What you need to know about "Free" Medical Care and Medicare

About 30 years ago, while out shopping I bumped into a former patient, whose baby I had delivered previously at my birth center in Anchorage. We chatted for awhile, and she mentioned the baby was now in first grade. She also mentioned in passing that she had not seen any doctor since her last visit with me shortly after that birth. Come to find out, with her husbands recurring unemployment, there was never enough money left over for "luxuries" like pap smears and breast exams.

I felt sorry for her, and urged to call for an appointment. I told her I would be happy to see her without charge, to help her get caught up. Well to make a long story short, she did come in, and I diagnosed breast cancer. I called one of the breast surgeons in town who agreed to see her without charge and she ended up getting a lumpectomy. She survived the breast cancer and lived to finish raising her kids.


She was very appreciative and felt like I saved her life. Of course I corrected her and reminded her it was the surgeon who had saved her life.


Heartwarming stories like this make us all feel good. And some people think that this type of random, hit and miss, free care is actually a viable solution for people without health insurance. But in reality, most people never get free medical care and more realistic solutions must be found.


Many believe people without health insurance are entitled to free medical care. A lot of people with loud voices proclaim that medical care is a basic right and should be free for all. They believe our government should provide free medical care. They remind us that according to the United Nations Universal Declaration of Human Rights, signed by the U.S. and 47 other nations in 1948, health care is a basic human right.


How would that work? Could the Government give free medical care? Can anything be free? Is it really that simple? No, it is not that simple.


There is a business side to Medicine that often confuses, disappoints, and angers some people.


People that think medical care should be free don't seem to believe that doctors and nurses MUST be paid, and EXPECT to be paid. They think that free medical care is something that people are entitled to and if the rest of us were compassionate enough, we would vote for it and it would happen.


They seem to believe that basic business principles don't apply to health care. This is serious because if we don't understand the business side of medicine we may lose the best health care system in the world. Keep reading and I will explain things about the system that you need to understand. Things that you MUST understand.


Consider a one doctor medical office. It is almost quitting time for the day, and 20 patients have been seen. Each of those 20 patients paid for their office visit, some in cash, some with their insurance card, but all of them paid. When it is all added up, it will be enough to pay the expenses for that day. Rent for the office, salary for all of the staff, including the doctor. All of the supplies, insurance, etc. That days revenue, will be enough to pay all of that day's expenses.

And that is good, because all of those expenses MUST be paid. If the clinic doesn't collect enough money to cover paychecks, the employees won't get paid, and they will have to quit. Each employee has rent of their own, they have families, they have expenses, and they can't work for free. Same with the doctor, who is also an employee. If the doctor can't get paid they must look elsewhere for a job that does pay. And the medical supplies used that day must be replaced and the office rent must be paid. It is all essential and the patients have to pay enough to cover all the expenses.


But on this day, there is still a half hour till quitting time, and all of the expenses of the day have already been covered. At this point another patient shows up at the office. This patient has no money, no insurance, but WANTS and NEEDS help.


Can the doctor see this patient during this last half hour and do it for free? YES! Why? Because all of the paying patients have already covered all of the expenses. Without the paying patients that charity patient could NOT be seen for free.


Now the doctor may choose not to provide free care, for a number of reasons. The doctor may not want to create expectations of future free care, or may not want to attract more indigent patients if word gets out. So in this hypothetical case, the patient may or may not get seen.

But let's be clear about this. Even though the doctor CAN choose to see this patient for free, the doctor can't do that with every patient. The doctor can't see free patients, all day long, every day. That would lead to bouncing paychecks, no supplies, and the office rent going unpaid.


Very soon, there would be no staff, no medical supplies, and the doctors entire practice would be evicted and out on the street for nonpayment of rent. So here is the point:


If any Patient gets free Medical Care it is

BECAUSE

the other patients are paying the expenses.

Don't forget that!


But what about the clinics that see patients for free? It's not free! Those clinics get money from the Government. There is no free medical care.


This brings us to Medicare Patients

Medicare is the insurance for senior citizens. All of us pay into Medicare with a deduction from every paycheck, our entire working life. When we retire, we have prepaid our Medicare. Now we are able to get the health care we need in the last years of our life. Most people that have Medicare are grateful for the security of knowing they have medical coverage.


Now let's look at Medicare from the doctors point of view. Let's say the clinic charges regular patients $100. When each patient pays that amount, the clinic will be able to pay all of the bills and stay in business.


But here is the thing with Medicare. Medicare will only "allow" $35 of that $100 charge. Essentially, Medicare says $100 is OK for everybody else, but Medicare patients are entitled to a 65%, or more, discount on all of their medical care. So the $100 charge is now reduced to $35 for any Medicare patient. Don't like it? Then don't see Medicare patients.


Now that the fee has been reduced to $35, Medicare will pay 80% of that allowed amount, or $28 and the patient is supposed to pay the 20% copay, IE $7. Medicare reduces all medical and hospital charges by 65%, or more. This is great for the patient, but what about the other $65 and how does that work for the doctor or hospital?


Well it doesn't work very well. The doctor only gets $35 for providing a $100 service. In an average doctors office, the actual out of pocket expenses alone are about twice that amount, just to provide the service. That means the doctor loses money every time they see a Medicare patient.

But remember the patient that can be seen for free? Remember, that works, only because everybody else is paying the full amount. Seeing a Medicare patient is just like seeing a patient for free. It only works if MOST of the patients are paying the full $100. If all of the patients are on Medicare, the clinic will soon be broke. The clinic will not collect enough to pay the rent and cover the paychecks.


Because most doctors want to help the seniors, they are willing to see their fair share of Medicare patients. They figure out how many they can afford to see, and once they have that number of Medicare patients, they can't accept anymore.


To avoid Bankruptcy, Doctors MUST limit the

number of Medicare patients they see.


But you say: "Why don't the doctors just make the Medicare patient pay the $65 that Medicare doesn't allow?" Good idea! That is called "balance billing" and many years ago, many doctors did that. However in 1989 congress made balance billing illegal. Good for the seniors, bad for the doctors.


Well why doesn't the doctor raise the $100 fee so everybody else pays $110 or $115, to make up for what the Medicare patients don't pay? That is called "cost shifting". Problem is, the insurance companies won't let you raise the $100 fee, hence cost shifting doesn't work.


Why do some people propose Medicare for All?

Medicare for All would bankrupt our medical system.

Because they don't understand the basic issues we have just discussed. They live in a world of fantasy and unicorns. They refuse to understand that Medicare for all won't work. If everybody had Medicare, our medical system would go broke overnight.


This is not a secret. Numerous hospital administrators have testified in congressional hearings, that their hospitals could not keep their doors open if everybody had Medicare. The medical system can only extend a 65% discount to some, not all patients. Our system, would go broke, if everybody had Medicare.


Our current medical system, is the best system of health care in the world. Yet it seems to be under constant attack, often times by well meaning politicians that want to "help".


Please, to all the "helpful" politicians of America,

remember these 3 things!

  • Doctors can provide "free" medical care to a few people, only because everybody else pays the full amount.

  • Just as with free medical care, Doctors and hospitals can accept Medicare, only because most patients don't have Medicare and pay the full amount.

  • Medical care, is not a "right". It is a commodity, that must be paid for, like any other commodity.

Take care and BE HEALTHY!


CW Jasper

June, 2022



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