Sunday, September 25, 2011

In Los Angeles, Physician Reimbursement Is Heading To $0

You knew this was coming. In these times of worsening financial crises, when the government is running billions and trillions of dollars in debt but the needs of the poor are still growing, they have to cut the money from somewhere. The easiest targets, naturally, are the healthcare expenses of the government budget. Within this enormous slice of the budget, healthcare reimbursements to doctors are the quickest and least controversial areas to slash. Unlike the public employee unions, doctors cannot organize and threaten to shut down the system to prevent payment cuts. They are "morally obligated" to treat patients, no matter if they are paid or not.

In L.A. County, the Health Department has proposed cutting back reimbursements to doctors who treat the indigent population. If the reduced rate is not accepted, they will stop payments to doctors altogether. Health Director Mitch Katz has told the County Board of Supervisors that the department has no choice because it is running a deficit of millions of dollars this year. Currently MediCal, California's Medicaid program for the poor, pays doctors 18% of a patient's bill. That works out to about $50 for a visit. Under the Health Department's proposal, the county will reduce reimbursements to 12% of a bill. If the County Supervisors don't approve, then they will not pay doctors at all.

Notice that no doctors were consulted on this drastic decision that could irreparably harm their livelihoods and the healthcare of millions in the county. No attempt at cutting expenses from other areas of the budget were contemplated in the name of helping the poor. No salary reductions for county employees are in the cards. No changes in their pension plans or their gold plated health insurance will be tolerated in an attempt to give the indigent better medical care. Of course the reason is that everybody knows doctors have no choice but to treat patients for free. Thanks to EMTALA, anybody who walks or is wheeled into the emergency room will be taken care of, whether they have the ability to pay or not. If the care is felt to be substandard, then the patient will just call the first medical malpractice lawyer he sees advertising on the side of the city bus to extort money from the doctor and the hospital, who may not have received anything at all trying to help the patient. 

Some say a single payer system is the eventual endpoint for healthcare in the U.S. If we believe that medical care is an essential element of a civilized society, and frankly it has been elevated to a right like freedom of speech and religion, then the only logical choice is the single payer. However, now we can see that doctors being beholden to a single entity for payments has severe downsides. With no market competition, doctor salaries can be changed on a whim, depending on the generosity and fiscal health of the government. That day may not be as far off as we think.

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