A doctor's perpective of Obamacare - Healthcare delivery bankruptcy Please read

Real Life | schwingdoc

[schwingdoc]

I have been a doctor for 19 years. 4 years in the Army and 15 years in private practice. I belong to a doctor owned group of approx 350 doctors in a multi-specialty practice. We employ 4000 people. In addition to being touted as one of the very best clinics in the nation (Acclaim Award winners) we have donated over a million dollars to the local city in grants, scholarships and charity. Regularly voted as top places to work by our employees. US healthcare at its very best. I am very proud of what we do and we provide tremendous care and value to our patients.

We seek to maintain a 3-5% profit margin annually. We operate in the very precarious business model of enormous volume, low margin. As any business owner knows, this is high-risk-low-margin of error model. Consequently any small changes to cash flow vectors, mandates widespread internal policy and practice corrections. Tiny changes = massive consequences.

As many people may know, Medicare and Medicaid, the current government paid 'insurer' - pays approximately 70% of the cost of care. ie its more expensive for doctors to care for these patients than we get reimbursed for. Say you are a contractor. Imagine the government mandating a significant number of your jobs whereby your out of pocket costs are ~ 30% + greater than your income. That is Medicare and Medicaid. In perspective, our group alone, year 2008 lost ~$12 million caring for our government patients. This is despite taking over 1 1/2 years to help move our fee-for-service traditional Medicare patients over to Medicare Advantage plans, which are privatized versions of Medicare that reimburse better...still not covering costs...but lessen our losses significantly.

Many people ask, why do private health insurance premiums continue to escalate? The liberals want you to believe its a combination of profiteering and waste. When in fact its due mainly to two other processes. The first is obvious: every year it costs more to care for patients and premiums are trying to keep up with this rising cost. But secondly, and less often discussed, is that every year private delivery systems lose more and more money caring for our government patients. Someone has to make up for these losses in order for your hospitals, clinics, nursing homes, pharmacies, group practices to remain solvent and profitable. Every year these delivery systems open their books to the private healthcare insurers - and the insurers must - they must in order for the entire system at large to stay functional, increase the amount they pay out to cover these losses. If they dont, both the delivery systems and the insurers die. So to keep the boat afloat, the payouts by private insurers MUST increase to subsidize the ever increasing losses doctors incur by taking care of our government patients. So, in a way, you could say that your increasing premiums are a tax that you are paying to cover the losses that are Medicare and Medicaid. It's a clear and inarguable private subsidation of government cost. Enough said on that.

So to really feel the consequence and full impact of Obamacare, one must simply see the economic dominos. Most people can see how this bill will rapidly reduce private insurance plans and rapidly expand government plan patients. And take whatever number that is being reported, and multiply that by 3. That has been the experience in both Mass and Hawaii. Both government plans were overwhelmed with the enrollees as they significantly underestimated the government migration.

Ok, so now- how can anyone not see the obvious outcome? Government patients = significant loss of profitability. Initally the private insurers will do their best to continue to subsidize this loss, and there will be a huge escalation of premiums. But within a few months this will be unsustainable. Its a cycle that cannot be stopped. Higher premiums = higher recidivism to governmnet plans = higher premiums etc. Within months, every single hospital, every single doctor office, clinic, nursing home, pharmacy - every delivery system reliant on private insurers will no longer be profitable. ie they will go bankrupt. These will most certainly be the headlines to come: Hospital XYZ shockingly announces bankruptcy; Hospitals can no longer remain open; Clinics across the country file for bankruptcy; Loss of Pharmacy access shocks the Nation; Doctors going bankrupt en masse creating healthcare delivery and access to care crises; Where can you go to get care?; Loss of access reported Nationwide

Yes a crises. A crises of access due to widespread business failure. You will not be able to get care for as long as it takes for the government to devise their emergency bailout package and as long as it takes for those insufficient dollars to try and get those doors back open again. But it will be too late, and it will be too expensive. There is absolutely no way that our government can capitalize our entire healthcare system. Try as they might, only a percentage of what we have now will ultimately survive. And those that do survive will be a shell of what they once were. The conditions will be frightening, and the consequnces will be dire. The degree of disarray will be unimaginable and the underlap in access to care will be gaping.

I will not expand this discussion to predict what this means to our economy at large because I am not an economist. But anyone can be close to predicting what I am suggesting. Factors such as loss of work hours due to illnesses not treated, pressure on all the other private business models; let alone the out and out loss of enourmous capital via the bankruptcy of this entire healthcare industry can clearly be the death nail to our country and imo is a clear and present threat to our very sovereignty. This can make the housing collapse look like a speed bump. This will be massive and rapid and lethal and complete.

I am not certain why this very obvious outcome has not been openly discussed momre often - ie the rapid and massive bankruptcy of all of your health care providers and their delivery systems. But this is the inevitable outcome should this bill ever become law and inplemented.

Thanks for reading. Please ping, copy and email your friends and try and get this word out. I know it's a very late hour - but I do think the implementation is not an inevitability as multiple lawsuits may keep it on hold for a while - so public opinion will still be vital for many more months to come.

Unbelievable times. Please do your part and email and make the phone calls. This plea comes an honest and heartfelt love of our country and its citizens, and an honest and heartfelt love of my profession, avocation and the welfare of my patients.

[GloriaJane]

You sound like you work for obama. All gung ho for obama care.

And no! You're wrong when you said: "Those poorer are already on Medicaid." They are not! My family, case in point. My sisters grown kids, all three can't afford insurance but are not on Medicaid. My own son, he sells his blood right now to get by. And that's how most of the people I know live. From pay check to pay check, if they can get work, they don't have insurance but their not on medicaid.

And the medicaid system will be flooded. And every state knows it. That's why so many of them are standing up and saying they're going to be fighting obamacare.

[RatsDawg]

Yup ignorant, they just go on feelings...like, “We have to do SOMETHING for the millions who are uninsured, its not fair!!”

[givemELL]

With a 3-5% profit margin, the enterprise is an extremely high-risk enterprise as any profit margin is is only a hopeful guess these days. In the credit derivative world, currently sinking the Western World, a drop of 3-5% in collateral value sinks billions of tranches of credit derivatives. Private medicine cannot survive chronic sub-cost payment.

The public has no knowledge of the vast, draconian medicare cuts to MD reimbuirsement of surgical subspecialists in 1991, a result of the 1986 Budget Omnibus Reconciliation Bill. One specialty was cut 50% on its time reimbursement, and additional amounts varying with the service...some specialists were cut, measuring results at the end of their billing year...cut to the tune of 65% in income for services rendered equvalent to the previous year, 1991. These rates remained about the same to the present time. None of this has ever been disclosed. The break year was 1990/91....data is very hard to come by unless individual specialists have saved their records. One specialist reported in 2000 that by the minute, his time in the OR was 75% for Medicare and Medicaid, and that time only provided 15% of his income. Managed care and PPO discounted minutes provided 85% of his income and amounted to only 25% of his time. Medicare and Medicare reimbursements, 75% of his time, and only 15% of his income did not come close to meeting his practice overhead. His bills and living were all contained within his private, non-govt. practice. He has stated that the data in his practice is similar today.

[grame]

I'm on Gov’t Workman's Comp because someone ran a sign and tboned me. Some of my bills they are paying at only 15 to 25% of what is billed. Many, many docs won't take me as a patient, and those that do are frustrated by the hoops we continually have to jump through, and how many we have to jump through depends on who we get on the phone that day. I'm embarrassed to go but it is necessary right now.

[The Duke]

And the effects you describe are but the tip of the iceberg. I've become aware that my own little company - built at the cost of great sacrifice over more then 25 years - will probably not survive. The cost of employees will increase, which will increase the prices we charge our customers. Our customers will then decide to do less business with us because, not only have our costs increased, but their own costs (as well as the costs of all their other vendors) will have increased.

The result is a dramatic slowdown in an economy that is already headed towards ruin.

I am absolutely certain, and horrified, that we are on a path toward civil unrest and bloodshed.

[ArmstedFragg]

I think the mechanism’s a bit different than you forsee. The bill provides for control of premium hikes. They’ll use that to keep the insurers from offsetting the practitioners’ losses, thereby bankrupting the insurance companies while simultaneously forcing the practitioners to adopt higher volume, lower margin, lower quality of care operations. With the private insurers broke, we’ll all be on the government plan, and the practitioners will be scraping by doing 10 minute patient visits. They’ll then congratulate themselves for the new “efficiencies” they’ve created.

[freeangel]

I was just chatting with a doc at work and he made some other interesting points. For those docs that decide they might want to refuse to take medicare/medicaid/public option patients, the next step for mugabeobami will be to “deem” their professional licenses null and void unless they comply. This country ain’t seen nothing yet if this passes.

[Scotsman will be Free]

I’ve read a couple of different articles stating that approx 47% of MDs will quit or retire if this bill becomes law. That’s a massive hit. Throw in all of the other medical jobs, nurses, techs of various sorts, etc. that will be reduced by the lack of MDs.
Buh bye U.S. health care, hello 3rd world.

[Truth29]

Another aspect is that the plan won’t force 30 plus million to buy health care. The fines are too low. Combine a requirement that plans cannot deny coverage due to a preexisting condition and high premium costs and many will make the economic decision to pay the fine and wait till they need health care.
They will then sign up and immediately cost far more than they pay.

[Rockingham]

Thank you for an excellent and informative post.

[maryz]

And the medicaid system will be flooded. And every state knows it.

MA definitely knows it -- they just won't admit it. These hordes of people who can afford health insurance but don't buy it just don't exist, at least not in significant numbers. So with the mandate, more are pushed into Medicaid (MassHealth, as it's known here). Reporting on the failure of the MA plan is thin, to say the least, but I've heard reports, not followed up on (of course), of at least three hospitals close to bankruptcy and four that are suing the state over the pathetic reimbursements. Taxes and fees have been raised to pay for it (in spite of two federal bailouts!).

The cost of MA health insurance (already the highest in the nation) jumped. (I've seen different figures, so not sure which is accurate.) More people are paying the fine rather than buying insurance. If they get sick, of course, with no exclusion for pre-existing conditions, they buy it, get treated, and drop it as soon as possible, so it's not the bonanza the health insurers expected!

[schwingdoc]

Your question is excellent and indeed poignant and fundmental to the argument.
A few points to consider.
1) As is in the Senate Bill (No verion of the slaughter fix up yet,no?)- all people will be required to buy a “GOVERNMENT APPROVED HEALTHCARE INSURANCE PLAN.”
“GOVERNMENT APPROVED” is puporsely left undefined in the bill, stating that definition is left to be determined by the Secretary of DSHS. So A government approved plan can theoretically be private or public. There is nothing eliminating a public option. As we know they have kicked araound expanding the enrollemnt criteron to Medicare / Medicaid.
Their staretgy is to make private insurance companies non-viable first. They are the direct barrier to single payer. Private insruance must be destroyed for govermnet to be the ultimate insurer.
So, how to do this?
Lets look at the banks: Hello Mr Banks. You must make bad loans because we said so - and here is an incentive to do so, and nything that goes under - dont worry, we’ll hide it in Freddie and Fannie.

Today: Hello Mr insurance companies. You must write bad policies. - youo no longer can underwrite your patients. ie your business model must die. Bad loans = Bad insurance policies. Eventually they fail.
Or make the analogy to auto insurance. Pre-existing conditions = 3 DUIS, 9 speeding tickets and 5 accidents.
In this bill, the analogous health insurance company is forced to say yes. Underwriting risk - the life blood of the fundamental concept of insurance is stripped.
And like Fannie and Fae there to sweep up the pieces; so too will the clause of “gov approved health cae plans to be determined in the future by Secretart of DSHS - be the dumping grounds for these failures. Think about it.
When current private heath insurance business show systemic failures, there is nothing in the Senate bill preventing the DSHS secretary deeming a series of new government programs the new “approved health care plans”; or in such a crises - DHSH secretary deeming the expension to new enrolees to both Medicare and Medicaid. It was not long ago that the expansion to Medicare to an age of 50 was kicked around. And that that was just tailgaiting. Do we believe for one minute that once insurance co’s show failures, that the rationale to resurrect, expand create and ‘deem’ gov backed plans to be the fall back position?
Of course it will.
The only other alternatives would be:
1) Hey, we’re breaking private insrance companies - damn that could lead to single payer gov system - lets lay off and pass legislation to get these guys back ontheir feet. Something tells me thats a very cold day in hell.
2) Well, we did say vaguely, “no public option”. Of course the wording is here to allow it to occur; but we have to stick to our word and we’ll let the private sector develop a new creative way of insuring people and we’ll just stand aside while the private system figues it out.

Call me a pessimist - but that is just not gonna happen. They have clearly shown that their fundamental intentions are to assume and absorb the private sector into their public and governmental bureaucracies. Nd this is there most prozed posession.

So yes jackmercer, you are correct in that as is there is no obvous public options clearly constructed. But the language is there to create it, and the war is being fully waged against the private insurers. Public option is inevitable. It will will be over-run with all the patients dropped by the businesses willing to take the penalty over the tax; over-run by the patients dropped from a failed private insurance plan.

This goverment insurance policy migration is inevitable,and will be exponentially faster and more massive than anyone will predict, and the subsequent lethal business effects on the private healthcare delivery systems will be swift and thourough.

Thank you everyone so far with you kind and supportive comments.
This is the real tragedy. insuance companies are the life blood to the healthcare system.
Kill the life blood, you kill the system.

[The Working Man]

A VERY good essay, I appreciate you laying the situation out like this. I thought I knew a lot about the Healthcare situation and how it got there. But you opened my eyes to the Medicare and Medicaid contributions to cost escalations.

So my advice to you and your fellow Doctors: Prepare yourselves to be Nationalized. Everyone in the Healthcare field stands a very good chance of becoming workers/slaves to the Government, also known as the only provider of healthcare. It’s a terrifying thought, isn’t it.

It’s a terrible thing to be demonized for wanting to bring comfort and healing to others and to make a decent living also. The hours that most Healthcare professionals work is nearly insane. I didn’t want to do it, so I took a different path in life. But I can admire you and your compatriots for doing what you do.

If we make it through this and don’t have Government Healthcare shoved down our throats, then we need to take the steps to insure it never comes this close again.

[SupplySider]

We are governed by economic morons. Until that changes, not much else will.

That is the real core of the problem.

Our leaders have two principal tasks: national defense, and managing the multi-trillion dollar income transfer machine that, tragically, is our national economy.

The economic model in vogue with the elites is sophomoric socialist fantasy having little to do with real world economics. The only hope is to elect people who challenge the childish economics taught by the Ivy League/Oxford/Cambridge progressive training camps.

Jimmynomics gave us Reagan. The only hope I see is a similar reaction to the even worse Obamanomics.

[Diogenesis]

Mass. State Treasurer Timothy P. Cahill (I): RomneyCARE
is bankrupting Massachusetts and will do the same nationally.

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"Romney admitted ... that about half of the real costs of "extending
coverage to the uninsured... is covered by federal tax dollars.

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Mr. Romney's RomneyCARE is doing what entitlements do: crowding
out private insurers, compounding the cost explosion, walking the state toward rationing.

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From CATO (the whole article is worthwhile): "Of the 133,000 people who have signed up for insurance since the plan was
implemented, slightly more than half have received totally free coverage."

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"Health Care Speechwriter for Edwards, Obama & Clinton Now Without Health Insurance"
I'm a critic because what Washington is talking about doing
has made health insurance unaffordable in Massachusetts.

---

"Small businesses bridle at health insurance hikes (Romneycare strangles Mass. businesses)
some really bad news from Blue Cross-Blue Shield: His company's health insurance rates are going up 47 percent in January."

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" Rationing medicine has already begun
… government-
run health care has introduced rationing and waiting lists and cost the lives of the people under its provisions."

---

"DEATH PANELS OPEN FOR BUSINESS IN MASSACHUSETTS"

---

"President Obama's newly confirmed regulatory czar defended the
possibility of removing organs from terminally ill patients without their permission."

---

"You can't reap these savings without limiting patients' choices in some way," said Paul Levy, CEO of Beth Israel Deaconess."

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"State plan may place limits on patients' hospital options( Mass. RomneyCare )"

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"Romney Visits Nebraska, Talks Health Care [where he defends Romneycare] "

---

"Paying the Health Tax in Massachusetts [Romneycare]
Unless we ponied up for a pricier policy we
neither need nor want-or enrolled in a government-sponsored insurance plan-we
would have to pay $1,000 each year to the state.
How did we become outlaws?"

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The Massachusetts debacle, coming soon to your neighborhood."
The state's overall costs on health programs have increased by 42% (!) since 2006."

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A Very Sick Health Plan; Bay State's 'Grand Experiment' Fails [RomneyCare]

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Health care in Massachusetts: a warning for America [Romney brings Mass. to its knees]
The Bay State's mandatory insurance law is raising costs, limiting access, and lowering care. "

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"'Severe' doc shortage seen hiking wait time
"The shortage is getting more severe""

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"Health costs to rise again.( RomneyCare )
The state's major health insurers plan to raise premiums by about 10 percent next year"

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"Nation's ill-advised to follow Mass. plan [Health plan a failure]
September 17, 2009 The canary is dead."

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"Bay State Insurance Premiums Highest in Country - Boston Globe August 22, 2009"

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"Massachusetts: the laboratory for ObamaCare"

---

"Massachusetts' Obama-like reforms increase health costs, wait times [RomneyCare]
Premiums are growing 21 to 46 percent faster than the national average"

---

"Mass. Pushes Rationing to Control Universal Healthcare Costs (RomneyCare)"

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"1,000 cancer patients 'refused treatment'"

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"Massachusetts Universal Healthcare System Breaking Down Already"

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"Hospital patients 'left in agony'"

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"Mr. Romney should have known better before signing on to this not-so-grand experiment, especially since the state's "free market" reforms that he boasts about have proven to be irrelevant when not fictional.
Only 21,000 people have used the "connector" that was supposed to link individuals to private insurers."

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A Very Sick Health Plan; Bay State's 'Grand Experiment' Fails [RomneyCare]
Even though the Bay State commenced its program with a far smaller percentage of uninsured residents than exists nationwide,
"RomneyCare" is threatening to bankrupt the state."

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"Dem Congresswoman Admits Obama Health Care Plan Will Destroy Private Health Insurance Industry"

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"Romney's mistreatments a sick man,"

Where is RINO Romney
as the Dems push through ObamaCARE?

Answer: The RINO coward is hiding, sending out his saboteurs
against Gov. Palin and all conservative GOP stars again,
selling his ghostwritten book, helping Gore push the fraud of climate change,
and attacking the "tea party".

[Vet_6780]

We won't let the elderly be turned into another shovel ready govt project.

This law is the equivalent of the 55 MPH speed limit only it will turn into a big joke about how to avoid bleed traps instead of speed traps.

[CapnJack]

Isn't the scenario outlined in the story exactly what 0 wants to happen to this country?

What better way to build a new Reich then from the ashes of the old system.

[ElectionInspector]

“you kill the system”

BINGO....we have a winner! Good post, the fact is this is the CLOWARD/PIVEN overwhelm the system to destroy it and bring on a crisis solved by gov’t takeover... right before our eyes with the lamestream media cheering the Alinski-ites on ... line up your American trained Dr in Panama if you know you are gonna need treatment...

ymmv

[therut]

I agree with the physician totally. We are barely keeping our doors open now. The .gov delayed our Medicare payement for 2 weeks and we had to borrow money for the first time in 36 years to make pay roll. My pay the first 3 months of this year have been cut almost in half. I am making 55,000 a year this year if this keeps up. This is with increased work load. I did 60,000 more care last year increasing my patient load from 32 a day to 50. This is insane. We have 60% medicare and medicaid patients. That is our problem. We have about only 5% private pay. We collect 95% of our private pay charges and on average the private insurance plus the .gov is around 60%. I do not know what is going to happen. We may have to close. It is getting desperate out here.

[GailA]

We are also forced to take generic drugs that don’t work as well, and need more frequent testing driving up the cost of care. We are forced to RENT things like sleep apena machines, when buying them would be cheaper in the long, run. We are forced to put Loved Ones in costly nursing homes, when just a Nurses Aide coming in couple days a week would be cheaper. List goes on and on of what would reduce cost, and not need this OBAMANATION with the IRS in control.

I don’t want some pimple faced 25 year old IRS agent who has never been to Med School making medical decisions for me!