Medicare: Where Do We Draw the Line?

The last two weeks have seen a myriad of developments in Washington affecting physicians and their patients who rely on Medicare to deliver the funding for their health care.  The discussions elicited by theses events beg the question about the affordability of the Medicare program in its present form and its solvency.  Regardless of where one stands on the issue of Medicare, one central and rarely mentioned question serves as the quintessential determinant of the program’s future.  Where do we draw the line on access to government-funded health care?

Like all things federal, I suggest we begin by looking at the Constitution.  Article I Section 8 defines the powers of the Congress.  In their concern over unchecked growth of the central government’s power, the Framers were very careful in ascertaining the federal government’s domestic powers, limiting them to those specifically delineated in the Constitution.  Needless to say, the power to create a mammoth insurance company designed to provide coverage to the elderly is nowhere delineated in that historical document.  Indeed, had we stayed true to the original interpretation of the Constitution’s text, we would have found no legal basis upon which to build the Herculean Social Security and Medicare programs.

In fact, according to our original governmental design while the states would have been free to develop their individual government-run health care systems (so long as doing so did not conflict with the individual state’s constitution), there is no similar power afforded to the federal government.  Such a restriction to the federal government’s ability to develop an entitlement program was genial because it allowed only the states to develop such programs. However, devoid of the power to print currency, no matter the idealistic visions the state legislators would entertain, their intrusions upon the liberties of their constituents would be limited by the restraints of their finite purses.

However, a far different story would be told if the federal government were allowed to create the insurance/entitlement program with its unlimited powers of taxation and printing of currency.  Gone would be the budgetary check on the growth of the entitlement system.  Despite these clearly foreseeable threats to the nation’s fiscal integrity, the program was built and implemented under the massive and expansive hands of the federal government.

There are those who claim the Medicare program is unconstitutional, and it is likely that at one time it would have been deemed as such.   However, among the many issues the Supreme Court evaluates in considering the Constitutionality of a law is the time it has been in existence and whether it has instilled such reliance upon it that its removal would elicit substantial hardship.  In Medicare’s case, with its fifty year existence and the millions of individuals dependent upon its existence for the funding of life-preserving health care, it is most unlikely that the provisions of the Social Security Act of 1965 would ever be overruled.

Being stuck with the Medicare program, we are forced to work with it and consider, among other questions, how pervasive we want it to be, and how much we can afford to pay for it?  No serious analysis would conclude that Medicare, with its unaffordability and its seemingly unrestricted access to care has not become too large.  The natural inclination is to cut its funding, but there are at least two obstacles to the indiscriminate cutting of Medicare funding.

The first was set up in 1989 when Congress decided to mandate the amount of money health care providers would be paid for a procedure or intervention.  The results of this were devastating.  Not only had Congress now strayed even further from the powers enumerated to it in the Constitution by placing itself in the business of determining the value of a procedure or intervention, by prohibiting the provider from privately contracting with the patient to recover the market value of the service (and not merely the government-directed value) the federal government suddenly assumed the full responsibility of paying for the care.

The move, although achieving the progressive goal of centrally controlling the care for the nation’s seniors and placing us squarely in track for the implementation of a single-payer health care system, placed upon the federal government the unmanageable burden of having to pay for such care.

From the physician’s side, there was no longer a market-based approach to health care delivery and pricing.  The provider delivering care in Medicare-rich economies became wholly dependent on the federal government, not only to reimburse him for the costs of delivering care, but for the setting of the fee he would receive for such care.  If the government determined a physician’s fees were to be cut, the physician’s practice would merely see less revenue, until, if the appropriate number was reached, the practice would generate insufficient numbers to maintain itself.

So, although the myopic and deceptively responsible action would be to cut provider reimbursement, in point of fact, unless the underlying premise under which Medicare operates is radically transformed, the effect of such reimbursement cuts would be to decimate regional health care systems throughout key areas of the country.  Indeed, cutting provider reimbursement has been the action the government has taken since it first took on the role of “Appraiser General” of health care services.  Since 1995, when corrected for inflation, physician reimbursement has been cut by 44%.  The cuts, of course, would be even larger when referenced of the inflationary costs specific to health care delivery.  It is therefore appalling to consider the effects the additional 27% reduction in such reimbursement slated to take place on January 1, 2012 will have on the nation’s health care system.

Clearly, the call to have physicians “suck up” and “get used to” to unsustainable reimbursement formulas transcends rationality.

Now that we have breached the restrictions imposed by the Constitution without any signs of reversal and have allowed the executive to take on the role of “Appraiser General,” what recourse do we have available in the face of a national financial implosion?

Although there are numerous possible solutions, every one of them carries with it significant disadvantages.  However, perhaps the simplest solution is the “Your Medicare; Your Choice” option introduced by Congressman Tom Price of Georgia.  Simply put, the program allows for the physician to set his own fee schedule and allows him the ability to individually contract with his patient.  The Congress would then be free to set its nonbinding fee schedule.  Regardless of what the figure would be, it would fall upon the physician and his patient to negotiate a price for the rest…or not.  The program would be implemented upon enrollees joining the program ten or fifteen years from now so as to spare the presently-enrolled or soon-to-be-enrolled recipients from the hardship of having to adapt to a suddenly and substantially changed system.  Once implemented, the government would no longer be burdened with paying for a system it clearly cannot afford.  The physician would no longer be dependent on the government for the setting of reimbursement rates and defining his value to society, and the patient would become the key guardian of the cost of medical care.

Having ignored the line initially drawn by the Constitution, “Your Medicare; Your Choice” stacks up as the next best plan.