Coverage Does Not Equal Care

May 3, 2010

It has been several weeks now since H.R. 3590 The Patient Protection & Affordable Care Act became law.  While many view the new law as a panacea, others have been happy to criticize the perceived shortcomings of the new law.  One thing the new law failed to address is the flawed formula that will result impending 21.2% decrease in the Medicare Fee for Service Schedule in 2010.   Separate bills in Congress have extended this cut month to month, but a permanent fix to the flawed formula has eluded Congress for well over a decade now.   How may this impact the actual delivery of healthcare you ask? 

I had the opportunity to visit my Congressman’s Office on Capital Hill recently to educate his staff on the impact a 21.2% cut in the fee schedule would have on the access to care overtime.   The impression was that Medicare was only a percentage (albeit a fairly significant one in our case) of our insurance mix and that providers could survive on payments from our other private payers.   What they did not realize is that most private insurance contracts over the past decade or so have been pegged to the Medicare Fee for Service (Part B) Schedule.  That is, a majority of private insurers pay a percentage of the Part B Medicare Fee Schedule.   Thus, a 21.2% cut at the Medicare trickles down to providers’ entire revenue stream, significantly impacting the ability to operate a business. 

 Ironically, several weeks ago a local Primary Care Practice, Haymarket Medical Center, abruptly closed it’s doors after providing care to the community for over 25 years.   They claimed that in the local paper that finances ultimately led to the practice’s demise.   The point here is that no matter how you slice the delivery of healthcare is a business & if those professionals delivering care cannot remain in business all the promised coverage in the world will not guarantee better care.

The new healthcare law promises to expand coverage to the uninsured & surely earned some political capital for those who made campaign promises, but no law can actually deliver the care that is promised.  The same macroeconomic argument that healthcare spending is unsustainable applies to a microeconomic level at your local doctor’s office.   Meaning your physician’s ability to provide care is unsustainable if the expenses of operating the practice consistently outweigh the revenue received from providing care.   In fact, this economic truth applies to any business.