Medicaid Savings Result in Costs

On Jan. 17, the Medicare Payment Advisory Commission voted to recommend a reduction in Medicare payments to hospitals for 2006. Under the current formula, hospitals were entitled to a 3.2% increase for the year, based on rising costs of goods the hospitals buy. Under the proposed rules, the increase would be cut to 2.8%, saving the government about $800 million for the year.

The panel never heard the story of the man who was trying to save money by feeding his horse less and less. Just as he had the horse trained to do without any food at all, the foolish animal went and died. The various groups looking for ways to reduce health care costs have managed, over the years, to reduce the quality of care without reducing costs.

They have plots and plans that carefully avoid the fat, while removing the muscle. The most obvious is the Medicare prescription drug plan, which, if not precisely a license to steal, is certainly a permit to rip off, where Medicare is required to buy the medications for the plan at list price. Since most drug reimbursement plans don't pay list, but rather the amount they think a "prudent buyer" would pay for the drugs, it seems fair to say that the current administration and Congress simply aren't very prudent -- but we already knew that.

Cut payments to hospitals and then look around to see what the hospitals do to live on less. One step would be to reduce the use of professionals and increase the amount of work done by lower-paid aides and technicians. Unfortunately, the easy stuff has already been done, and the only way to divert more tasks to para-professionals and sub-professionals is to assign them tasks that seemed to require professionals on first and even second examination.

In some cases, activities can be dropped entirely. Many hospitals have cut back on clinical pharmacy services, having pharmacists review drug regimens for interactions or questionable drugs or doses. These programs were designed to reduce the number of medication errors made in hospitals, and in limited studies they were effective. Estimates of patient deaths due to medication errors and adverse drug events in hospitals range from 30,000 to 180,000 per year, but the priority is to cut costs rather than work toward reducing errors.

Length of stay will decrease further, since this reduces the cost of treating any single patient. There was a furor when insurers insisted that women be discharged from the hospital within 24 hours of giving birth, but no comparable demands when insurers insisted on faster discharges after liver transplants.

People, the ones who actually provide the health care that is supposed to be the reason for having hospitals and insurance programs, are laid off. The hospital has to do more with less. We got a laugh out of Charlie Chaplin in Modern Times and Lucille Ball in the chocolate factory, but neither Charlie nor Lucy were ever asked to do an appendectomy.

If anything gets enlarged it's the department responsible for reviewing charts and making sure that no billable item gets missed.

As it is, Medicare is one of the most efficient healthcare programs around, with minimal overhead, estimated as low as 3%. If we really were serious about cutting healthcare costs, all the private insurers with their 15%-plus administrative costs would be folded into Medicare. Similarly, the 45 million people who go without health insurance would be brought under the system, eliminating the complex billing formulas that are designed to compensate hospitals for caring for the uninsured. This would also eliminate the legal costs associated with garnishing the wages of the working poor.

Both government and hospitals have lost sight of their original purpose, which had something to do with helping people who need help. There's an institutional game of chicken, a limbo dance, or a variant on the kids' games of Don't Break the Ice and Don't Spill the Beans to see how far you can go before the whole system collapses. Meanwhile, defense contractors are given cost-plus contracts and healthcare providers are paid less than cost to see how little they can survive on -- only, it's not always their survival that's on the line.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y.

Home Page

News | Current Issue | Back Issues | Essays | Links

About the Progressive Populist | How to Subscribe | How to Contact Us

Copyright © 2005 The Progressive Populist