Maybe it's my military background or maybe my personality, but I tend to think about how certain hypothetical situations would affect my practice. The hypothetical that seems most relevant right now is how Sen. Bernie Sanders’ proposal of “Medicare for All” would actually work.
But first, what is "Medicare for All"? According to Sen. Sanders’ website, "Health care must be recognized as a right, not a privilege... The only long-term solution to America's health care crisis is a single-payer national health care program." So when he says “Medicare for All,” he really means a single-payer national health care program.
Let's think about that. A single-payer system is one in which one group organizes and finances health care but the actual delivery of care remains in private hands. The easiest way to implement this is to eliminate all private health insurers and have the government, via the Medicare program, take over.
But the devil is in the details. For example, Medicare currently pays 80% of most health care, and most seniors either use Medicaid or a supplement to cover the rest. Under Sen. Sanders’ proposal, Medicare would pay 100% with no premiums or deductibles.
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Incidentally, the government doesn’t necessarily have to be the “single payer.” You could also imagine a system where all insurers across the country band together and set rates as a single payer. Seems like collusion, but as it turns out, a 1945 law known as the McCarran-Ferguson Act, gives this specific industry an antitrust exemption. (Turns out Major League Baseball also has such an exemption.)
It’s also important to state what a single-payer system is not; namely, socialized medicine. This is not a VA-style system where the doctors and hospitals are owned by the government. Remember, the means of health care delivery are still privately owned, rather it’s just that all bills are submitted to one payer. Most of the articles I read that are against this system argue that single payer is simply an intermediate step between our current system and a governmental takeover of all health care, but in a true reading of the proposal it is not.
Before I tackle the important question of how a single-payer system would affect my practice (and possibly your own), I wanted to address what the theoretical advantages of such a system are. The advantages and disadvantages of our current system are well known. A good summary of a single-payer system versus the Affordable Health Care Act (ObamaCare) versus the American Health Care Act (the Republicans’ proposed plan that didn’t pass the Senate) is found on a website of a group called Physicians for a National Health Program, whose opinion on the subject is easy to ascertain.
The advantages of a single-payer system are fairly straightforward. Everyone is covered. Patient choice of physician would likely stay the same or increase; the only doctors who would not be “in-network” would be those who chose to not participate in Medicare, ie concierge doctors. Negotiation power on the side of Medicare would increase against everyone (hospitals, doctors, drug makers, and gadget makers), as there is no more playing one insurance company against another.
But all of this at what cost? Ah yes, that little detail. As you can imagine, the cost estimates vary greatly depending on what assumptions you make, but in general it would not be cheap. Sen. Sanders’ plan itself calls for a 2.2% income tax on all Americans and a 6.2% levy on employers. That means for the average urologist who makes $400,000 a year, his taxes would go up $8,800. Ouch. But then I currently pay about $1,500 a month for health insurance for my family (the plan has a $6,300 individual deductible), so I’d actually save $9,200 a year.
However, my company would also have to pay the 6.2% levy, so as a business owner, my pay would also go down. And that assumes the costs are what Sen. Sanders predicts. Probably the best summary of the pros and cons of a single-payer system is a Washington Post article, “What liberals get wrong about single payer.”
With that in mind, let’s talk about something more germane, namely, how such a plan would affect my business directly. Note that nothing in this blog post discusses how such a plan would affect patient care, as that is a different topic entirely.
Assumptions: We wake up tomorrow and all insurance companies are gone. All citizens have Medicare that covers 100% of costs with no premiums and no deductibles. (This is the Sen. Sanders plan in a nutshell).
First, about 60% of my business is via private insurers and they pay about 25% more than Medicare, so my average patient pays about 115% Medicare now. That means I just lost 15% of my revenue, as my average patient now pays only 100% Medicare. Ouch. I realize this calculation is rough and that it varies greatly depending on your exact situation, but I doubt anyone would see a pay increase.
There are, however, advantages from a business standpoint to a single-payer system as described. First, Medicaid and no-pay patients go away, which means that for the 5% to 10% of my business that currently pays pennies on the dollar, I would receive Medicare rates instead. That’s a plus. Additionally, I could probably save money on billing, as Medicare billing is much more straightforward that private pay. Further, Medicare does pay faster than most private payers, so my accounts receivable would also go down. My staff would also like the fact that most pre-authorizations would go away.
The same could be said for all of my ancillary income. Suddenly, while I may make less per patient, the volume of cases at my ambulatory surgical center, for example, would increase because there would be no more narrow networks. I’d also wager that the overall volume of patient visits would increase, since patients who are delaying health care because they don’t have insurance or can’t afford to use the insurance they have would suddenly show up at our offices.
I realize that this back-of-the-envelope calculation depends greatly on a group’s payer mix. For a practice that does a significant amount of Medicaid, this may be an advantage, whereas if your group’s average contract is 300% Medicare, your income will certainly decrease (and please email me the name of your contract negotiator as I would love her to redo my contracts).
While I don’t know if I “feel the Bern” (a popular Sanders slogan) about a single-payer system, I also don’t think I would have to start looking for a second job if we transitioned to that system.
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