How Medicare Ruined American Healthcare

Medicare ushered in the greatest explosion of medical advances in the history of mankind for twenty years, but it also guaranteed the destruction of the hallmark of our system: the physician as a patient advocate.

In the 1950s I contracted pneumonia at age 10. Our general practitioner, Dr. Wilson, who delivered my brother and took out my father’s gallbladder, admitted me to the hospital and saved my life with antibiotics developed during World War II.

The ethical rule in the 1950s and 1960s was: “Charge the patients according to their ability to pay.” In essence, the wealthier were subsidizing the physician’s care of the needy, “balance billing,” in today’s jargon.

Along came the social engineers. The ideal was healthcare for all, a noble cause. No politician ever understood healthcare delivery. It was used and abused as a political tool.

Harry Truman, who is considered the father of Medicare, said, “What I am recommending is not socialized medicine. Socialized medicine means all doctors work as employees of the government. The American people want no such system. No such system is here proposed.”

On May 20, 1962, President Kennedy gave a speech at Madison Square Garden televised by the three major networks for free, promoting the King-Anderson Bill, which today we call Medicare, saying, “We do not affect the freedom of choice. You can go to any doctor you want.”

The American Medical Association requested rebuttal time. They were told to take a hike. The AMA rented Madison Square Garden and paid one network to show up. Edward Annis, MD, spoke eloquently to an empty Garden and to one of the biggest TV audiences of the times.

He explained directly to viewers: “This is not health care insurance … It will put government smack into your hospitals … deciding who gets in, who gets out, what they get, and what they don’t get. … This King-Anderson Bill is a cruel hoax and a delusion. … It will stand between the patient and his doctor. And it will serve as a forerunner of a different system of medicine for all Americans.”

King-Anderson was defeated in July 1962 by a vote of 52 to 48. However, President Lyndon Johnson threatened and bullied to get it passed in July 1965 with the intention of providing health insurance to people age 65 and older, regardless of income or medical history. A noble cause, but nobody read the bill before passing it, except perhaps Dr. Annis.

In the late 1990s, I asked Dr. Annis what was in the King-Anderson Bill that enabled him to predict in 1962 the insolvency of Medicare and the coming government takeover of healthcare. He replied with a smile, “Cost-plus financing. It was a license to steal.”

Indeed, Medicare ushered in unbridled spending for two decades before approaching insolvency.

Open-heart surgery, cardiac catheterization and revascularization, organ transplants, modern burn care, tracheal resection, and microsurgery all came into existence with unlimited funding. In 1973 came the first shock trauma unit. Before that, there was not a single emergency room in the entire U.S. equipped to handle multiple traumas! For the first time helicopters were used to transport civilian casualties.

We started re-attachment of severed fingers and limbs with microsurgery and discovered that placing catheters in the lung and heart would not kill patients. Immunosuppression made kidney transplants commonplace. We saved children with 90% third-degree burns. CT scans, MRIs, and modern radiation machines were developed and eventually became commonplace.

In the early 1980s, I was able to reattach an ear and cure brown-recluse spider bites with hyperbaric oxygen chambers in small-town Stuart, Florida, in patients with no insurance without question or resistance! Money was not a consideration.

But, as predicted by Dr. Annis, the system became insolvent by the early nineties. High tech equipment and expensive surgical and medical treatments were now expected as a right, not a privilege. Hospitals and many providers became addicted to easy money and abused the system. Why not? Cost-plus meant guaranteed profit.

Faced with Medicare insolvency, the insurance lobby persuaded Hillary Clinton to have secret meetings, without physician input. The argument was that physicians were driving the cost. The plan was to force all Americans into health maintenance organizations (HMOs), create regional alliances to price-fix by region, and criminalize charging more than the set rates.

Though Hillarycare never became law, the effort brought a sea change. Patients could no longer choose their doctor. Insurance companies now owned the patients. Participation in HMOs rose from 10% to 50%. Your doctor could no longer refer you to the best hospital or consultants if they were “out of network.” The doctor-patient bond had been successfully severed.

Medicare was always a price-fixed delivery system. It initially paid about one-third of conventional insurance, but when the squeeze came in the early 1990s, it started annual cutbacks. Many hospitals and sophisticated surgery reimbursements are now below the actual cost of delivery. For example, in 1991, the payment for code 14060 (flap repair to rebuild a nose after cancer removal) paid about $1,200. Now, that same code pays about $600.

Balance billing by physicians was outlawed. Medicare does not mandate who gets into hospitals, but it forces patients to get out by paying for only a limited number of days.

For the past two decades, hospitals have aggressively been buying up medical practices. The goal is to establish accountable care organizations (ACOs). Private practitioners are being elbowed out slowly but surely. General practitioners (GPs) cannot admit a patient to the hospital without “hospitalists” taking over. Hospital surgeons cannot refer to private surgeons, etc. Even the concierge model will be wiped out.

The Medicare approach to ACOs requires three things: electronic medical records, a “Quality Care Protocol,” and a “Protocol for the Elimination of Non-Compliant Physicians.” This is the ideal rationing system.

The computer will eventually dictate all allowed testing and treatments according to a “quality,” or more likely “cheapest way to do it,” protocol. Providers will ration according to the computer, or they will fall into the “protocol for the elimination of non-compliant physicians.”

In the past, physicians were reappointed every two to three years. Now they are reappointed every year. If you are a vocal patient advocate and buck the system, you are not fired, you just do not get reappointed in the next annual cycle.

There are three ways to ration healthcare:

  • Dumb down the system with nurse practitioners replacing GPs and technicians replacing nurses.
  • Slow down the system by delaying procedures. The longer you delay a hip replacement, the fewer patients will be alive to receive treatment. Small percentages result in huge savings on a large scale.
  • Less time per patient. Managed care is demanding that providers limit time per patient. See more in less time.

In the new system, no one has a doctor. Doctors have a shift. The doctor you see on the morning shift has no responsibility for you when his/her shift is over or on a day off. A nurse practitioner takes the patient history and physical, further fractionating care. A system like this requires that all doctors are created equal. They are not.

Free medical school education will become a necessity, and it is already starting to happen. Becoming a clinical physician or surgeon will not be a satisfying career. Salaries are plummeting. Imagine being told to follow the protocol, use the cheapest drugs, cheapest surgery, spend less time per patient, see more patients per hour, delegate to nurses and techs, and do not innovate better techniques that are expensive. Give less quality to more people and do not complain or buck the system, or you will find yourself in the protocol for the elimination of non-compliant physicians.

A glimmer of light in this trend to give less quality care to more people is artificial intelligence. The “Watson” computer now used in cancer treatment may be able to replace highly trained physicians in the future. It may eventually become the “best practices” protocol and free up the “brightest and the best” to pursue other careers and research.

Politicians and bean counters have never understood healthcare delivery. It was used and abused as a political tool.

Republicans are still trying to preserve and bail out the insurance companies. Coverage of pre-existing conditions makes that impossible. Removing pre-existing condition coverage to save insurance companies is political suicide. Leaving it eliminates the need for insurance companies. The only alternative is a single-payer system, not because it is a great idea or quality care, but because there is no alternative.

No one listened to the warning of Dr. Annis. The AMA is often demonized by historians for opposition to Medicare, but it understood healthcare delivery and the destructive nature of cost-plus financing. I blossomed in the Golden Age of Medicine and bear witness to the fall.

Note: This article originally appeared in the July 29, 2019 version of Medpage Today.

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