Last week we had the pleasure of participating in an “expert panel discussion” with Drs. Brian Biles and Peter Salgo, that will be available on the web on or around June 15, 2011. The topic was healthcare reform and the Affordable Care Act (aka “ObamaCare”); and more specifically the short and long-term implications of the ACA for practicing physicians. From my perspective there were two important take home lessons. First, there is no way on God’s green earth clinicians can be expected to absorb the payment cuts that the law mandates and still maintain medicine as a viable profession for most young people. Second, we may not have seen anything yet.
As spelled out in this year’s “Alternative Report” from Medicare’s own Office of the Actuary, (the regular report now being nothing more than fiction since passage of the ACA, because it is forced to use assumptions about the world that are clearly unrealistic), Medicare payments are rapidly falling below those of both private insurance and Medicaid. The law of the land, passed by Democrats along strict party lines and signed by President Obama, says that Medicare will pay only 40% of the average private insurance payment in less than 20 years, and about 30% by 2060. Meanwhile, Medicaid payments will remain steady at just over 55% of what private insurance pays.
Here’s the problem: the vast majority of clinicians find that they are already losing money by seeing Medicaid patients, even though the government bureaucracy and paperwork associated with seeing these patients is typically much worse that that required for patients who are privately insured. Nationwide, about one-third of clinicians simply won’t see Medicaid patients for this reason. To do so would be financial suicide, equivalent to bakers agreeing to sell cookies that cost 50 cents to make to everyone with a government-issued card for 25 cents. In areas with lots of “Medicookie” customers, there will obviously be a lot of bakeries going out of business.
What does this mean to older Americans? Well, conservatively, at least one-third of doctors simply won’t be able to see Medicare beneficiaries over the next few years. The percentage will then expand rapidly over time until few, if any, seniors can be seen by the average clinician. Clearly this is not going to be “Medicare as we know it”, but it’s the law as signed by President Obama. If we want our elders to be seen either the law needs to change, or they need to be seeing “providers” who aren’t really doctors and are willing and able to accept a lot less money for whatever it is they’re doing. (Of course, that wouldn’t be “Medicare as we know it” either, but for some reason none of our political leaders have yet mentioned this.)
We knew much of this going into the panel discussion. However we are profoundly grateful to Dr. Biles for pointing out something that had escaped us: all of this can easily get a good deal worse. How? It turns out that the newly legislated Independent Payment Advisory Board (IPAB) is even more independent than even its critics had imagined.
We’ve previously written about the IPAB, and at one point specifically cut and pasted all of the elements of the Affordable Care Act that applied to the IPAB into a single convenient document. Many others have weighed in on this topic as well, most notably Dr. Rich over at The Covert Rationing Blog. But Dr. Biles mentioned something that positively astonished us. He observed that, according to the law, it was perfectly possible to for the President, any President, create and operate this body with just a single person. Moreover, this person could be given a recess appointment, thereby completely escaping the muss and inconvenience of Congressional hearings or Senate approval, just at Mr. Obama did when he appointed Dr. Donald Berwick to be the Head of CMS. Since, by law, a majority of IPAB appointees cannot be actual healthcare providers like doctors or nurses, this person would – almost by definition – know little or nothing about the actual provision of patient care services. Here’s the relevant language. It’s not continuous, but simply cobbled together from the relevant passages:
“(A) IN GENERAL. — The Board shall be composed of —
(i) 15 members appointed by the President, by and with the advice and consent of the Senate; and
(ii) the Secretary, the Administrator of the Center for Medicare & Medicaid Services, and the Administrator of the Health Resources and Services Administration, all of whom shall serve ex officio as nonvoting members of the Board.
MAJORITY NONPROVIDERS. — Individuals who are directly involved in the provision or management of the delivery of items and services covered under this title shall not constitute a majority of the appointed membership of the Board.
(h) VACANCIES; QUORUM; SEAL; VICE CHAIRPERSON; VOTING ON REPORTS. —
(1) VACANCIES. — No vacancy on the Board shall impair the right of the remaining members to exercise all the powers of the Board.
(2) QUORUM. — A majority of the appointed members of the Board shall constitute a quorum for the transaction of business, but a lesser number of members may hold hearings.”
Because the law is both relatively vague and written to make it extremely difficult for Congress to override the rules and regulations proposed by the IPAB, it is actually quite possible for this single individual to sit alone, perhaps secluded in the in the White House, HHS or even the caves of Tora Bora, and personally dictate the terms of care for tens of millions of Americans.
“The proposal shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and co-payments), or otherwise restrict benefits or modify eligibility criteria.”
Supposedly (s)he can’t “ration care”, but what does “rationing care” really mean? Let’s pose a hypothetical example. Suppose that if procedure A and procedure B are equally effective in the treatment of condition X in that both work in half of patients treated, but A is more expensive than B. So it might seem perfectly fine for our IPAB administrator to deny Medicare payments for treatment A, while retaining treatment B. That’s not “rationing care”, it’s simply making care “cost-effective”, right? But what if the population of patients who responds to treatment B only has a 50% overlap with the patients who respond to respond to treatment A? For all practical purposes, 25% of Medicare patients with this condition have just had their only opportunity for effective care removed, but not “rationed”. This example is hardly far-fetched. As Dr. Rich has illustrated, this is exactly what Britain’s National Institute for Health and Clinical Excellence (or “NICE”) – which clearly is in the business of rationing – did in the case of the drug Amiodarone.
However key difference here is that, while NICE really is composed of a bunch of people with some knowledge of medical science, statistics and the like, there is no similar obligation of the part of the IPAB, either in terms of numbers of people or the expertise they bring to bear. All of these elements are at the whim of future Presidents, whoever he or she may be.
“Okay”, many of our readers might say, “but this is all paranoid. This sort of IPAB dictatorship would only occur in a world filed with conspiracies. It’s really supposed to have 15 people, and they’re really all going to be experts and the Senate will approve them, and they won’t be pathological about what they construe rationing to be, and everything will be all logical and compassionate and fine.”
That may be, but the real point here is that that’s also a lot of “ifs”. Healthcare policy shouldn’t be held hostage to the whims of Presidents or the people whom they appoint without ample opportunities for checks and balances. It’s too important. Would those scoffing at “IPAB paranoia” be just as complacent if the IPAB were constituted not by President Obama, but by Richard Nixon or GW Bush? How about a President Palin? What if, for example, President Palin decided to appoint the worst possible person they might imagine?
All of a sudden, maybe paranoia about the potential harm that could be done by this single unaccountable organization may not seem so far-fetched. It brings to mind that old saying: “Just because you’re paranoid doesn’t mean that they’re not out to get you.”