Thursday, September 3, 2009

Public / Private Funding: We're All in This Together

I have written a great deal about the shortage of primary care physicians in the US, both at present and probably worsening in the future. One of the main reasons is that they make less (much less!) money than many other specialists. This has led to a true shortage of physicians in many Migrant Health Centers, Indian Health Service Clinics, public (e.g., county owned) clinics and other safety net providers, and can even affect Community Health Centers (especially those serving rural areas), although they are in a special category[1]. Another reason that these clinics have difficulty in recruitment of primary care doctors is that their salaries, and these days most primary care doctors are salaried, are lower than those of “private” for-profit (a typical medical practice) or non-profit (when a medical practice is owned by a non-profit hospital, for example) groups. Thus, there are fewer doctors to serve the underserved.

There are also fewer nurse practitioners and nurses. The salaries offered at most of these public settings are much lower than can be earned in private practices or hospital based practices caring for the patients in a particular sub-specialty. County health clinics, which often provide prenatal care, children’s care, family planning, and treatment for sexually-transmitted infections (STIs), as well as other highly infectious diseases which can put the entire community at risk (e.g., tuberculosis) are grossly underfunded, pay low salaries, and thus usually have open positions or people operating above their level of training. Because these nurses and others are not independent practitioners, they often operate under very rigid protocols that can limit care when referrals are not available.

In addition, such clinics (county, public health, etc.) have inadequate non-staff resources, so that their patients get second-class treatment. For example, a county family planning clinic may be able to offer intrauterine devices (a very effective and appropriate method of contraception for many women) only if the company making one of the two brands available in the US approves them for a free IUD. And if the clinic has not exceeded its “allotment”. Very different from a patient in a private office whose insurance will pay for the IUD. And this is just one of many, many examples of patients in public clinics getting inferior care.

Well, you may say, what did you expect? These are after all, public clinics, funded by tax revenue. They can’t expect to have high salaries competitive with the private sector, to have all the equipment and drugs that they need. Governments, both state and local, have always underfunded these operations, and it is obvious that it will get worse in economically hard times. After all, the people who come to these clinics are poor people, without insurance, without money. What do you expect? This is the free market at work: doctors, practices, and hospitals that can be private and take only insured patients will make more money; those at the mercy of our public generosity have to take what they can get. Maybe some of us think it would be nice to do better, but, hey, these are hard times. Taxing the middle-class to be able to provide all these nice services for poor people simply won’t fly. This is the way of the market and the way of the world.

Except, simply, this is a lie. Pretty much we all pay for everyone’s health care. We just choose to do it in different ways, to segregate the market, so that more middle and upper class people have access to more services and better paid doctors and nurses (and thus, obviously, more doctors and nurses!) and poor people have to make do (or not) with what we have left over and choose to devote to this cause.

First of all, there are a lot of health care dollars spent directly by government, federal state and local. This was discussed in the last posting (“Senator Kennedy…, August 30, 2009). Medicare, Medicaid, VA, military, Indian Health service. Then there are the public dollars filtered through private insurance companies – the Federal Employees Health Benefits Plan and the various state and local governments that pay the premiums for their employees. Then there are the tax subsidies for employer contributions to health insurance – the money that the government would get if your employer paid you higher wages, but doesn’t get because, instead of higher wages, you get health insurance, which is tax-deductible to the employer. Of course, even with the availability of this tax break, you may not get health insurance; it depends upon your employer. Not, mainly, whether they are nice or caring, but whether they are big enough to negotiate a good rate with an insurer, and also pay enough in tax to get the break. So your neighbor, the machinist working for Ford, may have a good health plan while you, the just-as-skilled machinist working for a small company may not. But your income taxes are subsidizing his (or her) health insurance. And if you are the insured worker and are healthy, your premiums subsidize the costs of those who are not. That is the way of both insurance and, more important, a society that functions together.

Of course, the reimbursement received by providers for particular episodes of care is higher from some payers, mainly those large companies that insure employees, than it is from other payers, such as Medicare and particularly Medicaid. This is because those costs are paid directly with tax dollars and thus subject to more scrutiny than those filtered (laundered?) through insurance companies. Therefore providers, doctors and hospitals, prefer to care for privately insured patients because they get more money. But, as noted above, a significant part of that cost is paid by government funds. And, of course, the costs are higher because the insurance companies do not provide their laundry service for free; the taxpayer is paying more, the recipient patient is often getting less, and the middleman, the insurance companies, are making the profit.

Thus, the financial justification for provided more limited services to patients (there is no moral justification!) who have to access public or other safety net clinics for their care, is very weak when the entire picture is considered. Obviously, those individual clinics, public hospitals and other safety net providers face limited resources to provide care. But that is because so many dollars, that could be used to provide such care, are being siphoned off for subsidies to “privately insured”, insurance company profit, and administrative waste. The system, as all systems, is “perfectly designed to get the results it gets.” Huge administrative waste, huge insurance company profits, 47 million uninsured, and enormous numbers of underinsured who find out when they get sick what their insurance doesn’t, or won’t, cover.

And a system, noted at the beginning of this piece, that perversely incents the production of high-intervention subspecialists rather than the prevention-and-chronic-disease-management primary care doctors that we need more of. There are also not enough nurse practitioners, physician’s assistants, and nurses working in these areas, because they too can make much more money in high-tech, high-intervention areas. Not as a result of the market, but simply federal government policy decisions. The relative reimbursement for any medical activity (office visit, procedure, hospitalization) is basically set by federal policy. The actual amount will vary depending upon the insurer, but they are virtually all tied to Medicare reimbursement. That is, Blue Cross, or Aetna, or CIGNA will pay 120% of Medicare or 150% of Medicare, or whatever rate the provider (usually based on their power as market share) can negotiate, but always tied to Medicare rates. So, if intervention is paid higher than prevention, if subspecialists are paid higher than generalists, if certain drugs are paid with big markups (like chemotherapy), this is not the market at work, it is simply government policy – it is set by Medicare. This is succinctly and well explained in a recent article by Darshak Sanghavi, “The Fix Is In: The hidden public-private cartel that sets health care prices.”

And, again, the system is perfectly designed to get the results it gets.

We get it. But it is not what we want or need.

[1] Community Health Centers, CHCs, get significantly higher reimbursement from Medicare and Medicaid – often 3 times higher than do non CHC providers. Therefore they have an incentive to see Medicare and Medicaid recipients, but not uninsured people.

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