With Medicare, Medicaid, and Social Security facing certain bankruptcy, the Federal government has shown itself quite inept at managing an insurance business. Despite that, Speaker Pelosi is insistent that any health care reform include a Public Option paid at Medicare rates. Such a plan would be disastrous for hospitals, physicians, and patients.
An analysis by the Lewin Group made the following observations:
1. Premiums for the public plan would be 20 percent to 25 percent less than for comparable private coverage--resulting in a shift of the majority of those currently in a private plan into the public plan. (That was certainly the experience with the Keiki plan in Hawaii which was essentially bankrupt within 7 months, because 85% of those enrolled in the Keiki plan had previously had private insurance.)
2. Medicare payments to hospitals are equal to only about 91% of the actual costs of services provided. For physician services, Medicare pays only about 81% of what is paid by private health plans for the same services.
3. Payments for Medicare (to physicians and hospitals) are usually less than the cost of the services provided, resulting in payment shortfalls. (This has been the experience of every physician I know). Hospitals and physicians cover the cost of payment shortfalls under public programs by increasing charges for private health plans.
It has been the testimony of substantially every economist who has appeared before Congress that the Public Option will enjoy cost and regulatory advantages that will result in the effective elimination of private health insurance within four years of the beginning of the Public Option program. There is no reason to doubt the accuracy of that analysis. That will eliminate any options for cost shifting and will force most hospitals and physicians into bankruptcy, leaving patients nowhere to turn for care. No hospital can survive with the vast majority of patient’s bills being reimbursed at Medicare rates. Indeed, I know of no physicians whose practice could survive that. My practice would most certainly have to close.
1. Premiums for the public plan would be 20 percent to 25 percent less than for comparable private coverage--resulting in a shift of the majority of those currently in a private plan into the public plan. (That was certainly the experience with the Keiki plan in Hawaii which was essentially bankrupt within 7 months, because 85% of those enrolled in the Keiki plan had previously had private insurance.)
2. Medicare payments to hospitals are equal to only about 91% of the actual costs of services provided. For physician services, Medicare pays only about 81% of what is paid by private health plans for the same services.
3. Payments for Medicare (to physicians and hospitals) are usually less than the cost of the services provided, resulting in payment shortfalls. (This has been the experience of every physician I know). Hospitals and physicians cover the cost of payment shortfalls under public programs by increasing charges for private health plans.
It has been the testimony of substantially every economist who has appeared before Congress that the Public Option will enjoy cost and regulatory advantages that will result in the effective elimination of private health insurance within four years of the beginning of the Public Option program. There is no reason to doubt the accuracy of that analysis. That will eliminate any options for cost shifting and will force most hospitals and physicians into bankruptcy, leaving patients nowhere to turn for care. No hospital can survive with the vast majority of patient’s bills being reimbursed at Medicare rates. Indeed, I know of no physicians whose practice could survive that. My practice would most certainly have to close.
Instead of a Public Option how about a Private Option along the lines of the Patient Choice Act,
S 1099. The Patient Choice Act takes the power out of the hands of the government and employers and puts it back where it belongs, in the hands of those in the best position to make informed decisions and who will be most affected by them – the patients. That ultimately is the choice we face; emulate a system that has failed the world over, or take the best of a system that provides the best health care on the planet and fix the problems that have made it one of the most costly on the planet.
There is nothing as permanent as a government program--and passage of the Pelosi/ Obama plan will permanently and irreversibly end the free market system for health care in the US.
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