Public Option Dropped; Medicare Expanded: Net Effect?

Great Debates
1

Certainly, an appreciation of the political landscape would not be encouraging when a provision favored by a majority of Americans is scuttled by well-bribed senators.

But what will be the effects in terms of outcomes? And what strategy can liberals and progressives pursue now?

Given the Republicans’ recent (disingenuous) defense of Medicare, I think there might be a real foothold for a push to further expand Medicare–say, to anyone 40 years or older. And, even if it’s only 55+ for the time being, it would set the precedent for such expansions in the future. Plus, as others have long argued, a campaign for “Medicare for All” would be far harder to derail than a public option with a myriad definitions.

2

Happy happy fun fun in the conference committee when they try to reconcile the House and Senate versions?

3

the net effect is that insurance companies get to offload the most expensive customers onto the public, and get to pad their wallets with the cheap-to-insure healthy people.

privatizing the profits and socializing the losses, example number 552.

4

True, but that’s always been a problem. The current bills prevent discrimination based on pre-existing conditions, though they permit price differentials based on age and locale.

Also, some senators are working on an amendment to force insurance companies to spend more of their premium dollars on providing care, rather than denying claims:

So that should help get the insurance companies to focus on competing for best service, rather than most claim denials.

5

I think its a good compromise. Any public option that got through was going to be neutered beyond much usefulness anyways, while expanding Medicare will help put further downwards pressure on prices, add at least some measure of competition. I think liberal dems got at least a decent trade for (more or less) tossing the Public Option, I was worried they’d be so paranoid about throwing it out that they’d end up just taking some vestigial remenant to get the conservative votes.

Of course the providers are going to fight it tooth and nail, so hopefully it passes quickly before they can start lobbying against it.

I don’t know anything about nationally managed non-profit plans. Perhaps someone can elaborate?

6

Great move. Most opponents of UHC are too dumb to know that Medicare is govt run

7

Did the House bill include a public option?

8

On a related note, I think all the talk of a filibuster-proof Democratic Senate majority was nothing but marketing, meant to induce voters into voting for Democratic candidates on the premise that they would have a free hand in enacting a unified Democrat agenda. So long as they count the Liebermans and the Baucuses as Democrats, this supposed majority will continue to be an illusion.

9

Nobody could have predicted this.

10

Rates will go up for private insurance as more people move to Medicare. Medicare does not cover the costs of many medical procedures - Hospitals and clinics could always count on private insurance covering the rest. With more people on Medicare, the medical care people will either stop taking as many medicare patients and will also have to ask for higher reimbursements from the insurance companies.

Those private practitioners in lower income areas might go ahead and retire early as well.

11

These so called “costs” that are not being covered are nothing more or less than the incomes of medical workers. Some of them can and should go down. The ratio of a doctor’s income (particularly specialists) to the median income is one of the biggest drivers of variance in the cost of health care as a proportion of GDP.

12

Are you taking into account malpractice insurance and the student loans, not to mention the many years of their lives, that these doctors (particularly specialists) have to pay out to get to their current position?

13

No, it is the cost of the physician, rent, malpractice, techs, receptionist, billing team, nurses and supplies. Every time the doctor opens the steri kit, there is a cost. Every single wooden stick, steri cover for the thermometer, clean cloth for the room has a cost. The minimum of 3 people involved in a typical 7.5 minute exam all need to be paid, need THEIR healthcare covered, their workman’s compensation, their social security and FICA taxes, their retirement fund, etc.

14

Here’s a source for some data on Medicare and Medicaid underpayment (pdf):

http://www.ihatoday.org/issues/payment/charity/underpymt.pdf

15

And here is some on doctors incomes.

http://gregmankiw.blogspot.com/2009/06/physicians-incomes-and-healthcare-costs.html

People want to avoid the real problems and talk about the financing. But the conclusion is simple and inescapeable. You need to reduce the amounts your pay (per hour, per pill, per syringe, per piece of new equipment).

I have helped prepare hospital budgets. The biggest costs are:

Doctors Salaries (even though they are a a surprising small proportion of the staff)
Other staff costs
Services (cleaning, disposal, maintenance)
Equipment costs (primarily reflected as depreciation though there is quite a bit of leasing going on)

and then way down we have

Drugs
Med/Surg Supplies

Outside the hospital, in clinical practices, you have 2-3 non-doctors per doctor, but the personnel cost is still 70-80% doctors (if you count nurse practicioners with the doctors) because the disparity in salaries is so high.

On the drugs side, the cost of production is a tiny fraction of the retail price. Actually so is the cost of research. Marketing and overhead are the big costs. And guess what? Most of those are income to people working for the pharmaceutical companies.

If you want to attack the cost you have to face the reality of where the costs are in the first place.

I can see lots of statistics showing that insurers have a 10-20% overhead (premium dollars not paid out as claims) but if the insurers did not provide the function of denying claims (!) the total costs would be higher. It is like to cost of the budget department. You can save money by eliminating the budget department, but you will end up spending ten times as much when costs get out of control everywhere else. People need to understand the position the insurance companies are in. They are paid by one group of people (primarily employers) and they pay out based on the behavior of two highly self-interested groups, patients and doctors, both of whom want more of everything and the best of everything.

As a loonie leftist, I have no more love for the insurers than for the pharmaceutical companies or the hospital companies. They all behave badly when they think they can get away with it.

I am 100% in favor of a single payer plan, but some strict regulation of private insurance with strong public option is fine with me. But people should understand that either this is going to mean even higher costs or lower payments to providers. Taking out some of the profit motive is going to mean fewer new drugs, fewer new procedures and less brilliant people going into medicine as a profession.

I think we also need LESS qualified doctors. The process for becoming a doctor in the US is too long, too rigorous and too expensive for the doctors themselves. So they demand a huge premium in pay compared with doctors in other countries. In some way the market is already taking care of this, by making care provided by nurse practicioners and physicians assistants a bigger feature of health care delivery.

16

I would like to see a cite with a percentage breakdown of costs showing the the physicians are so much. A short Googling seemed to show that all staff costs are around 1/3 of hospital revenue.

Yes, some docs make a mint in income after they have finished their undergrad, grad, specialty and residency programs. A friend of mine is making close to half a million a year - then again, he is considered to be one of the finest in his field and people come from near and far to have him operate. I do not begrudge him his salary at all.

17

I can’t cite anything because the two entities I have worked with are not public. Here is one (the other is within 1-3% in each category)

Revenue 100%
Uncollectibles 9.6%
Pre Tax Income 9.5%
Interest Expense 2.7%
Total Operating Costs 78.2% of revenue

Costs categories as a percent of Total Operating Costs

Salaries and Benefits 52.0%
Other Operating Expenses 21.6%
Supplies 19.2%
Depreciation 7.2%

Other Operating Expenses includes space rent and equipment rent, but the single largest category under “Other” is “Professional Services” which is payments to physicians who are not on staff, but have “priviledges” there.

Based on tax returns I have prepared for doctors, $500k is chump change for a top surgeon. I don’t think I ever saw a doctor with less than $300k, but of course those using professional tax preparers are a self selected minority with presumably higher incomes, and more non-salary income (partnerships, consulting, etc) Maybe that is what is coloring my perception of the income of doctors.

I do have several doctors in my family. They have done more to damage the perception of the medical profession in my eyes than anything else. All they seem to talk about is money, at least the American ones.

18

I do not know about the rest but malpractice insurance is a tiny drop in the health care cost bucket. A lot of the rise in premiums to doctors resulted from insurance companies losing money on investments and not to cover malpractice payouts.

Per the CBO:

19

In fact, it’s probably even less than 2%–more like 0.46%:

But if conservatives are so concerned about the costs of malpractice insurance, let’s take them at their word and create a system in which medical personnel cannot be sued by patients. For example, among its great attributes, the VA system does not permit physicians to be sued for malpractice. So, the answer is quite simple: if physicians are government employees and healthcare is guaranteed for everyone, there is no need for malpractice lawsuits and the healthcare system can be made that much simpler and cheaper.

20

here is the latest CBO estimate on the effects of modifying the tort regime in this country, both on reduced malpractice rates and its effect on defensive medicine:

CBO letter to Sen. Hatch on Oct 9, 2009