Affordable Health Care?

A few days ago, a friend related, after a visit to the doctor, that a sign in the doctor’s waiting room stated that the doctor would no longer accept Medicare patients.  Another friend mentioned seeing a similar sign in his doctor’s office.  I wondered why these doctors would refuse Medicare patients, so I did some digging.

Back in February, Congress voted to extend payroll tax cuts. That legislation also postponed a 27.4% cut in Medicare physician payment rates, freezing current payment rates through December 31, 2012.  In July, the Centers for Medicare and Medicaid Services released its proposed Medicare physician fee schedule, listing the various fees and allowed charges for which physicians will be reimbursed by Medicare.  The cuts contained in the proposed schedule are approximately 27%. 

A quick survey of the web indicates that most medical insurance coverage reimburses doctors at a higher rate than Medicare. By agreeing to accept Medicare patients, physicians receive a fixed payment for services, regardless of the charges.  With large payments cuts looming in the future, doctors are trying to figure out how to keep their practices from going under.

In order to stay in business, the physician must ensure that their costs of services are less than the amount paid by the patients.  To reduce costs, the physician may reduce staff, increase the number of appointments, and/or eliminate some services.

Dr. Sowell writes in his book, Basic Economics, that price controls lead to a deterioration of quality in good or services.  If you’ve been frustrated when scheduling an appointment, having been told the first available appointment is weeks or months in the future; or frustrated by the long wait time once you arrive; or disappointed that the time actually spent with the doctor is mere minutes, you would likely say the quality of service is diminished.  Another option physicians have to decrease costs is to limit the number of Medicare patients they see. 

Doctors are choosing to drop out of Medicare.  A recent survey by the Texas Medical Association showed that number of physicians accepting Medicare dropped from 78% in 2000 to 58% in 2012.  Many believe that the low reimbursement payments and the bureaucratic hassle do not provide enough incentive to provide care for Medicare patients.  So to reduce costs and remain in business, doctors are no longer accepting Medicare patients, the very ones who, quite often, need the most health care.

 If a medical practice can’t remain financially viable, then, like any other business, it must reduce costs or close its doors.  It’s that simple. The next time you hear a politician or candidate speak about “affordable health care”, find out how they plan to make it affordable.  Lowering the costs of health care, such as lowering costs of regulation compliance and administrative costs, makes it affordable.  Simply lowering the price of health care doesn’t make it affordable, it makes it scarce.