Opting Out

I didn't intend for this site to become all Obamacare, all the time, but with 17% of the economy at stake, and the pending doomsday scenario of Obamacare, it seems like a worthwhile dalliance. On Instapundit today (They Can't Handle This, But They'll Handle Health Care?, August 20, 2009), Prof. Reynolds remarks:

They promised FedEx, but they’re delivering the Post Office. . . .

It is wise that Prof. Reynolds reminds us how inefficient the government can be, but it isn't necessary to predict that the handling of Obamacare would be akin to the Cash for Clunkers program--no crystal-ball gazing is required. It is appropriate to look at how the government currently handles Medicare reimbursements (apples to apples comparison).

Exhibits:

• Low Medicare Reimbursement Rates Hurt Hospitals in Iowa And California (Kaiser Health News, June 3, 2009):

Television Station KHQA 7 reports on how Iowa hospitals are losing millions of dollars a year because of low payments from the state and federal government. "For years Medicare pays 14 percent less than what it actually costs for hospitals to provide the care to patients. Medicaid payments are even lower and many times are late in coming..."

• Medicaid Payment Delays Deter Physician Participation (Health System Change, November 18, 2009):

"Medicaid payment rates matter, but the hassle factor also matters, and this study strongly suggests that higher Medicaid fees won't have the desired effect of increasing access if physicians have to wait months to get paid," said HSC Senior Fellow Peter J. Cunningham, Ph.D., coauthor of the study with HSC Senior Researcher Ann S. O'Malley, M.D., M.P.H.

• Doctors Are Opting Out of Medicare (Julie Connelly, New York Times, April 1, 2009):

Early this year, Barbara Plumb, a freelance editor and writer in New York who is on Medicare, received a disturbing letter. Her gynecologist informed her that she was opting out of Medicare. When Ms. Plumb asked her primary-care doctor to recommend another gynecologist who took Medicare, the doctor responded that she didn’t know any — and that if Ms. Plumb found one she liked, could she call and tell her the name?

• Medicare and Its Impact on Patient Care (Association of American Physicians and Surgeons, February 4, 2000):

• Almost 25% of doctors refuse to treat new Medicare patients;
• 20% of those who refuse to accept new Medicare patients, do so because of hassles and/or threats from Medicare carriers;
• More than one-third of doctors have trouble finding referral doctors for Medicare patients;
• More than one-third of doctors surveyed are restricting services to Medicare patients;
• Almost one-fifth of doctors give Medicare patients a lower priority for appointments;
• More than 80% of doctors have an increased fear of investigation or prosecution;
• More than one-fourth of doctors are restricting services to Medicare patients because of hassles/threats from Medicare.

The Federal government does a pitiful job with Medicare. There is no reason to think that Obamacare would make things better. In fact, it is reasonable to conclude that the lack of competition would make the problems even worse. Beyond their pathetic handling of payments and the low rates of reimbursement, the Federal government has one additional feather in its cap to make things even worse: The threat of imprisonment. While we could all point to a story about some notorious doctor-fraud ring, the reality is that the vast majority of physicians are not committing fraud; yet, the slightest error in Medicare forms can generate the full force of the government. Why would any physician want to engage in activities where they can easily misstep, resulting in imprisonment? If Medicare was fast to pay and paid the equivalent of the insurance company's negotiated rates, then the higher risk of fraud charges would be irrelevant, but with a trifecta of risk (late pay, low pay, fraud charges), doctors are simply saying "no" to Medicare.

With Obamacare, the "no" option would be taken off the table. Most people realize that lack of competition makes a business sector lazy and unresponsive to customer demands, but this is even worse than that. A business sector is always vulnerable to a new player who does respond to customer demand with a better product, but the government doesn't have a competitor, nor a threat of one.

"Government as well as religion has furnished its schisms, its persecutions, and its devices for fattening idleness on the earnings of the people."

- Thomas Jefferson, 1815

Cross posted at From the Maenianum Secundum (comments are open there).