The 2007-08 Federal budget has been submitted to Congress. It includes an 11% increase in defense spending, which is no surprise. Nor is it surprising that this spending increase will be financed in part through cuts in health care. One hundred billion dollars will be excised from Medicare and Medicaid, and there will be deep cuts in funding to medical training programs. (I had to borrow $130,000 to get through medical school. I guess this means future doctors will be borrowing even more.)
These budget cuts will mean serious pain for the U.S. government's two largest healthcare programs. Healthcare costs continue to rise much more rapidly than inflation, and the Bush administration is looking to cut funding at a time when demand is increasing. Medicare, the larger of the two programs, insures almost all Americans over 65 and many people on disability. Medicaid is America's idea of healthcare for the poor. It is so underfunded that in most states it excludes anyone with a job, even a part-time minimum-wage job, meaning that a lot of Americans are forced to choose between working for $5.15 an hour and having health insurance.
On Wednesday of last week, Health and Human Resources Secretary Mike Leavitt went to Capitol Hill to defend the President's budget before the Energy and Commerce Committee. When Mr. Leavitt was asked if the budget cuts would result in hundreds of thousands of children being kicked off of Medicaid, he answered cryptically, "That it is dependent completely on the state rules." In a mealymouthed, roundabout way, what he was saying is that the states can continue to insure children on Medicaid if they change their policies and pay more of their share of the bill (i.e., raise taxes). Hardly an unqualified commitment to the future of Medicaid.
Many people think of Medicaid as welfare, as a government handout for the poor. While this is to some degree true, Medicaid is also one of the largest insurers of children in America. One in five American children is enrolled in Medicaid in any given year. According to the U.S. Department of Health and Human Services, 59 million people enrolled in Medicaid in 2004, 29 million of them children. Cutting this program will hurt millions of people, most of them poor, and most of them children. And the reason? To finance a war.
It is not possible to lay the full blame of this sad situation on the White House, however. I was greatly disappointed to read the American Medical Association's press release on the proposed budget:
What is missing from this statement? The word Medicaid. The AMA is all over Medicare, and rightfully so, but in this, and in virtually all other missives I get from them, Medicaid is nowhere to be found. It is the ugly stepchild of healthcare policy. Since most Medicaid recipients are poor and under 18, they do not vote and do not contribute money to political campaigns. It is easy for us to pretend they don't exist.
The AMA has been a strong supporter of Republican healthcare policy for many years. It is hard to see why. What have the Republicans done to improve healthcare in the United States? George W. Bush ran for president in 2004 on the vague promise that he would reform medical malpractice law. He has done nothing of the sort. Nor has Republican leadership offered any revision to our healthcare system other than tax cuts and tax credits. I do not pretend to know everything about health insurance policy, but one thing I can promise is that we will not fix what is wrong with the U.S. healthcare system by jiggling the tax code.
I do not have a problem with the AMA fighting the good fight to keep up Medicare funding. But I am not worried about Medicare. Medicare is healthcare insurance for the elderly. The over-65 demographic group is the fastest-growing segment of the American population, and people over 65 vote. It is unthinkable that Congress would allow Medicare cuts to pass. Any politician who supported such cuts would be signing his own suicide note.
The AMA throws its considerable funding and prestige behind efforts to restore Medicare funding because increasing Medicare funding is both popular and financially beneficial to doctors. Medicaid, however, is a different matter. Most doctors don't see Medicaid patients. While 75% of doctors accept patients with Medicare, less than 25% accept Medicaid. Since doctors rarely depend on Medicaid for their income, and since most Medicaid patients are very poor and have no real political power, there is a real possibility that, while the Medicare cuts get restored, the Medicaid cuts could stick. If they do stick, hundreds of thousands of people will move into the ranks of the uninsured, and many of them will be children.
One way to get a feel for how well the government funds Medicaid is to look at the ratio between what Medicaid and Medicare pay for the same services. In other words, if Medicare pays $100 for a particular service, such as a new patient office visit, how much does Medicaid pay? This ratio varies from state to state, but overall, in 2003 it was 0.63 for primary care doctors. That is, on average, Medicaid only paid doctors 63 cents for services that Medicare would pay a dollar for. In Louisiana, the percentage was 0.73, which is pretty good. California paid 0.51, New Jersey paid 0.35, and New York paid 0.45. Now, if you were a doctor in New Jersey, how would you feel about getting only 35% of the payment would get if you saw the same patient under Medicare? Would you consider not seeing Medicaid patients at all? And the Bush administration wants to cut Medicaid funding even further.
When I was in Louisiana, I got about $28 in reimbursement for each Medicaid patient I saw for a typical office sick visit. If I saw 4 patients an hour, that would come to $112 an hour. In a typical doctor's office, after factoring in the nurse's salary, the receptionist's salary, rent, heat, light, phone, and insurance costs, it costs more than $100 an hour just to stay open. For a specialist, who may require high tech equipment such as ultrasound machines (OB/gyn, cardiology), lasers (dermatology), Xrays and casting equipment (orthopedics), the cost can be much, much more. It is very difficult to see a Medicaid patient without losing money.
It would be one thing if Medicaid simply paid badly. Perhaps doctors would take it anyway, just as an act of charity. Many would, I believe, except that Medicaid, besides being the cheapest payor in healthcare, is also the most annoying. Here is a concrete example. In both Louisiana and Mississippi, Medicaid has a drug formulary -- a list of medications it covers as part of its plan. In this way Medicaid is no different from most other drug plans. But in most drug plans, the drug formulary is composed of tiers. First tier drugs are the cheapest -- usually generics -- and the insurance pays for the majority of the cost with a small co-pay of maybe $10. Second tier drugs are more expensive, and the drug plan usually pays for them also but requires a higher co-pay of, say, $30. Drugs on the highest tier have the highest co-pay, and the plan will often only pay about 50% of the cost or less.
Medicaid is different. Medicaid is the only insurance plan I know of in which the plan has no second tier. Medicaid pays all the cost of its first-tier drugs except for a small copay of $2. For everything else, it pays nothing. This forces doctors to write for formulary medications. Patients with Medicaid are by definition poor, and they cannot afford non-formulary drugs. The only way around this rule is to apply for an override, known as a Prior Authorization, or PA. In my experience, Mississippi Medicaid rarely approves PAs, and PA forms take time to fill out and file.
So instead I have to memorize the Medicaid formulary and work only with it, even if I feel my patients would be better served with non-formulary drugs. To make matters worse, the state of Mississippi changes the formulary every 3 months and never, ever sends me a list of their changes. I may have a patient on a particular medication for months or even years, and then suddenly the medication is dropped and I start getting phone calls from pharmacies on behalf of patients stuck with huge drug bills. I find out what is now covered, and I rewrite the prescriptions. This is easier than signing a hundred PAs and waiting for the rejections.
This agonizing bureaucracy is typical of Medicaid, and to my knowledge, occurs in some equivalent manner in every state.
To sum up, there are no benefits to taking Medicaid patients. The reimbursement is lousy, the drug formulary is difficult and annoying, there are severe restrictions on services providers are allowed to bill for, and, on top of all that, the program makes no effort whatsoever to accommodate doctors who are trying to work with the system out of concern for patients. One would think that a program in which nearly 80% of doctors refuse to participate would be eager to work with the 20% who do. One would think.
What we have is this orphaned program, a program that provides a critical service to some of the sickest and poorest patients around. The federal government wants to slice it up, the AMA has forgotten about it, and most doctors want nothing to do with it. If there were not real lives at stake here, we might even think this is funny.
Most people with private insurance give Medicaid no thought. All I can do is invite you the reader, next time you pick up a paycheck, to look at that check and consider a possibility. If you were to lose your job and then contract a serious medical illness, that forsaken program may be all the medical care you can hope to get. Don't laugh. I can name a dozen patients of mine who have found themselves in exactly this predicament.
Think it over. Then go out and vote accordingly.
These budget cuts will mean serious pain for the U.S. government's two largest healthcare programs. Healthcare costs continue to rise much more rapidly than inflation, and the Bush administration is looking to cut funding at a time when demand is increasing. Medicare, the larger of the two programs, insures almost all Americans over 65 and many people on disability. Medicaid is America's idea of healthcare for the poor. It is so underfunded that in most states it excludes anyone with a job, even a part-time minimum-wage job, meaning that a lot of Americans are forced to choose between working for $5.15 an hour and having health insurance.
On Wednesday of last week, Health and Human Resources Secretary Mike Leavitt went to Capitol Hill to defend the President's budget before the Energy and Commerce Committee. When Mr. Leavitt was asked if the budget cuts would result in hundreds of thousands of children being kicked off of Medicaid, he answered cryptically, "That it is dependent completely on the state rules." In a mealymouthed, roundabout way, what he was saying is that the states can continue to insure children on Medicaid if they change their policies and pay more of their share of the bill (i.e., raise taxes). Hardly an unqualified commitment to the future of Medicaid.
Many people think of Medicaid as welfare, as a government handout for the poor. While this is to some degree true, Medicaid is also one of the largest insurers of children in America. One in five American children is enrolled in Medicaid in any given year. According to the U.S. Department of Health and Human Services, 59 million people enrolled in Medicaid in 2004, 29 million of them children. Cutting this program will hurt millions of people, most of them poor, and most of them children. And the reason? To finance a war.
It is not possible to lay the full blame of this sad situation on the White House, however. I was greatly disappointed to read the American Medical Association's press release on the proposed budget:
The AMA is deeply disappointed that President Bush has once again ignored an opportunity to right the wrongs in the current Medicare physician payment system by failing to call on Congress to stop the cuts and provide payments in line with practice costs. Current average Medicare payments to physicians are about the same as in 2001, and next year’s reimbursement will be cut 10 percent – unless Congress intervenes.
What is missing from this statement? The word Medicaid. The AMA is all over Medicare, and rightfully so, but in this, and in virtually all other missives I get from them, Medicaid is nowhere to be found. It is the ugly stepchild of healthcare policy. Since most Medicaid recipients are poor and under 18, they do not vote and do not contribute money to political campaigns. It is easy for us to pretend they don't exist.
The AMA has been a strong supporter of Republican healthcare policy for many years. It is hard to see why. What have the Republicans done to improve healthcare in the United States? George W. Bush ran for president in 2004 on the vague promise that he would reform medical malpractice law. He has done nothing of the sort. Nor has Republican leadership offered any revision to our healthcare system other than tax cuts and tax credits. I do not pretend to know everything about health insurance policy, but one thing I can promise is that we will not fix what is wrong with the U.S. healthcare system by jiggling the tax code.
I do not have a problem with the AMA fighting the good fight to keep up Medicare funding. But I am not worried about Medicare. Medicare is healthcare insurance for the elderly. The over-65 demographic group is the fastest-growing segment of the American population, and people over 65 vote. It is unthinkable that Congress would allow Medicare cuts to pass. Any politician who supported such cuts would be signing his own suicide note.
The AMA throws its considerable funding and prestige behind efforts to restore Medicare funding because increasing Medicare funding is both popular and financially beneficial to doctors. Medicaid, however, is a different matter. Most doctors don't see Medicaid patients. While 75% of doctors accept patients with Medicare, less than 25% accept Medicaid. Since doctors rarely depend on Medicaid for their income, and since most Medicaid patients are very poor and have no real political power, there is a real possibility that, while the Medicare cuts get restored, the Medicaid cuts could stick. If they do stick, hundreds of thousands of people will move into the ranks of the uninsured, and many of them will be children.
One way to get a feel for how well the government funds Medicaid is to look at the ratio between what Medicaid and Medicare pay for the same services. In other words, if Medicare pays $100 for a particular service, such as a new patient office visit, how much does Medicaid pay? This ratio varies from state to state, but overall, in 2003 it was 0.63 for primary care doctors. That is, on average, Medicaid only paid doctors 63 cents for services that Medicare would pay a dollar for. In Louisiana, the percentage was 0.73, which is pretty good. California paid 0.51, New Jersey paid 0.35, and New York paid 0.45. Now, if you were a doctor in New Jersey, how would you feel about getting only 35% of the payment would get if you saw the same patient under Medicare? Would you consider not seeing Medicaid patients at all? And the Bush administration wants to cut Medicaid funding even further.
When I was in Louisiana, I got about $28 in reimbursement for each Medicaid patient I saw for a typical office sick visit. If I saw 4 patients an hour, that would come to $112 an hour. In a typical doctor's office, after factoring in the nurse's salary, the receptionist's salary, rent, heat, light, phone, and insurance costs, it costs more than $100 an hour just to stay open. For a specialist, who may require high tech equipment such as ultrasound machines (OB/gyn, cardiology), lasers (dermatology), Xrays and casting equipment (orthopedics), the cost can be much, much more. It is very difficult to see a Medicaid patient without losing money.
It would be one thing if Medicaid simply paid badly. Perhaps doctors would take it anyway, just as an act of charity. Many would, I believe, except that Medicaid, besides being the cheapest payor in healthcare, is also the most annoying. Here is a concrete example. In both Louisiana and Mississippi, Medicaid has a drug formulary -- a list of medications it covers as part of its plan. In this way Medicaid is no different from most other drug plans. But in most drug plans, the drug formulary is composed of tiers. First tier drugs are the cheapest -- usually generics -- and the insurance pays for the majority of the cost with a small co-pay of maybe $10. Second tier drugs are more expensive, and the drug plan usually pays for them also but requires a higher co-pay of, say, $30. Drugs on the highest tier have the highest co-pay, and the plan will often only pay about 50% of the cost or less.
Medicaid is different. Medicaid is the only insurance plan I know of in which the plan has no second tier. Medicaid pays all the cost of its first-tier drugs except for a small copay of $2. For everything else, it pays nothing. This forces doctors to write for formulary medications. Patients with Medicaid are by definition poor, and they cannot afford non-formulary drugs. The only way around this rule is to apply for an override, known as a Prior Authorization, or PA. In my experience, Mississippi Medicaid rarely approves PAs, and PA forms take time to fill out and file.
So instead I have to memorize the Medicaid formulary and work only with it, even if I feel my patients would be better served with non-formulary drugs. To make matters worse, the state of Mississippi changes the formulary every 3 months and never, ever sends me a list of their changes. I may have a patient on a particular medication for months or even years, and then suddenly the medication is dropped and I start getting phone calls from pharmacies on behalf of patients stuck with huge drug bills. I find out what is now covered, and I rewrite the prescriptions. This is easier than signing a hundred PAs and waiting for the rejections.
This agonizing bureaucracy is typical of Medicaid, and to my knowledge, occurs in some equivalent manner in every state.
To sum up, there are no benefits to taking Medicaid patients. The reimbursement is lousy, the drug formulary is difficult and annoying, there are severe restrictions on services providers are allowed to bill for, and, on top of all that, the program makes no effort whatsoever to accommodate doctors who are trying to work with the system out of concern for patients. One would think that a program in which nearly 80% of doctors refuse to participate would be eager to work with the 20% who do. One would think.
What we have is this orphaned program, a program that provides a critical service to some of the sickest and poorest patients around. The federal government wants to slice it up, the AMA has forgotten about it, and most doctors want nothing to do with it. If there were not real lives at stake here, we might even think this is funny.
Most people with private insurance give Medicaid no thought. All I can do is invite you the reader, next time you pick up a paycheck, to look at that check and consider a possibility. If you were to lose your job and then contract a serious medical illness, that forsaken program may be all the medical care you can hope to get. Don't laugh. I can name a dozen patients of mine who have found themselves in exactly this predicament.
Think it over. Then go out and vote accordingly.