Senator Reid makes the Doctors Pay for Medicare under Senate Bill 3590

The politicians are claiming that Senator Reid's bill will save the country money according to the latest CBO report. Physicians were scheduled to have a 21% pay cut caring for Medicare patients as of January 1, 2010. However, under Section 3101, this bill provides for .5% increase for physicians in 2010 but assumes no further increases or change to the Medicare Sustainable Growth Rate formula which is used to compute physician payment rates. It is known to be a flawed formula requiring an act of Congress to "fix" each year. Politicians have always provided some nominal increase in physician payments, even if it has not kept pace with inflation. According to the Alliance of Specialty Medicine, "If the SGR formula is not fixed, physicians will receive negative updates of approximately five percent each year from 2006 until 2013 and rates will not return to their 2002 level until well after 2013. In other words, physicians will receive less reimbursement in 2013 than they did in 2002 for the exact same procedure, regardless of inflation and increases in practice costs." This unrealistically assumes doctors will bear the cost burden for the Medicare population. More likely physicians will have to stop Medicare participation (stop caring for Medicare patients) under these conditions. It seems disingenuous to claim "savings," when not all the costs have been realistically accounted for in this bill. This bill will surely go over the CBO estimates if real world historical political behavior of annual "fixes" are assumed as opposed to the static assumptions of the CBO.

On Sunday, under Cloak of Darkness, in the Wee Hours of the Night and in a Snow Storm, the Senate Voted on Health Reform

I am reminded of a phrase my grandmother used to say, “Fra dire e fare, ch’é un mare” - Between saying and doing there is an ocean in between. For all the talk about openness and transparency, it seems things could not be more the opposite given the government was shut down yesterday (Monday) due to the snow. Most all of what has been negotiated has been behind closed doors, with only the ruling party invited to participate. All the rhetoric about “If anyone out there has any good ideas, we want to hear them,” appears to be just hot air. Only one party actually got to bring any of their ideas to the floor for a vote. Despite the fact that Rasmussen has polled the public on healthcare reform and 57% do not want the government to do anything at this point, Congress seems determined to ignore the will of the people. Many have called their elected representatives to find no one answers the phone, email is answered by form letter that usually is not even relevant to what the person wrote. Local offices of elected officials are not taking calls from what my colleagues are reporting to me. Americans are frustrated because their voices are being flatly ignored.

It seems our elected officials do not realize healthcare is not like any other issue. People go back to work for healthcare coverage. The definition of a good job is that it has good benefits, especially health benefits. For most people this is a giant security blanket. They will take a lesser paying job in order to get coverage.

What is most disturbing is the fact that Congress fails to appreciate that the uninsured are not a static group of people. According to a 2004 CBO report, “About 30 percent of Americans under age 65 who become uninsured in a given year remain so for more than 12 months, while nearly half obtain coverage within four months.” Given that most are only transiently uninsured, one must ask. “What is the purpose of remaking 1/6 of the economy and financing it with high taxes to build a system that is not scheduled for implementation for four years, for people who will not likely need coverage by then?”

Politicians, beware passing any of the currently proposed healthcare bills. Failure to recognize that this unlike any other matter before Congress, will surely mean peril in next fall’s election and beyond.

Where has opportunity gone?

While we wait to get a copy of the actual final Senate bill - Last week Senator Harry Reid was reportedly debating another proposed tax increase on those earning more than $250,000 per year to pay for the Senate healthcare proposal; it now appears to have been included in the final version. This time it is an increase in the Medicare payroll tax rate. [NYTimes]


It is extremely popular these days for politicians to consider taxing high income earners. This is perhaps not the wisest move from a tax standpoint, since the top 1% paid 39% of all individual income taxes according to CNN. Let us consider why most people or their families immigrated to this country in the first place – it was the land of opportunity.

Economist Richard Florida wrote about this phenomenon in his critically acclaimed book The Rise of the Creative Class, which describes the immigrant draw of cities like Pittsburgh in the industrial age. His sequel, The Flight of the Creative Class is a must read for any thinking person today. [For a taste, read the brief in the Harvard Business Review.] He calls the doctors, lawyers, engineers, scientists, architects, artists, musicians and professors the creative class. He says that it is America’s openness to new people, ideas and the opportunity to succeed that attracted the world’s talent to our shores. He also documents the social change that has occurred in this country over the last 20 years and the reasons why America appears to have lost some of its luster. Now, it seems our politicians are determined to punish our most productive workers. The question is, if this country continues down this path, why should the creative class remain here? These are people with desirable transferrable skills who can live and work anywhere in the world – But what does this have to do with healthcare?

At a medical conference less than two weeks ago, a physical medicine and rehab physician was telling me he was watching this healthcare debate and depending how it went, looking at potentially moving to New Zealand. He had no idea I had been working with the osteopathic medical profession for the last 10 years on expanding the opportunities for the profession; he was telling me where we had practice rights. But it does not end there, my own family practitioner and her husband, an internist, took a trip this spring to investigate a few countries where they thought might be a good place to live and work. None of these folks are international types, yet they are looking uproot their families and move to another country for a better opportunity. Sure, this is anecdotal evidence now; but in two years, given the current political trajectory, there will be objective studies to show the exodus of the creative class. In less than four years, it will be common knowledge. It is time our politicians wake up before we lose our talent and our tax base.

Insurance: Profitable, but hardly obscene...

Finally today, the news media did their homework on the insurance industry and called the politicians’ bluff. According to TheStreet.com health insurers only made 2.4% last year. [I have to say it; I made this point on pages 1&2 of Healthcare Solved.] According to an article in the American Medical News, October 12, 2009 [print], the nonprofit blues insurers averaged only 2.0% profit last year. Fortune magazine ranked the industry as 35th out of 53 in profits. It is clearly not the most profitable industry in America as Senator Harry Reid has claimed. Not exactly "obscene" profit margins - in fact, the insurance industry is quite anemic in comparison to many other industries. It seems the only possible explanations for these glaring discrepancies are that our politicians are grossly negligent in doing their due diligence on the industry or they are lying.

If they are this ignorant about the industry, is it not pure arrogance to think they can “reform” it? Or, do they believe if enough of politicians repeat these outright lies enough times, Americans will fall for anything they propose? Whether clueless and content to stay that way or desperate, either is deplorable; we need real, meaningful reform. Keep informed, participate in the process. If one of those politicians is yours, call them on it. They get away with it when we let them slide. Shame them into being better men and women then they are. We need statesmen serving the best interests of the people. Accept nothing less.