Friday, March 05, 2010

A doctor's budget

Forbes has an interesting look at how the budget of one primary care doctor would be affected by cuts in Medicare payments that are scheduled to take place this month.
Schreiber sees 120 patients a week. About 30% of them are enrolled directly in Medicare, while another 65% have private insurance plans that peg their payments on Medicare's rates. Only 5% pay on their own.

As a result, Schreiber expects the cuts to take away $3 out of every $5 he currently earns. And, as a primary care physician, he already wasn't earning anything near the salary of a specialist.

"After the costs of my own benefits are deducted, that will leave me with the equivalent of a minimum wage job," he said.

Unless Congress acts to adjust Medicare payments without considering the impact of rising health care costs, Schreiber said he could be forced into bankruptcy or shut his practice.
Read the rest as he goes through his fixed costs per month and what he gets from each Medicare patient. If the Medicare cuts go through there is no way that he would be able to break even in a practice that sees many Medicare patients.

This is why the Congress has to fix the proposed Medicare reimbursements. This is the problem that Congress keeps shuffling along year to year without finding a permanent solution. The Democrats kept the whole issue out of their health care bill despite trumpeting how necessary it is to have a comprehensive plan that addresses this looming crisis for so many doctors. The extension that was just voted on is only for one month. What is needed is a permanent fix, but that is just so massive that politicians would rather vote for it in smaller increments than for the entire problem.
Called the Sustainable Growth Rate formula, it went into effect in 2002 and was intended to control the growth of Medicare costs over time. But it has never been implemented.

Each year, under pressure from the health industry and seniors, the slated cuts have been put off for another year, until they have snowballed into a 21 percent discrepancy.

By law, unless a fix is made, the entire snowball will hit in April. It would have hit March 1.

The U.S. House of Representatives recently passed a permanent fix, and the American Medical Association wants the Senate to pass it immediately, too.

But given the hyper sensitivity to the budget deficit right now, this fix is a politically touchy issue. It’s expensive.

No one wants to cut benefits to seniors. And doctors say such a dramatic cut could force many to close their doors.

But Medicare is a big part of the deficit problem.The Congressional Budget Office estimates that the formula fix passed by the House alone will cost taxpayers an extra $8 billion in 2010.

Over the next decade, it could add $210 billion to projected budget deficits if the Sustainable Growth Rate fix under the House bill passes.
Instead of fixing this problem, the Democrats want to take on a huge new entitlement problem. Despite their brave words, their solutions don't lower these looming crises in Medicare spending. So we stumble along with short-term fix after short-term fix while they ignore the overall problem. Check this CBO projection.
Bring it back to the scale of one doctor seeing his patients and trying to balance his books and it all comes home rather quickly.