
in the community. There is no solution in Tallahassee, Washington
D.C. or the insurance company board room that will solve this
problem. Most government plans turn the system over to insurance
companies, force money from taxpayers, borrow it from china
or simply have the Federal Reserve print it like monopoly money.
In fact the state of Florida is receiving over $12 billion in
borrowed and printed federal "stimulus" money just
to stay afloat now. These approaches are having very negative
effects on Americans and our national security and are failing
to meet the needs of the most vulnerable people with health
problems: the poor.
An American solution for Medicaid
But there is an American solution already present in our society
to help those in need. It is time start activating the most
powerful anti-poverty programs in the history of mankind: the
free market and charitable activity. Right now, the government
forbids patients who receive Medicaid from having a charity
donate money to assist in the care of Medicaid patients. If
a family member wants to help pay the bill of a Medicaid patient,
they too are forbidden. I had a brain tumor patient show up
in the ER and tell me that a large cancer center wouldn't take
care of her since she had Medicaid. Her story helped inspire
me to found a charity to help patients like her and others.
We would raise private money and give her a check so that the
cancer center could take what Medicaid can pay and the charity
would pay the rest. The only problem that this is currently
against the law! The state calls that "balance billing"
and feels it is inappropriate for purely political reasons.
It is also against the law for Medicare and the insurance industry
wants to outlaw it for private insurance so they can force doctors
to be controlled by their payment policies that hurt patients.
It is worth noting that the right of patients to privately contract
with their doctors for balance billing in exchange for faster
and desired care was allowed until the end of the ‘80's.
Doctors always adjusted rates voluntarily in this system to
help the poor as well. A great American solution would have
politicians change the law to allow charity to grow and flourish
and provide the financial help patients need while allowing
the taxpayers and government to provide the limited, economically
sustainable and temporary help they can afford.
Another American solution involves restoring the free market
in health care. (The over-regulated insurance industry engaging
in rent seeking and reliant on government bailouts is not a
true free market). We can lower the costs of health care and
health insurance if we encourage people to pay for routine annual
medical care out of pocket through health savings accounts that
build up tax free (the government let's you keep your own money).
People should also consider buying lower cost high-deductible
health insurance and use it only rarely when they have a medical
catastrophe. In fact, we can fund health savings accounts for
Medicaid patients, match funds into them through charity, and
stop treating them like they aren't smart enough to spend money
on medical care wisely. I know they are capable, because I have
taken care of so many patients on Medicaid. They could also
benefit from participating with everyone else in society in
low cost catastrophic insurance pools.
We could also ease regulation to permit insurance companies
to offer lower cost basic health policies people want rather
than saddle them with expensive "benefits" many don't
need: like a hair prosthesis, marriage counseling or acupuncture.
It has also been shown that when people who aren't poor pay
out of pocket for medical care, they drive down costs for all-
including the poor. Costs have gone up with government and insurance
company control and their solutions aren't helping Americans
or the poor. Florida should change the law to allow charity
and families to supplement Medicaid spending and work to encourage
growth of health savings accounts and catastrophic health insurance
plans. They should encourage the growth of more basic health
insurance plans and allow Floridians to buy cheaper plans across
state lines. Applying these American solutions will give people
better care at lower cost than any plan concocted by politicians,
a government committee or insurance company. Then the government
can send billions back to the taxpayer, instead of to insurance
companies -- money that will be used to create jobs and actually
lower the number of poor requiring assistance.
"When the people find they can vote themselves
money, that will herald the end of the republic."
- Fall Of The Republic - Buy
the DVD here
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