How Medical Care is Like Deficit Spending

September 30, 2011 in Health Care "Reform", Health Policy by RangelMD

Right now the total US federal debt is $14.5 Trillion dollars (14,500,000,000,000.00) and the Federal government is currently spending $1.1 Trillion per year MORE than it takes in (revenue).  Obviously this can’t continue forever – at some point the total debt becomes so big that the GDP is no longer able to support the payments on the interest and principle, treasury bonds are devalued to junk status and interest rates rise causing the economy to shrink which further decreases the GDP etc, etc.

At some point (probably just before complete economic collapse becomes inevitable) the deficit will need to be paid back and right now that amounts of almost $50,000 per every single American.  Of course, this only applies to tax payers and inevitably those with higher incomes will be “called upon” to shoulder more of the debt burden. But beneficiaries will also have to pay the price of decades of deficit spending as social programs and entitlement benefits are slashed to bring spending under control. Essentially, everyone will pay in one way or another.

Fortunately, deficit spending can probably continue for many more years before the bottom falls out and we all end up taking night classes in Chinese. This is just what the current bunch of drunken sailors on a Tijuana spending binge that passes for the US Congress is counting on.  Re-election is more likely as long as members can continue the spending insanity and delay the inevitable hang-over until well after they have left office.

The health care industry and physicians in particular are doing almost exactly the same thing.

The current reimbursement system (as directed by Medicare) rewards volume over quality and invasive procedures over good medical management. Therefore and in the face of shrinking reimbursements, physicians have continued a pattern of high volume and high utilization of health care resources.

Currently there are absolutely no good incentives and fewer reasons for physicians to practice good resource utilization and try to contain health care costs.  A few managed health plans will “reward” their participating primary care providers by “sharing” a little of the savings from their efforts to reduce costs. But these kick-backs are usually a very small percentage of the over-all savings.  What about passing savings on to their patients? In my experience, patients infrequently ask their providers to help them out with less costly tests and treatments and any concerns are usually limited to medications. This is what happens in an insurance system. Costs are separated from the source. This disconnect impairs how both providers and patients understand and react to costs.

But not truly understanding and being separated from the economic consequences of their practice is only the background of how physicians are contributing to the escalating cost crisis.  There are so many other factors that “reward” physicians to totally ignore resource utilization and order more expensive tests and treatments for their patients. There’s ignorance among doctors that more expensive tests and treatments are better. There is fear of litigation and other reprisals and having to explain why they didn’t get the test instead of why they did. And then there is outright greed either to see a ton of patients a day (on the part of primary care docs) or to perform a ton of procedures (among specialists). There is even institutionalized greed among health care facilities to admit and treat the most patients and to perform the most expensive procedures which simply enables those aggressive, high cost physicians.

If you’re not part of the solution then you are certainly part of the problem. Unless physicians take responsibility and assume (or rather, re-assume) some leadership in our health care system the consequences of ever increasing health care costs will be ever drastic and larger funding cuts.  If physicians don’t stop responding to decreasing reimbursement rates by exploiting new revenue sources or simply increasing volume then the system will bring back managed care . . with a vengeance.

Our wild spending spree will have consequences. The problem is that no one knows when the tipping point will come. I’ve tried to talk to other physicians about this. The blank stare or shrugged shoulders they give me is similar to the responses I get when I talk to 20 somethings about the dangers of smoking.  The threat is currently too abstract. Like Congressmen, the hope is that they will be long retired and out of the profession before the proverbial excrement hits the fan. At that point, it will be someone else’s problem.

I’m not advocating for socialized medicine or some universal health care government scheme. I’m certainly not an anti-capitalist. The problem is that the current health care system is not so much capitalist as it is a gigantic privatized government program. As such, there are few  classic capitalist mechanisms as cost transparency and free markets in this system, which is great for recipients of the funding. It’s great, until the bottom falls out.

In concert with such actual and true reforms such as malpractice tort reforms and reimbursement reforms and stabilization, physicians need to convert from simple “consumers” of the health care system and start acting more like advocates, reformers, and preservationists of the good things about our system (freedom of choice, efficiency, advanced care) before the US gets it’s own National Health Service nightmare.

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