How Healthcare Reform Could Affect Physicians

Leslie R. Kane

Disclosures

September 08, 2009

Introduction

As US leaders tackle healthcare reform, many conflicting goals and interests vie for supremacy.

Although the overall aim is to lower the nation's healthcare costs and create access to healthcare for America's 46 million uninsured, many aspects of the plans could have a huge impact on physicians.

Several healthcare reform plans are being proposed. Major discussions now revolve around elements in the Affordable Health Choices Act of 2009 (H.R. 3200), passed on July 31, 2009 by the House Energy and Commerce Committee.

The proposed plan is over 1000 pages long and addresses numerous aspects of healthcare. Some are generally considered beneficial, such as preventing insurers from denying coverage for previously existing conditions. Other features may run counter to physician interests.

Here is how the 3 major points of H.R. 3200 could affect physicians.

Public Option Plan

Summary: The government will develop low-premium insurance coverage to be offered to the public to compete with employer-sponsored plans. The public option will be a popular low-cost alternative and is intended to spur private insurance companies to lower their premiums to stay competitive.

Until mid-August, the intention was for reimbursement, rates to providers would be based on Medicare rates. However, in the newest development, the government would negotiate reimbursement rates directly with physicians. The rates could not be lower than Medicare rates, but couldn't be higher than the average rates paid by provider plans.

The public option insurance plan would be required to pay for itself through premiums collected. It would not be funded by the US Treasury.

The plan would be optional for providers, who could choose whether or not to participate (Table 1).

Table 1. Pros and Cons of the Public Plan Option

Those Opposed Say: Those in Favor Say:
The government plan will offer premiums so low that they'll ultimately push out other plans, effectively leaving a single payer. This would create a virtual monopoly, and the government plan would have no competition as far as fixing reimbursement rates. A lower-cost insurance will enable coverage for many people who cannot currently afford coverage.
Even with competition, the government is dominant enough to require lower prices from physicians and hospitals. If private plans lower their premiums in response to competition, that is good for the public.
As private insurance companies try to compete with the government plan, they will likely reduce premiums, but will do so by reducing payments to providers. The government public insurance plan would be required to cover essential benefits.
Employers may ultimately drop the private insurance company coverage they now offer in favor of the lower-cost government plan. This would reduce the options available to the public, and deny many people continued coverage in plans they're happy with. If the country eventually had a single-payer plan, this would be more efficient and spare physicians a lot of administrative paperwork.
If the public option insurance plan offers low reimbursements to physicians, this will encourage physicians to refuse to take patients where the cost of care will exceed payment. Physicians are not required to participate in the plan.
Some providers have worried that such a plan will lead to rationing of care that is based on cost. Although H.R. 3200 does not give authority to ration or limit care on the basis of cost per se, there are other metrics on which rationing is more likely, and some may correlate with cost. H.R. 3200 does not give authority to ration or limit care on the basis of cost, and acceptance/denial decisions are expected to be transparent.

 

Individual Mandate

Summary: This element would require all individuals to have "acceptable health coverage." People would be required to carry at least a minimal catastrophic policy to prevent catastrophic medical bills that bankrupt a percentage of US citizens each year.

Anyone without coverage will be charged a penalty of up to 2.5% of their modified adjusted gross income (up to the cost of the average national premium).

With the government insurance plan option, it is considered that carrying health insurance will be less of a burden for people who currently avoid health coverage because of cost (Table 2).

Table 2. Pros and Cons of the Individual Mandate Plan

Those Opposed Say: Those in Favor Say:
As huge numbers of people who were not previously covered get insurance, the patient load in physician offices could double or triple. This could potentially force physicians to ration care. An individual mandate is a positive element of healthcare reform. This will prevent people who cannot pay their medical bills from going bankrupt, forcing foreclosures, etc.
Some physicians have said that inferior patient care could result. Because physicians cannot see all new patients, other healthcare providers would fill the void. Many are less well trained to recognize and manage patients with sicker cases and unusual presentations. The results of the individual mandate are superior to having uninsured people show up at emergency departments, use expensive hospital services, and pay nothing toward the bill. This can help with hospitals' "charitable care" and bad debt from patients who don't pay.
In order to create low-cost insurance for low-income individuals to purchase, insurers will need to keep payments to providers as low as possible. This will enable patients to have conditions treated before they become even more serious and would cost the system more to treat.

 

Cost of Funding Healthcare Reform Plan

Summary: You won't find many folks who deny that we need healthcare reform. Of course, expanded access to healthcare requires funding. Extended coverage to the uninsured has been estimated to cost in the range of $1 trillion over 10 years, and most of that will come from taxpayers. House Speaker Nancy Pelosi has claimed that she will push to "drain" more savings from the medical industry -- hospitals, pharmaceutical companies, and health insurers, which will help fund healthcare reform.

Although H.R. 3200 does not specify the funding, proposals for doing so are under discussion. Current recommendations are to tax the most affluent. Individuals earning over $280,000 and households earning over $350,000 would have to pay a 1% surtax. Households earning from $500,000 to $1 million would have to pay a 1.5% surtax. Those tax rates could increase to 2% and 3% if the government does not achieve targeted cost savings. Pelosi would like the trigger raised to $500,000 for individuals and households with an adjusted gross income of $1 million or more (Table 3).

Table 3. Pros and Cons of the Cost of Funding Healthcare Reform Plan

Those Opposed Say: Those in Favor Say:
Although physician incomes have been declining in recent years, $280,000 individual income is not out of line for many specialties and for high-earning primary care physicians or physicians holding directorial positions. Because most Americans earn less than those amounts, it is not unreasonable to tax wealthier people when there is such a large disparity in income.
Would hurt small business owners and demotivate them to grow their businesses if they will be paying more in taxes. Taxing the wealthy helps lessen the tax bite on the middle class and lower class, who can less afford it.
Taxing people who have huge educational debts and have worked hard to achieve a high income level is demotivating for American business people and for physicians who have achieved more credentials and expertise through hard work.
For physicians, this is money that they have earned, and many have gone deeply into dept through medical school and while earning minimum wage in residency. Taking it away is wrong, and fewer physicians will choose to go to medical school and remain in practice.
Government programs typically cost even more than they were budgeted at, which means that the proposed surcharge taxes would jump to an even higher level.

 

Other Key Points

A number of physicians have castigated H.R. 3200 for the issues that it does not address:

  • Repayment of student loans: Repayment of student loans would help relieve numerous physicians of the financial pressures that they face. For new medical school graduates, student loans can range up to $225,000, according to The New England Journal of Medicine.

  • Malpractice reform: H.R. 3200 does not address the malpractice issues that physicians face, and there appears to be no discussion of malpractice premiums, caps of awards, or other mechanisms to lessen the malpractice burden for physicians.

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