Our Medical Future?

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Posted on : 2/28/2012 07:00:00 AM | By : Dann | In : , , ,

Consider Product X.  It costs a store owner $95 to get Product X into their store.  They sell Product X for for $100 and make $5 per sale; less the cost of their building, staff, electicity, etc.

What happens when they can only get $90 for Product X?  Most store owners would stop selling it.

What happens when someone needs Product X to survive?  Not a very nice question.

But this is precisely what is about to happen in California where the state has decided to cut Medicaid prescription reimbursements by 10%.  It isn't a 10% cut in the margin that the store owner earns.  It is a 10% cut in total reimbursements.


What does this bode for our nation's future?  Nothing good.

I hardly need to point out that we can expect a lot more stories like this one in the future.  Reimbursements currently have some give in them, which allows the highest-cost providers to operate, and the lowest-cost providers to make some profit.  The natural political tendency is to squeeze reimbursements to the level where the lowest-cost providers are pinched--or even beyond.  And the best-case result of this is that in the long-run, the lowest-cost providers get bigger, while in the short term, the disruptions among the higher-cost providers compromise at least some patients' access to care.

Are we willing to put up with that short term disruption?  Not so far, unless the service exclusively benefits the very poor.  Maybe we'll get more willing as the tax bite goes deeper.  But either way, with a dramatic Medicaid expansion on its way, and more and more of the rest of the health care system under the control of the government, the fights are going to get uglier.
A modest warning for language at the link.

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