Monday, April 26, 2010

Early Reports Indicate No Cost Savings From Healthcare Reform

The first report from the supposedly neutral experts at the Health and Human Services Department has good news and bad for President Obama's newly enacted healthcare reform bill. The good news is that 34 million uninsured Americans are expected to now have coverage under the new plan. The bad news is that they predict that spending will actually increase between 2010 and 2019 by $311 billion. This is after accounting for the Medicare cuts and new taxes on high cost insurance. Apparently the costs of insurance expansion have been underestimated. Who in the room is surprised at this development?

Republicans are quick to say "I told you so" while Democrats are touting the increased insurance coverage as a major victory. Apparently cost overruns is a glitch that can be fixed as we go. This may be true, but we need to find other ways of efficiency besides just decreasing payments to providers. Remember that the real driver behind healthcare reform is economic not political. The current system can not continue to fund itself without substantial overhaul.

In addition to the HHS report, a new poll by American Medical News which surveyed 172 hospital and medical group executives, found that most of them feel the new bill will have a negative impact on their facilities. Only 22% were pleased with the passing of the bill last month. Any new revenue from the coverage of previously uninsured patients will be more than offset by cuts in reimbursement primarily from Medicare patients. Also the increase in demand caused by the newly insured will further strain physician shortages in many areas, thus driving up the cost to provide these services.

A related concern is that this new climate will spell the demise of the independent physician practice. The economic demands will force all physician providers to be either salaried by the hospitals and health systems or part of a large multispecialty group. This will change the way medicine is practiced and ultimately impact the availability of providers.

These are just the early reports on the impact of healthcare reform. There will certainly be...

more on this later.

Mark Brodeur

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