Health Care Reform and Unintended Consequences: A Prediction

Health care reform has been necessary for a long time. But having said that, I’d like to give you an example of how the expected changes might lead to some unfortunate results, as well as some that are helpful.

My example will focus on Medicare. Everyone knows that Medicare is expensive for the government and that it will ultimately suck the life out of the national economy if costs are not restrained. One way to restrain costs is to require physicians to accept lower fees for their services, something that Medicare has struggled to do for a while, even before passage of the recent health care legislation. Providers are already getting paid less than they were a few years ago, but even more extensive mandated annual changes have been regularly rescinded by the Congress. If they are actually accomplished in the future, Medicare would pay out still less to those same MDs, Ph.Ds, and other health care professionals.

What will happen when reduced fees become more significant? Some healers will decide that it is financially unwise to see patients who are covered by Medicare. They will drop out of the Medicare panel of providers. The greater the fee reductions, the smaller the number of physicians available to see Medicare patients, while at the same time the number of individuals covered by insurance is increasing, led by the large expected additions to the rolls of the insured because of recently passed health care reform legislation.

Let’s say you are the following person: someone covered by Medicare who doesn’t have the cash to pay for treatment out of your own pocket, who also has a medical problem or concern that cannot wait very long. The good news in this hypothetical example is that your MD still accepts Medicare. But when you call your doctor’s office, you are told that you can’t have an appointment for four months—again, hypothetically speaking. The problem and the pain aren’t getting any better in this period of time, maybe they are even getting worse. So what should you do?

First, you will probably try to find another medic who accepts your insurance and has a nearer-term appointment for you. But given the anticipated shortage of people who do take Medicare patients, it will be unlikely.

Eventually, however, you will do what any sensible person would do once the problem becomes really acute—and what your doctor’s office will probably advise you to do under the circumstances—go to the emergency room of your local hospital.

Since emergency room care is notoriously expensive and since the condition might be harder to treat because you waited, this will only serve to drive up the amount of money spent on health care, something that the intended reduction in doctor fees was expected to reverse. Whether the decrease at one end will outweigh the increase at the other, I do not know.

And, instead of the growing number of  people who had no health insurance being the impetus for the increased use of the ER, it will now be people with health insurance who are using it more because they have no other readily available alternatives.

I don’t have a handy solution to this problem. My hunch is that there is some amount by which doctor’s fees can still be cut before they start dropping out of the Medicare system in large numbers. It may be that only trial and error will determine exactly how much cutting is possible before producing the unintended consequences I’ve described. The good news, however, is that where there is a high demand for services, eventually supply does catch up, although in the case of producing more docs it will takes years to do so.

Surely, there will be many more unintended consequences of health reform just around the corner. Some might actually be beneficial, but certainly not all. The system we have is not working well for many of our fellow-citizens, so the status quo is not a good answer. Doubtless, once legislators hear enough complaints about problems such as the one I’ve described, they will attempt to alter the system further. How long it takes before we get something that works well is unknown. It is likely that we will eventually have a two-tiered system: a universal, government-run insurance plan on one side, and some number of pretty rich people simply paying for health services out of their own pockets on the other.

In the short run, all of this reminds me of an old joke Woody Allen told at the end of one of his nightclub routines.

It went something like this:

I’d like to leave you with a positive message.

But I can’t think of one.

Would you take two negative messages?

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