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Your Future Under Obamacare: Big Medicine Getting Bigger

More centralized control of health spending will inevitably mean more centralized control of health care.

by
Paul Hsieh

Bio

September 3, 2013 - 11:13 pm
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This is the first in a series of articles on the rollout of Obamacare and how the law will change our health care system. Each Wednesday in September, we will publish two articles — one on the changes in medicine and medical care and one on changes in the insurance industry. We hope this series of articles will help you make better decisions when it comes to your health care and how you buy insurance.

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Recently, there’s been an enormous shakeup in three traditionally stable professions — law, education, and medicine. But where law and education are moving towards decentralization and greater consumer control, medicine is moving in the opposite direction — towards greater centralization and less consumer (patient) control.

Why? Because the upheavals in law and education are being driven by market forces. In contrast, the upheaval in medicine is being driven by new government controls. Hence, Big Law and Big Education are struggling, while Big Medicine is growing.

This series of articles will discuss how the ObamaCare health law is fueling the rise of Big Medicine, what this will mean for patients, and how patients can respond to best protect their medical care.

There are three major components to Big Medicine. The first is a “remarkable” wave of hospital mergers, as recently reported by the New York Times.

These mergers are driven primarily by economic pressures, including declining reimbursements from Medicare (and from private insurers who typically peg their payments to Medicare rates) as well as costs of expensive, new, mandatory electronic medical record systems. Mergers give hospitals greater leverage in their negotiations with private insurers and increased efficiencies of scale with electronic record keeping, billing, and other administrative overhead.

According to the New York Times, the mergers are “transforming the economics of health care” by “creating giant hospital systems that could one day dominate American health care.”

The second component of Big Medicine is the shift of doctors away from independent private practice and towards becoming hospital employees. Doctors face many of the same pressures as hospitals. As eWeek reported, “Doctors are abandoning their private practices to join large health organizations so they can lower their costs and meet government mandates on electronic health records.”

By becoming hospital employees, doctors lose autonomy, but enjoy more regular hours and a more predictable salary. In return, hospitals gain access to a guaranteed supply of patients from their employee-physicians. Last year the Washington Post reported, “[T]he number of physicians who own their firms dropped from 57 percent in 2000 to 43 percent in 2009, and it’s projected to continue falling to 33 percent by 2013.” As oncologist Patrick Cobb recently told CNN, “We have a joke that there are two kinds of private practices left in America. Those that sold to hospitals and those that are about to be sold.”

The third component of Big Medicine will be Accountable Care Organizations (ACOs). ObamaCare encourages hospitals and doctor to band together into large ACOs to contain Medicare health costs. The ACOs would be paid according to how well they met government benchmarks for “outcomes” and “quality.” ACOs that spent less money on patients than the government deemed necessary would be financially rewarded; those that spend too much money would suffer. In essence, government will use financial carrots and sticks to reward ACOs for practicing medicine according to its guidelines.

It’s informative to contrast this growing consolidation of American medicine with the opposite trends in law and education.

Noam Scheiber recently described the ongoing shakeout in “Big Law” following the collapse of the housing bubble and the subsequent recession:

“Stable” is not the way anyone would describe a legal career today. In the past decade, twelve major firms with more than 1,000 partners between them have collapsed entirely. The surviving lawyers live in fear of suffering a similar fate, driving them to ever-more humiliating lengths to edge out rivals for business. “They were cold-calling,” says the lawyer whose firm once turned down no-name clients.

According to Scheiber, corporate clients previously willing to pay high legal bills started using alternatives like contract attorneys and “legal process outsourcers.” University of North Carolina law professor Bernard Burk has described this as a combination of “outsourcing, downsourcing and insourcing.”

The shakeout in higher education (“Big Ed”) is also being driven by unhappy consumers. Glenn Reynolds (aka “Instapundit“) has written extensively about the “higher education bubble“ of skyrocketing college tuitions outstripping any reasonable expected return:

As more young people see friends and relatives with degrees serving coffee and living in their parents’ basements, the idea of borrowing tens of thousands of dollars to attend a traditional university will become less appealing. More focused skills training will probably become more common, and growing numbers of students and parents will opt for less costly online classes…

Comments are closed.

Top Rated Comments   
I have not only watched this, but I have got to live it since I got cancer 7 years ago. I had my own insurance through my own job and that covered almost all my iniatial costs. Once it was proven I was never going to return to my job, they quickly fired me to save money. I went on my wife's insurace she had through her job and I was denied NOTHING during my 11 months of chemo and as many operations. When obamma came to power my wifes non-profit legal firm was on jarrets enemies list (they were all republican laywers) and their funding dried up to the point that they went out of business. I was then forced onto medicare and the battle of "you cost too much" began for me.

Every single previous medication I was on for 2 years was denied out of hand because the bean counters had to "review" what the DOCTORS perscribed and "recomend" ( meaning force you) to change medications or pay 100% of the cost yourself, and that was AFTER being cut-off of my meds cold-turkey for 3 months! Then all the co-pays started to change to the point that my entire $1200 per month SS check that I got for paying taxes for 30 years, would NOT even cover the "CO-PAYS". According to them, it was OK to raise my co-pay from $30 bucks a month on ONE med to $800 a month, and that was after my & my doctors fight to get it on the "inclusive" list of approved meds.

After 2 years of this all of our savings was gone, all of our creditcards were maxed out, and I still was racking up medical debt at break neck pace.

This was all BEFORE obamacare. Now even diagnostic imaging of ANY kind carries a percentage that you have to pay out of your pocket, and that pectage changes often. 1 xray for me $80... 1 MRI for me $2000.

Now it is even worse and the pace of forcing you to pay more or go without is going faster while hospital profit margins sit around 4000% mark-up on average in the USA.


Soon the death panels or as the VA likes to call them "end of life councilers" will expand from talking our vets into killing themselves out onto the general public and have a team at every hospital in the country with mandatory sessions for all medicade paitents to attend or lose your coverage.
1 year ago
1 year ago Link To Comment
All Comments   (15)
All Comments   (15)
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To low information citizens Social Security and Medicare appear financially viable on the surface. Anyone paying attention knows they are unsustainably bankrupt. But these are both relatively smaller populations for which to provide benefits to compared to Obamacare's affected population.

The US may be seem to be decades behind European nationalized health care's descent into bankruptcy - but unfettered immigration of millions more Obamacare recipients may well catch us up at a frighteningly quick pace.
1 year ago
1 year ago Link To Comment
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1 year ago
1 year ago Link To Comment
Short of the overthrow of our “republic” and massive suffering, there will be improvement.
1 year ago
1 year ago Link To Comment
This is going to wreak absolute havoc on people like me who have migraine. It's a highly individual disease that's absolutely pernicious. If you have it, you lose a lot of days to it until you can get it under control, but because it's highly individual, you really need a doctor who understands it very well, knows all the possible treatment permutations and is willing and able to work with you to come up with a plan that really works for you. That makes it very expensive to properly treat migraine suffers, but when it works, it's so worth it.
1 year ago
1 year ago Link To Comment
The thing is, somehow every other 1st world country in the world, and even many 3rd world countries somehow manage to have universal coverage via socialized medicine and yet somehow manage to only pay a small fraction of what we do.

If their medical coverage somehow actually worse? Maybe, maybe not. But my experience with the health care system indicates it can't possibly any worse. My mother had heart problems and then later cancer. Both times it was absolute nightmares, constantly fighting with the insurance company.

The hospital would have to discharge her because the insurance company wouldn't pay any more, so we'd constantly have to take her right back to the emergency room to get her re-admitted.

The whole thing just killed about my father and certainly didn't do my well being any favors.

God forbid if actually giving everyone health care means delays. Can't have rich people and those with great insurance inconvenienced, meanwhile people like my mother can just die, apparently.
1 year ago
1 year ago Link To Comment
Do not be so hard on discojer.

What happened to his mother was not right.

Medicine has not been a free market since the whole concept of medical insurance came to be. This is not a box of Cheerios.

The market became infused with cash when doctors and hospitals could negotiate fees with insurance companies instead of just having the patient write a check. That has had some upside and medical care rode that wave of employer benefit insurance money to build and provide better care.

There is no free lunch. It had to happen that corporate medicine evolved to better meet the negotiated fees, which have little to do with actual charges, Medicare brought government into the picture in an ever expanding role. All of this happened long before Obamacare.

Now government wants to call more shots because they can. We all know that government tends to least efficient and most costly of all options.

So I have seen these things happen over the last few decades and have run the gamut. I was trained in the county run government big city hospital which was an excellent experience for a resident. We were in it up to our eyeballs there. No regrets.

I have since had a long run in a private group practice which was run over by a big box corporate institution. I have been hospital employee, practiced with a smaller company as employee, and am now with another private practice trying to maintain position in this sea of instability.

All I ever wanted was to be able to do my work without thinking much about the politics and reimbursement. Mostly I have had that opportunity. That freedom will diminish as government controls.

Anyway I am sorry about what happened to Discojer and his family. I do not control anymore the bill for my services. That has been taken away from the providers long ago.
1 year ago
1 year ago Link To Comment
Well, it certainly is simpler in those countries. You get what you get without appeal. However, those countries also deliver second or third rate treatments at best, and if there's a better treatment that you might need to save life or limb? Too bad. You get what you get. And if you have a rapidly deteriorating condition or an aggressive cancer and the line is six to nine months long to wait for your treatment, you just better pray your condition isn't really that bad so that you're still alive and maybe treatable when it's your turn.

You must be a big supporter of the public school system, too.
1 year ago
1 year ago Link To Comment
DiscoJer, My condolences for your mother, but you have it wrong. With a free market, you have many more options to save life and to address corruption or malpractice. With a government system run by nameless, faceless bureaucrats, you'll get nothing. Note how those with the power, exempt themselves, like Congress and the IRS. That tells you all you need to know. Obamacare is a scam. It's not designed to improve healthcare. It's meant to take away your options and make you entirely dependent on power mad tyrants who don't give a damn about your mother or you, while taking all of your money for their use. And if you complain, you'll be threatened, imprisoned, silenced, slandered, possibly killed as a right wing anti-government terrorist if you get too much notice. Don't expect justice or mercy from the politicians in power, liars and hypocrites all, who constantly lie to you telling you that they'll make the world more fair, more just, if you just sign away your life, your money, your liberty to them for eternity. Don't let your grief turn into anger that is used by politicians to pit you against your neighbor.
1 year ago
1 year ago Link To Comment
how many Free socialized medicine countries have you visited? the UK has some of the worst medical staff, if you want to commit suicide go to Gov run healthcare- the entire healthcare scam by USG is a vote buying campaign & countries like Canada just go and see how free is FREE? sounds great but like Food Stamps and Welfare it will be abused by the masses until they kill it
1 year ago
1 year ago Link To Comment
Let me add, I'm not in favor of socialism, but there's no free market possible in medicine.

The minute the government starts regulating things, and handing out lawsuit money, it means that costs just go up and up and up.
1 year ago
1 year ago Link To Comment
No one denies that our health care system had problems, but ACA is looking to be a miserable way to "fix" things. You asked if the European systems were worse? How many stories have we seen over the years of seriously ill folks both famous and indigent flown to the US for treatment? Famous because they could afford to pay out of pocket, and the special cases because some charitable organization stepped in and footed the bills.
1 year ago
1 year ago Link To Comment
And the minute the government gets involved, it ceased to be a free market. So do you want tell me again how the free market isn't possible because we haven't seen it.
1 year ago
1 year ago Link To Comment
I have not only watched this, but I have got to live it since I got cancer 7 years ago. I had my own insurance through my own job and that covered almost all my iniatial costs. Once it was proven I was never going to return to my job, they quickly fired me to save money. I went on my wife's insurace she had through her job and I was denied NOTHING during my 11 months of chemo and as many operations. When obamma came to power my wifes non-profit legal firm was on jarrets enemies list (they were all republican laywers) and their funding dried up to the point that they went out of business. I was then forced onto medicare and the battle of "you cost too much" began for me.

Every single previous medication I was on for 2 years was denied out of hand because the bean counters had to "review" what the DOCTORS perscribed and "recomend" ( meaning force you) to change medications or pay 100% of the cost yourself, and that was AFTER being cut-off of my meds cold-turkey for 3 months! Then all the co-pays started to change to the point that my entire $1200 per month SS check that I got for paying taxes for 30 years, would NOT even cover the "CO-PAYS". According to them, it was OK to raise my co-pay from $30 bucks a month on ONE med to $800 a month, and that was after my & my doctors fight to get it on the "inclusive" list of approved meds.

After 2 years of this all of our savings was gone, all of our creditcards were maxed out, and I still was racking up medical debt at break neck pace.

This was all BEFORE obamacare. Now even diagnostic imaging of ANY kind carries a percentage that you have to pay out of your pocket, and that pectage changes often. 1 xray for me $80... 1 MRI for me $2000.

Now it is even worse and the pace of forcing you to pay more or go without is going faster while hospital profit margins sit around 4000% mark-up on average in the USA.


Soon the death panels or as the VA likes to call them "end of life councilers" will expand from talking our vets into killing themselves out onto the general public and have a team at every hospital in the country with mandatory sessions for all medicade paitents to attend or lose your coverage.
1 year ago
1 year ago Link To Comment
An Ass masquerading as a President once found a Doctor’s white lab coat
which had been left out in the sun to dry. He put it on and spoke to his
countrymen. All bowed, both men and women, and he was a proud Ass that
day. In his delight he lifted up his voice and brayed treatments and
prescriptions and timetables and qualifications randomly and incoherently and unleashed mindless and ravenous bureaucrats upon the land to look for trouble, find it everywhere, diagnose everything incorrectly and then in a very grouchy manner force Doctors to misapply the wrong remedies, and then everyone knew him for the Ass he really was ... ... ... but by then the majority of the nation, especially in Congress, had devolved from Lions and Foxes into Mice and Sheep and so it was too late.
1 year ago
1 year ago Link To Comment
this issue of Dem led healthcare has been going on for 20+ years it has been nothing more than a vote buying campaign by the DEMS, remember when Bill & Hilary were pushing the issue in 1990's? vote buying all it is
1 year ago
1 year ago Link To Comment
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