Tag: "American Medical Association"

Bipartisan Medicare Reform: Debt and Deficits, All the Way Down

The extremely flawed so-called Medicare “doc fix” has passed. Its direct consequences include increasing federal government control of the practice of medicine and increasing deficits by at least $141 billion through 2025. However, it also has implications far beyond Medicare’s physician fee schedule, to post-Obamacare reform and general governance. Let’s tackle the fee schedule first. This “doc fix” was promoted as solving the problem that Congress has to increase Medicare’s physician fees at least once a year beyond the rate of growth originally legislated in 1997. If this did not happen, physicians’ fees would drop by about 20 percent, and they would reduce Medicare beneficiaries’ access. This “doc fix” abolishes the 1997 formula in favor of fixed, nominal rates of growth. As a consequence, the fee schedule is not “fixed” in the sense that it is “solved”. It is “fixed” in the sense that Congress has dictated the total amount that will be paid to physicians in future years. It will go up 0.5 percent per year from 2016 through 2019. Then, the amount freezes, and doctors enter a war of all against all, competing against each other for shares of an amount that will inexorably shrink in inflation-adjusted terms. It gets even more bureaucratized after 2025, but there is no point thinking about that because the whole thing is almost certain to unravel before then.

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Robots as Therapists, and Other Links

Doctor Poll: 69% Pessimistic About Future of Medicine Under ObamaCare

ObamaCare will cause higher costs and waiting lines:

The majority of doctors don’t believe that the AMA represents their views. The primary reason: the AMA’s support of [ObamaCare]. Just 13% of those surveyed backed the Affordable Care Act…

When surveyed by Deloitte, 83% of doctors said one likely change to the medical system as a result of the law would be increased wait times…an inevitable outcome of insuring millions more patients without a matching increase in the number of doctors.

It’s one thing to mandate insurance for all, but quite another to do so without incentivizing physicians or those considering the profession. In fact, the law does the opposite: For many doctors, there becomes a financial disincentive to practice medicine.

The Global Budget in Your Future

There were two announcements last week that I hope you paid attention to:

  • The American Medical Group Association, representing medical groups that provide care for roughly 1 in 3 Americans, said that 90% of its members would not participate in the new Accountable Care Organization (ACO) model the Obama administration wants to impose on Medicare providers.
  • Secretary of Health and Human Services Kathleen Sebelius, exercising new powers conferred upon her by health reform (ObamaCare), said insurers would have to justify any rate increases greater than 10%.

So what does one announcement have to do with the other? A lot. I’ll connect the dots below the fold.

Here’s the bottom line. The administration uses the rhetoric of choice and competition and some isolated souls within it may actually think competitive pressures can reduce health care costs. But if that doesn’t work out, it’s goodbye to volunteerism and hello to another way of constraining costs: global budgets.


If it don’t work out
Then you can tell me goodbye

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Is Global Warming Harmful to Your Health?

American Medical Association: Yes

Scholarly studies: No

This is from a study by Tom Moore:

This study shows that climate change would probably reduce mortality in the United States by about 40,000 per year, assuming a 4.5° warmer climate – the IPCC best estimate of temperature change with a doubling of carbon dioxide. Benefits would extend to lower medical costs nationwide. Measuring willingness to pay by wage rates shows that people prefer warm climates and would be willing to give up between $30 billion and $100 billion annually for a 4.5° increase in temperatures.

See this Moore study as well. See also this study here as well as my own thoughts on global warming.

Why Do We Need Unions?

There is one group of workers who have signed a consent decree with the federal government, agreeing to never form a union. Do you know who they are? Answer below the fold.

The economics of unions is quite simple. Like medieval guilds, the goal of a modern union is to monopolize the supply of labor to a market. (See David Henderson here.) With that power, the union can then limit the labor supply and secure above-market wages. Why do unions push for higher wages and benefits even when they cause layoffs? Because trading off smaller output for higher prices is what all monopolies do.

It is sometimes thought that unions are needed to offset the superior bargaining power of employers. But this is bad economics. Do you need to band with other consumers in order to bargain better with Wal-mart? Of course not. Wal-mart’s prices are low not because of your bargaining power, but because it has competitors. Similarly, competition among employers is what keeps wages high in the labor market.

It is sometimes argued that unions are needed to lift people out of poverty. This is even worse economics. Above-market wages for unionized workers are possible only if less fortunate workers can be kept out of the market. Moreover, like the members of medieval guilds, the vast majority of unionized workers today have above-average incomes. They are squarely in the top half of the income distribution, not the bottom half. Unionized professional athletes are downright rich. Poor people almost never form successful labor unions.

Here is a song by Pete Seeger and Arlo Guthrie via Ezra Klein. I’ve added a different caption.

NFL Football Players
Have Learned this Lesson Well

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The AMA and the Myth of the “Doc Fix”

Of all the huffery puffery in American health policy, what is the most ridiculous? I think a leading candidate is the never-ending lobbying by the American Medical Association and associated medical societies to implement a so-called “doc fix” for Medicare.  This refers to U.S. government’s spending on doctors who participate in the Medicare Part B program, through which American seniors receive outpatient care.

The federal government attempts to calculate the price and value of each medical service delivered to Medicare beneficiaries by using a formula called the Resource-Based Relative Value Scale (RVBS).  Furthermore, it attempts to limit the total growth of Medicare’s spending on physicians by a method called the Sustainable Growth Rate (SGR), which Congress imposed in 1997.

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Should Eligibility for Medicare Be Lowered to Age 55?

“The irony of this late-breaking Medicare proposal is that it could be a bigger step toward a single-payer system than the milquetoast public option plans rejected by Senate moderates as too disruptive of the private market.”  — Washington Post

“Any plan to expand Medicare, which is the government’s largest public plan, beyond its current scope does not solve the nation’s health care crisis, but compounds it. … This scenario follows the typical pattern for price controls —reduced access, compromised quality and increasing costs anyway. We need to address these problems — not perpetuate them — through health reform legislation.”                    — Mayo Clinic

“A Medicare buy-in…would add millions of more patients to a program where it is difficult for a new enrollee to get an appointment with a physician.”                       — American Medical Association

“Medicare pays hospitals just 91 cents for each dollar of care provided. …  Adding millions of people to these programs at a time when they already severely underfund hospitals is unwise and should be opposed.”  — American Hospital Association


What Special Interests are Getting for Selling Out on Health Reform

The American Medical Association (AMA): A promise to repeal a scheduled 21 percent cut in physician’s Medicare reimbursements under the current law.

AARP: As many as 8.5 million seniors will lose their Medicare Advantage coverage and be forced to buy Medigap insurance instead. AARP (which has morphed into an insurance company) is one of the main sellers of Medigap.

The drug industry: A 10-year limit of $80 billion in cuts in prescription drug costs and administration assurances that it will continue to bar lower-cost Canadian drugs from coming into the U.S.

Insurance companies: Access to 40 million potential new customers.

Full article in The Hill’s Pundits Blog.