Medicare is much discussed today in the current Fiscal Cliff standoff. It shouldn't be. First, because it is not an entitlement. You and I pay a premium for it and the fund is solvent through 2024, even with our changing, aging demographics. Don't let anyone call it an entitlement and demonize it. Here is the real problem few except President Obama are discussing. Many of our Democratic leaders are healthcare economics illiterates. The problem is that we have allowed healthcare to become the most inflationary aspect of our economy--double digit inflationary.
Who are we? We the voters, at least those of us electing state legislators in the 80's. We allowed them, Republicans and Democrats alike, to deregulate hospitals and healthcare institutions. We were sold a bill of goods, told that it would create competition and competition would drive down costs. Hospitals and their outpatient facilities were once regulated like utilities. At least, in the majority of states where utilities were actually regulated, our Texas being an exception. But, even in Texas, public owned and tax exempt hospitals were regulated to the extent that if your county hospital or local non-profit wanted to add an OB wing, or buy an MRI machine, they had to commission a study proving sufficient demand and file a Certificate of Need application to defend such a new investment with the department of health. Some got turned down for reason of insufficient demand or need.
But states like California got the bright idea, sold by really good con artists that by unleashing unregulated competition, institutions like hospitals and outpatient centers would lower costs.
But quite the opposite happened during the hyper capitalistic Reagan era. As Certificate of Need requirements were abandoned by legislators and regulators, a national movement spread like a brush fire. Hospitals and outpatient centers began buying technology for their diagnostic and surgical programs, buying off high priced surgical practices like open heart surgeons and advertising these. Technology manufacturers had an orgy of sales. In short order, there were more unused million dollar machines than junkers in a used car lot. Hospitals started advertising wars spending millions, extolling the virtues of their Gamma Knives, PET scanners and multi-million dollar heart surgeons with not enough work. Soon, way too many beds, way too many suburban branches of medical center hospitals and soon, you or your parent’s insurance premiums started exploding. And though they pissed these institutions off mightily by resisting raising Medicare reimbursements, Medicare too had to fork out more cash for exotic procedures and technology driven medicine. Then came an explosion of for profit hospitals, later to consolidate into mega-mergers, driving competition further into a frenzied state.
These trends caused formerly altruism driven medical students into the chase for the big bucks in specialty medicine like cardiology and orthopedics, away from general practice and primary care. Soon came a shortage of primary care physicians, particularly serving lower income communities.
What we created was a crazy quilt of unsynchronized, uncoordinated, inefficient, dollar driven enterprises in the health care arena that we call our health care system today. Not to excuse greed driven, hyper-profitable health insurance companies, but this is a lot of what they face. And so does Medicare. It is an out of control hodge-podge of ever escalating costs.
Add to that another phenomenon that drives inflation in health care. What looks like a hospital with four reasonably square walls really is not. Inside those wall is crazy quilt of for profit contact companies running the day to day operations of Mother Mercy Medical Center. Mother Mercy is not findable. What you find is the Emergency Room company, the surgical suite company, the nurse staffing company, the housekeeping company, the IT company, the billing company, the anesthesiology company, the food service company, the pharmacy company, the list is endless and total. Mother Mercy has dozens of for profit contractors, usually parts of huge national hospital contract service companies. Yes, this is within your tax exempt, so called non-profit hospital. Why? Well for one thing, it is nearly impossible to unionize staffs who work for disparate contract companies. And another thing, it is a lot easier for a hospital administrator to rely on company specialists to stay abreast of the exploding technology and new processes that to know and stay on top of that stuff themselves. You know, this is the age of specialization. Hey, there are even companies that computer scan your hospital charges before they go to Medicare and do something called "upcoding" to make sure that the most expensive option of several billing codes applies to your respiratory therapy bill before it goes out to Medicare.
Are you sufficiently confused by this chaos that some try to persuade us is the "best healthcare in the world"? How about efficient? Wouldn't you think we should be hearing from medical schools and hospital administrator graduate programs about how to clean up this mess? You won't. They're cleaning up financially.
Thank your lucky stars President Obama had the guts to take this nightmare on. He and we have a long way to go to make sense of this. Medicare still runs with 2 % overhead. Ask Mother Mercy Medical Center if they're doing the same. You won't get an answer. They're too busy wallowing in the chaos. Now you know who the real problem is.