Why Obamacare rate hikes mirror the same problems dragging down Medicare
November 5, 2016
This week the top story in RealClearHealth was an article I wrote about the Affordable Care Act (ACA), aka Obamacare. The ACA has become political fodder as participating insurance companies announced rate hikes that average 25%. Donald Trump proclaimed that all the fault for this rate hike lies in the ACA itself. But how true is his accusation? In fact, what is dragging down the ACA is no different than what is decimating Medicare, many health care plans, and our entire health care delivery system. I have discussed this in my book and blog, and touched on it in the RealClearHealth article, as have other health care experts like Nortin Hadler. But the pundits, press, and politicians seem to be turning a deaf ear to reality.
We are becoming a nation of specialists. Only 20% of medical students are entering primary care fields; most are flocking to highly paid procedure-oriented specialty fields. We know that in areas of the country that have more specialists and fewer primary care doctors, patient outcomes are worse and cost in higher. We know that health insurances pay 20-25% of their total revenue to specialists or specialist-ordered procedures, and we also know that many of those procedures have no proven efficacy and can cause more harm than good. A cardiologist is paid $2000 to put in a stent, even when the use of inexpensive medicines is more effective and less dangerous than that stent. The total cost of the stent to insurance averages $30,000. Who makes the call as to whether to place a stent or use medicines? The cardiologist who gets paid for the stent is alone responsible for that decision, and she can tell the patient anything she wants to convince that patient that the stent will save his life. There is no stipulation that she discuss with her patient the actual facts, and studies show that only about 3% of cardiologists provide an accurate assessment of the risks and benefits.
What is true of cardiologists is common among many procedural specialists. Orthopedic surgeries, chemotherapy, gastrointestinal procedures, MRI scans, biopsies; all these provide medical doctors large incomes and cost insurance tens of thousands of dollars, and very many too have no proven efficacy and can cause harm. Institute of Medicine estimates that we spend approximately $750 billion a year on unnecessary interventions that do not help patients but that enrich the health care system and the doctors who order them. How do insurance companies decide what to pay doctors for procedures, and why are those charges substantially higher than anywhere else in the world? A non-transparent committee of specialists in the AMA called the RUC Committee alone makes these decisions and passes them on to Medicare and then to other insurance companies. That is why primary care doctors earn hundreds of thousands of dollars less than specialists, and why care of complex illness by primary care doctors is paid a fraction of what insurance will pay to put a scope in someone's rectum.
Similarly, hospitals also are far more costly in this country than anywhere else in the world. About a quarter of Medicare's budget goes to hospitals. And like with specialty procedures, often it is more harmful and far more expensive to treat a patient (especially an elderly one) in the hospital than at home. But that's the catch. Medicare and virtually all other insurance will not allow or pay for home care. Patients are forced into the hospital even if they prefer to stay home, which most do, and even if they would be healthier at home. A recent study showed that 50% of elderly patients admitted to the hospital leave more impaired that when they came in, and a large percentage suffer iatrogenic harm caused directly by the hospital at the cost of billions of dollars a year. My book has an entire chapter devoted to the dangers of the hospital for elderly people, and yet even I in my practice have no choice in most cases but to send reluctant patients into the jaws of the hospital system. Home care would be cheaper and gentler. It simply is not an option.
Why are ACA premiums rising, why are all health care rates rising, why is Medicare staring into its own financial collapse? Why are we paying more in this country for our health care than anywhere else in the world while our health outcomes are among the worst? Why are some doctors earning a half million dollars a year ordering tests and procedures that are not helpful, while other doctors who spend their time talking with their patients and solving complex problems earn half that amount? The answer is simple: we are ignoring the drivers of our health care crisis. By encouraging procedure-based specialization and hospital-based care, by paying more to those who do than to those who think, by not empowering patients to make rational decisions, we are allowing a dysfunctional system to persevere. It is not enough to repudiate the ACA and talk about eliminating it. For us to be able to provide affordable and top-notch health care to all people in our country, for us to be responsible stewards for our patients and health care delivery system, we must acknowledge what is dragging our health care system down and then work to fix it. In fact, the fix is easy; i discuss it at length in chapter 6 of my book. But first we have to open our eyes and stop creating demons that do not exist.