Skin in the Game: Medicare Addition

Some of you might have caught this ad campaign recently launched by the AMA:

The draconian physician fee cuts on the horizon are unrealistic and will not occur. However, two quick thoughts, and they relate more to the ad’s stealthy message and implications:

  1. How many 35 year-old commercial plan possessing individuals with COPD, CAD, and DM or seniors with cash will sustain internal medicine practices if docs shut their Medicare spickets?  Are these patients in abundant supply?
  2. In this economy, will the cries of, “I cannot afford to keep my office open” sound just a tad shrill–when before and after means a salary reduction from $500K to $450K.  This does not apply to every practitioner of course.

I began to think about the Medicare beneficiaries on the receiving end of this message, their plight, and what we as docs know about them financially.

To that end, I wish to survey blog readers, and after collecting responses for the next few days, I will post the results.  So, before you read further, kindly answer the following two brief questions:

CLICK HERE FOR POP UP SURVEY.  Click Back Button on you browser to return to post after completing.

First, some facts:

Unlike many commercial plans, Medicare has no out of pocket cap, meaning, copays and other charges can accrue infinitely and extract financial hardship.  By definition, we care for hospitalized patients, and that alone places beneficiaries in a more precarious position. This is what pays the bills:

  • Medicare Part A (“the trust fund”), which we all contribute into lifelong via our pay stub deductions (1.45%), and is the bedrock of senior acute care; you are sick and need a hospital stay, you are covered.  The trust fund pays the bills of our hospitals.
  • Medicare Part B is the program component that manages doctor professional fees.  Beneficiaries pay a monthly premium.
  • Medicare Part D manages outpatient drug costs, and again, entails a monthly premium.
  • Folks may also purchase Medigap plans to supplement what A, B, and D lack.  Home health care is not part of the package (custodial care), along with many other services.

You might assume, incorrectly, that these offerings are inexpensive and seniors are getting a free ride.  Not quite.  Note the following table, and the out of pocket punch seniors withstand:

Total copays, premiums. and coinsurance , and one trip to the hospital with a few days of rehabilitation will set back the average senior ~$3000/year.  This does not include many other health related expenses seniors incur, and aggregate sums to meet basic needs are in the $4000-5000 range.

How many seniors amass less than 200% FPL you ask (~$20K, single household)?  Take a look:

About half of seniors are barely scraping by, if you define >200% FPL comfortable.  When one considers that 15-25% of all household income is spent on health—with rent, transportation, and food nipping away on fixed and diminishing pots of savings, reality is harsh.

Seniors are taking it on the chin.  Yes, the system needs repair and waste abounds.   Additionally, many elders have savings, are healthy, and benefit from affluent children or secure community safety nets.  However, the latter group is a quarter of this set, and not typical of the average beneficiary.

Physicians deserve their share, and to echo, the planned cuts lack credibility. However, doctors need context, and while its easy to shift responsibility to “others,” ultimately, the “us vs. them” is grandma and grandpa struggling to get by in a sputtering economy and ailing safety net.  Act we must, but we need to exercise caution.

Why?

Because if you are paying attention, Uncle Sam don’t got this one covered, at least  for the foreseeable future.

About Brian Klepper

Brian Klepper is a health care analyst, commentator and a Principal in Health Value Direct.
This entry was posted in Analytics, Consumerism, Market Dynamics, Medical Management, Physicians, Policy/Law/Regulation, Quality and tagged , , . Bookmark the permalink.

One Response to Skin in the Game: Medicare Addition

  1. a family doc says:

    “In this economy, will the cries of, “I cannot afford to keep my office open” sound just a tad shrill–when before and after means a salary reduction from $500K to $450K.”

    The sentence before this refers to internal medicine practices but those of us in primary care don’t see anything like this for pay now and our pay will drop much more from any Medicare cuts due to our 50% + overhead.

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