The Sustainable Growth Rate -- What Happens Now?

Eli Y. Adashi, MD; Sen. Tom A. Coburn, MD


June 30, 2011

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Eli Y. Adashi, MD: We are pleased to continue our discussion with Senator Tom Coburn, the junior Senator from Oklahoma, and hear more of his views on the ever-changing healthcare scene.

No Cuts, but no Hikes Either

It is difficult to talk about Medicare today without mentioning the sustainable growth rate (SGR) formula and the concern many of our viewers obviously have about impending cuts to their reimbursements. Two questions: Does your to-be-proposed bill address this issue, but aside from that, where do you see this matter going in the current mix?

Senator Tom A. Coburn, MD: Let me answer the second question first. Physicians are not going to have a 24% or a 27% cut. We all know that, but it shows you the problem of the legislative body trying to handle healthcare because the whole reason the SGR was put in was to control healthcare, thinking that if physicians were faced with this, they would make better decisions about how they spent Medicare dollars. That obviously didn't work, and we have been trying to catch up with it. What I think you can tell physicians is that they are probably not going to see any increases in payments for at least 5 years, simply because as a nation, we are on our back, financially, so I don't think that's going to happen. They may see a small cut, but nothing significant. As a physician I can tell you that dealing with Medicare is really pretty easy, in terms of filing electronically, getting paid electronically, and getting paid on time. The question is, can you afford to have those rates in your practice? That is changing all around the country; the mix is changing.

Where Are the Market Forces?

I have always asked the question, why does the best surgeon get paid the same as the worst? Why does the best internist get paid the same as the worst under Medicare? Where did we lose market forces? We lost market forces when Medicare came in. We have transitioned from seeing 25 patients a day and doing a great job to seeing 45 patients a day and not doing what we were taught, which is, if you listen to your patients, they will tell you what is wrong with them. Seeing 45 patients a day, you can't listen to your patients. So we have transitioned to a treadmill, where we are trying to pay the bills and it is highly expensive. I have all these friends who have gone to concierge medicine and what they like about it the most isn't that they are making more money, it's that they know they are doing a much better job. They are ordering fewer tests, they are coming to diagnostic conclusions faster and better, and they are educating their patients and doing a lot of work in terms of prevention that they never had time to do.

Dr. Adashi: In other words, their level of satisfaction overall is much increased.

Senator Coburn: And the satisfaction of the patient is better. We must figure out how to pay physicians right, and I'm not sure that the government ought to be setting prices on it. With a price-controlled commodity, if it is underpriced it is overutilized, and if it is overpriced, it's marginalized. What is wrong with letting individuals decide? If you have bad actors, hammer them.

Rationing Ourselves

Dr. Adashi: To the extent that you are comfortable sharing this with our viewers, how does your vision compare and contrast with the one that was developed by the House through the initiatives of Representative Paul Ryan?

Senator Coburn: I fully embrace what Paul Ryan is trying to do. There are a couple of givens. One is that it won't continue the way it is. So you have 2 options. You can go to a market-based model where people make choices based on their own best interests and interact with the market, or you can say, "No, we're not going to do that, we're going to have a fixed amount of money with a growing number of people and we're going to let 15 individuals decide what the pay is going to be." What the projections are under the Affordable Care Act (and the IPAB, Independent Payment Advisory Board), you will get less than what you are paid under Medicaid, in a very short period of time -- 3 or 4 years -- because that's what is going to happen if we don't change things. Why would we go there? Markets have allowed our country to accomplish much of what we have been able to do. Markets aren't perfect -- I have no illusions -- but they are a whole lot better than a bunch of bureaucrats trying to make decisions outside of the doctor-patient relationship. I would bet you that in terms of efficiency overall, we would get better returns on healthcare for the dollars expended compared with the way we are doing it today.

I am encouraged that Paul Ryan would put that out. You hear all the political clamor about it, and they' are going to run on it during the next election, but it really makes sense. It's untruthful to say that we are going to continue Medicare the way it is. It isn't going to continue because the money isn't going to be there. Why not make sure we take care of those who are on the low end, make sure they have plenty of money to get what they want? Why don’t we make sure you have an option where you can save some money if you are a smart consumer, and if you are very wealthy in this country, maybe you are not going to get as much help. That's not a novel idea, that is a common sense idea that just might work. It's amazing -- I talk to young people all the time. They don't expect to get Medicare. You know what? They're right. They won't. They don't expect to get social security, and I don't think they will. So I would embrace what Paul Ryan said. I would much rather have individuals ration the care themselves. It's not just the IPAB board, it is also the Innovation Council. I don't know if you are familiar with them.

Dr. Adashi: Yes, the CMS [Centers for Medicare and Medicaid Services].

Senator Coburn: Innovation Council. They are going to say what you can and cannot have access to, what new innovations are available to Medicare. That is nothing but a rationing technique as well. The IPAB board is going to say "Here's where we are cutting spending," and the Innovation Council is going to say, "Here is the limitation on new treatments." I think Americans would probably rather be able to choose that themselves than have a limited number of people in Washington choosing that for them, regardless of how well intentioned they are or how good they are. As a matter of fact, I know that. I don't think that, I know that Americans would like to make those decisions.

Medical Liability Reform: State vs Federal

Dr. Adashi: Shifting gears now Senator to another issue that is obviously on the mind of all physicians and that you as a practicing family medicine practitioner as well as an obstetrician/gynecologist would be very aware of, and that is of course the malpractice challenge and the notion that perhaps we can reform our medical liability situation. What is your general vision on that matter, and could you support a bill such as the health act proposed by Representative Gingrey? Do you think of this as a federal matter as opposed to a state matter? What can you share with our viewers, given a life experience both as a practitioner and as a legislator on this thorny issue?

Senator Coburn: It is a big issue. Defensive medicine costs, at a minimum, are $200 billion a year in this country. Where you have seen significant tort reform, like Texas, California, and Mississippi, what you have seen is not only have malpractice rates gone down, but also after about 2 years, you start to see practice patterns change. Oklahoma, my home state, just passed a tort change. We have been trying to do it for 25 years, and now there is a limitation on noneconomic damages for every action -- not just healthcare -- every action in our state is limited to $350,000. That is going to draw business to our state like crazy.

What I worry about as a fiscal conservative and also as a constitutionalist, is that the first time we put our nose under the tent to start telling Oklahoma or Ohio or Michigan what their tort law will be, where will it stop? In other words, if we can expand the commerce clause enough to mandate that you have to buy health insurance, then I'm sure nobody would object to saying we can extend it enough to say what your tort law is going to be. Then we are going to have the federal government telling us what our tort laws are going to be in healthcare, and what about our tort laws in everything else? Where does it stop?

One of the things our founders believed was that our 13 separate states could actually have some unique identity under this constitution and maybe do things differently, and I think we ought to allow that process to continue as long as we are protecting human and civil rights. I am real happy about what Oklahoma has done. I can't believe that any state wouldn't do that, but it is okay to fail. I don't like the liability system. I had a bill last year -- the Patient's Choice Act -- which incentivized the states to change. In other words, if you would go to a system where you would actually reform, we would supplement your Medicaid payments. We would incentivize you to do that, and I think that is the better way to do it. How do we get you to do something that is positive in the long run for your state?

When you break down that $800 billion, a quarter of it is physicians ordering tests we know we really don't need. When I first started delivering babies, we didn't do ultrasounds unless we had a suspicion that there was a problem. What does the average pregnancy have today -- 4 ultrasounds? I don't think the outcomes are a whole lot better. Yet why are we doing that? A good reason is to make sure that we don't see something there. Just because there is an ultrasound machine, it may not change our action, and it certainly won't always change the outcome, but now we have documented it. I'm not sure that helps us.

Wanted: Common Sense

Dr. Adashi: We have indirectly discussed today the Affordable Care Act, mostly through some of the revisions you were thinking of. Are there elements of the Affordable Care Act that you did find useful, constructive, or helpful in any way? Could you get behind one or more elements of the bill, or have you found the bill more or less across-the-board troubling?

Senator Coburn: As a practicing physician, I find it tremendously troubling, because ultimately what we are going to do is withdraw decision-making from patients and physicians. That's the long-term direction of this bill. I like some of the accountable care organization ideas. I think we can do things a lot better in medicine if we do them together.

Dr. Adashi: Teamwork.

Senator Coburn: Yes, but the regulations they put out, the 220 pages that nobody is going to want to comply with, it just shows you what happens. Doctors aren't putting those regulations out, lawyers are. What we need is to apply some common sense. We take a good idea and make it a disaster up here all the time when we run it through a bureaucracy. We are spending enough money on medicine in this country. I think we can get a whole lot better care for a whole lot more people with the same amount of dollars, but I don't think the way we do it, which is central to the Affordable Care Act, is through centralized command and control bureaucracy. It's the same thing you do with children -- you incentivize good behavior and punish or disincentivize bad behavior. What we need is transparency [with regard to] to price and outcomes. We need to quit kidding ourselves about what we can accomplish and what we can't. We need real competition in the pharmaceutical industry. Right now what we (American taxpayers and American consumers) do through our policies in this country is supplement and subsidize everybody else's drugs in the world. We ought to think about changing that. If Canada tells us our companies can only sell at a certain price, we ought to tell them what we will pay for their lumber. We have not ever had an aggressive approach as far as pharmaceutical costs in terms of our international competition. What happens is that we ultimately pay a whole lot more here than anybody else does around the world because we are subsidizing the research and the ability of the next new product to come along. There is no question that healthcare is broken, but I would put forth that healthcare really got broken when the government started getting into it. If you go back and look, healthcare inflation started in the mid 1960s, after Medicare started, after we had a system that said somebody else was going to pay for it.

Dr. Adashi: And we have been trying to constrain costs ever since.

Senator Coburn: Right. If I go to the grocery store, and I purchase the groceries for the week, and I bought an insurance policy that says, "Here's my copay." I am going to be a totally different consumer if I know that it is coming out of the wad of $5 bills that I have in my pocket that I've got to use to make ends meet. It's human nature. We keep kidding ourselves that this is something other than markets. Is it more serious? Yes. Is it life-impacting to a greater degree? Yes. Can we in fact trust individuals to make a great decision for themselves and can we trust physicians to actually do what they were trained to do? In our educational institutions today, because the government has now said, "Here is the limited time that you can learn as a resident," we are actually putting these constraints in terms of real practical experience on our residents and now we are putting constraints on what they can earn. It's not going to be long before you are going to have fewer and fewer of our top minds going into medicine.

The Individual Mandate

Dr. Adashi: As the Affordable Care Act and its various proposed substitutes are being debated in Congress, there is a parallel process going on in the courts as you know, and while you are not a lawyer or a judge, have you formed an opinion in your own mind as to the constitutionality or the appropriateness of the individual mandate as a principle?

Senator Coburn: I have, and it is probably obvious to you. As I look at our total government, one of the things I have seen is this slow expansion of the commerce clause to give the federal government more and more power, which sometimes has been good, no question, but most often, the good that has come from it has been very expensive and very costly. If the individual mandate is upheld, in other words, if the federal government can force you to buy something against your will, I think the time for true freedom in our country is limited, because there will be no constraints on this Congress or any other. If that is the rule of the day, then we can tell you what kind of car you're going to buy, we can tell you that you can't buy a Cadillac, you have to buy a Chevy because we are selling Chevys this month. This is such an expansion in the commerce clause. The commerce clause was originally expanded over a farmer who wanted to raise wheat for his chickens in Wisconsin, and yet the wheat board wouldn't let him raise wheat. So he challenged it and he lost. For the first time, we had the federal government telling a chicken farmer he couldn't raise his own feed for his chickens in Wisconsin. Washington said that and the Supreme Court upheld it. That was the first expansion of the commerce clause, and if you look at it, what we've done is continue to grow it and I think that as the commerce clause has been expanded through, for example, the individual mandate, our freedom is less, and I'm worried about the vitality of our republic when we can expand the commerce clause to that extent.

Cancer Research

Dr. Adashi: On a personal note, if I may, you are a 2-time cancer survivor. How can we best proceed in dealing with this major worldwide challenge? Would you like to see cancer legislation as part of your legacy? What are your personal wishes and hopes in this arena?

Senator Coburn: The science is expanding -- molecular and genetic science -- it is amazing what we are seeing. I guess my hope would be for us to be able to double National Institutes of Health (NIH) funding again, to take it to $60 billion a year, to really bring it up there to where we really put the dollars. I was diagnosed with melanoma as a young man and given a very poor outcome; I was fortunate and had great physicians. I had metastatic colon cancer in my 50s and had a 50:50 5-year survival. The medicines, the treatments, have so improved. Twenty years ago I wouldn't be here. I don't want us to specifically tell research scientists what they have to do because quite frankly we don't know. Congress doesn't know. What we ought to do is put the minds, the brains, the experience together, and say, "Guys, here are some goals. You go do it." I routinely fight disease-specific legislation up here because right now we are working at the molecular level and that has benefits across all sorts of disease spectrums and fields. When we start limiting our researchers and scientists by saying you have to lock down over here -- we should let them go where we can get the most benefit. I would like to see us do that. And we can do that if we pull in some of the rest of the federal government.

Dr. Adashi: Enabling rather than micromanaging.

Senator Coburn: Yes.

Dr. Adashi: And if possible, doubling the NIH budget to $60 billion when and if this becomes possible. Thank you.

Senator Coburn: You're welcome.

Dr. Adashi: On that note, sincere thanks to Senator Coburn and you, our viewers, for joining Medscape One-on-One. Until next time, I am Eli Adashi.


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