To say that Medicare is the most successful insurance program is just flat wrong. And to think that Medicare For All will be even better is certain folly, too.
To the contrary, Medicare and its blind payments (by the Federal Government) of Usual and Customary charges are at the very root of what is and has been the basis for runaway costs charged by providers. Maggie Mahar, of the Century Foundation, points this out in her book, Money Driven Medicine.
Medicare was created to provide insurance coverage for Americans who no longer worked and lacked income for care during retirement. It also did a nice job of enamoring voters over the age of 65 to LBJ and the Democratic party and kept the carrot at the end of the stick for a few years, too. (Wonder if the current administration thinks the same way?) Medicare grew in size to include those unable to provide for themselves, including the permanently disabled and renal patients. Medicare paid for hospitals (Medicare Part A) and for doctors (Part B). No insurance policy had ever been created for doctors until Medicare. And, Medicare paid directly, so seniors did not have to worry about a thing.
One of the offshoots of Medicare was the realization by doctors, hospitals and other providers that they received easy payments from the government without having to rely on patients to pay. As long as the charges were Usual and Customary, providers were paid whatever rate they told Medicare they needed. Wow! As long as doctors, hospitals and providers were close in their charges, they were paid by the government with no questions asked. Doctor A charged $20. Across the street, Doctor B charged $25. Both got paid. Then Doctor A decided to keep up and charged $25, too. Then Doctor C, down the block, charged $30. Doctors A and B soon followed. Everyone was paid by the government without a care. This was the spiral that continued for many years until network contracts and preferred provider organizations developed contractual reimbursements to providers based on agreed to schedules of services.
But the rout had started. Some private insurance plans through employers soon followed Medicare’s example, like the state government chartered Blue Cross and Blue Shield plans. In order to compete, all insurance companies joined in. Insurance companies followed Usual and Customary charges and then utilized the provider networks and reimbursement agreements. Private insurers also started to follow the practice of accepting assignment of benefits, the practice of paying providers directly and by-passing the insured.
Assignment of benefits is one of the single most egregious flaws in our health care system. It is also one of the main culprits of removing insured patients from the process of purchasing their health care and thereby acting as a rational consumer. Sure it is easy for the insurer to pay the doctor directly and saves the cost of issuing checks. Assignment of benefits also saves the provider the time to collect the money and alleviates the possibility of bad debts having to be assumed by the provider. And, it deters fraudulent claims from being made and paid.
The single biggest reason assignment of benefits is flawed is that there is no one to tell the provider that their price is too high. And no patient is able to tell the provider that they will not pay. How often have you returned and item to the store, sent a meal back to the kitchen at a restaurant or gotten a refund for poorly performed services. Can you do that with a doctor, hospital or other provider? Do you give the waiter your credit card for a meal ahead of time at a restaurant and tell him to bill you whatever he pleases? Of course not. But you do that with your doctor and hospital.
Doctors, hospitals and other providers force patients to contractually assign their benefits prior to any treatment delivered. That is what you are doing when you walk up to the receptionist, grab the clipboard, fill out the forms, sign your name and hand them your insurance card. At this point, insured patients feel that they have no more to pay the doctor than possibly a $20 copay. Now the insurance company is the bad guy if the doctor doesn’t get paid – which continues to be popular opinion today. However, if consumers were part of the process, as in the purchase of any other good or service, pricing would have to be set at the lowest possible margin.
Instead, costs rise unabated. Providers charge higher and higher fees while they attempt to justify. Insured patients could care less since they never see a bill and don’t provide any payment for care beyond a negligible copayment. Insurance companies become the bad guy as they are forced to play the role of consumer – which they are not.
It is quite clear that the onset of Medicare and its evolution has created ever increasing costs of medical care. Medicare For All will only intensify the increases. Stay tuned for my next post.
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