Over time, the concept of healthcare has changed dramatically as we discover more about our limits and increase our understanding of how the body works. This understanding has led to longer lives, the ability to live with disease, and increasing the price of healthcare. Healthcare has been a changing dynamic form of care since President Johnson became president, and with the installment of the Medicare and Medicaid program. This program was designed to help those who were not able to afford healthcare. Today, a large number of the public rely on this form of healthcare and it is costing the government billions of dollars. Many modifications to the rules of Medicare and Medicaid were supposed to help ease this burden, but have yet to do so in any significant manner. In the near future, the entire health industry is expecting to yet again change its administration of care to those who have a difficult time paying for aid. Through my experience in my MBA program, I am learning about these changes and even thinking of ways to make our health system better.
Currently, the United States spends more on healthcare than every other country in the world. Additionally, in 2009, there were over 50 million uninsured citizens. Why is so much being spent and so many left uninsured? Where in the system do we need to take corrective action? Research into these numbers have shown that if you factor out those who can pay, it turns out just 8.9% (28 million) of the US population is in need of financial aid for medical care. Providing for these individuals is entirely a charitable act, but continual government regulations and regulatory agencies (along with many other factors) seem to raise prices to prevent abuse. In an industry ruled by private companies and partially funded publically, this leads to a high level of problems and loss of income. The government started making the private sector take a bigger role in indigent care because the government felt it was spending too much money on it. There seems to be a theme in all entitlement programs. The longer the government is involved, the less they want to spend on it and the more they push costs onto the consumer and private companies in the industry. It is very reasonable to expect this same type of change for healthcare.
Why are there problems with Medicaid? If I knew the answer to that problem, I would probably be trying my best to tell President Obama. In truth, no one knows exactly why. If one thinks about how the mass of people in the United States would approach the installment of healthcare, one can begin to make a few inferences. Originally, Medicaid was meant to help those who could not pay their hospital bill in full or had absolutely no financial ability to access healthcare. This idea seemed good at the time, but it did not account for the public’s response to the plan. If the government is now paying for healthcare, is there a reason you should be saving up for it? To me, the answer is clearly no. Why save up for something that the government can help me out with? I can spend that money on other things now and save for retirement. This is how the public reacted to the installment of these federal and state programs.
Over the years, Medicaid and Medicare funding increased at higher rates than the government was expecting. President Johnson thought that Medicare would cost the government $500 million a year. In 1967, just 2 year later, Medicare cost the government $4.2 billion (Nowicki). Figure 1 below shows just how fast this rate increased far beyond the expected amount.
Figure 1. Medicaid payments adjusted for increase in recipients and prices, fiscal years 1968-1976
Fiscal Year Medical Payments (billions) Medicaid Recipients (millions)
1968 3.45 11.5
1969 4.35 12.1
1970 5.09 14.5
1971 6.35 18.0
1972 7.35 17.7
1973 8.71 18.5
1974 9.74 21.1
1975 12.09 22.5
1976 14.06 23.5
What is the proper response to the undervaluation by the government? Overtime, many presidents have tried to tackle this issue, but have had little success. It seems like it is too late to cancel the program once so many people are dependent on it. It is clear, as you provide more for people, they tend to abuse this aid and it gets worse year by year. The Obama administration passed a massive healthcare bill that will change and alter many parts to Medicaid and Medicare for the indigent. The full effects and reactions to the bill are more likely to be seen in 2014 when most of the law will go in full effect.
The Obama administration has made Electronic Health Records (EHR) a mandatory requirement by 2014. So that the arrival of 2014 will not be a big change to many healthcare providers, the government is giving rebates to many practices that are making changes now. In 2014, these rebates will go away and at this time, everyone should be using EHR. This change is supposed to address issues of medical mistakes and increase quality of care. This is a change that I personally am in great agreement with and feel is a move towards a better healthcare system. With billions of dollars being put into this change, one can expect there to be a change in the Information Technology portion of the health industry. Many private companies are fighting for practices to use their software systems and there has been a boom of new healthcare software providers.
This change is definitely for the better, but I feel that a better decision could have been made in this situation. Now that EHR are becoming more apparent, new problems are arising. I was in a hospital clinic last week and a patient just moved to Lubbock, Texas from Houston, Texas. The software that the University Medical Center uses at their hospital is called PowerNote made by Cerner. The hospitals in Houston use software called Epic made by Epic Systems Corporation. There is an economic incentive for these private companies to make this software and the hospitals definitely benefit with better quality, but it is still far from the best. The hospital in Lubbock, Texas cannot see the patient’s history because the Cerner and Epic software cannot communicate with each other. With the pace of healthcare changes, it seems like one day it will be a requirement that all these programs can speak to each other. Then once again, the government may infuse trillions to make it happen. In my opinion, we should allow private companies to make healthcare software, but to be able to, the software must be able to send information back and forth with any other software. There cannot be a closed loop because that still halts a higher level of quality.
Research has shown that physicians dislike Medicaid patients more than private insurance patients. This reason is mainly because government funded patients take longer to pay, and reimburse at a lower rate as well. The government is continually making cuts to their own funding which has led to a trend of refusal to take government funded patients by physicians. Many physicians lose money on these patients and loss of money is just bad business. As of now, there are whispers in Washington about making it illegal for hospitals and physicians to not accept Medicaid and Medicare. It seems that Washington is not happy that they are not getting the results they want and would force new sets of rules and regulations to make their vision a reality.
There needs to be a way to incentivize people to save money for health purposes. Too many people disregard this and lack any responsibility due to the amount of aid the government gives and enforces. Currently, it is illegal for an Emergency Rooms (ER) to turn away people. I have spent time shadowing at the ER in Lubbock, Tx and I have seen people take advantage of this. Someone gets a light headache and goes to the ER. Someone get a cut on their finger and goes to the ER. Some people are homeless so they go to the ER for free food and a place to sleep. There are huge losses taken due to treating those who really do not need treatment. Abuse of this system is obvious because there will always be those that take advantage of a system when they can. This is the same in the business world; each business sets up its operations to maximize profits within the rules that exist (usually by the Government). At some point, we need to ask ourselves, are making more rules really going to help us out? Or are we creating loopholes that allow large abuse? Should the health system be required to make up its rules on its own without outside influences? It is a question that I ponder and I hope you do too.