About a third of Medicare beneficiaries find it difficult to find a doctor who will accept Medicare.  In 2008, 29% of Medicare beneficiaries seeking a new physician (of any specialty) had trouble finding a new physician who would take Medicare.  It is worse in some areas.  For example in 2008, 60% of the internists associated with NY Presbyterian Hospital would not accept Medicare.  At the same time in Texas, 62% of primary care doctors refused to accept Medicare.

Some doctors discontinue offering services to patients who become Medicare eligible, and some limit the proportion of their patient load covered by Medicare.

Three themes underlie limiting service for Medicare patients; difficult and labor intense Medicare paperwork, inadequate reimbursement, and the complex treatment needed by Medicare-covered patients.

For many years, electronic health records have been urged as a remedy for administrative costs, but successful implementations are still not typical.  However, the most compelling reason for refusing Medicare is cost.  Medicare reimbursement to physicians covers about 1/3 of the cost of offering treatment.  At the end of 2012, that reimbursement level will drop another 27%, greatly aggravating the disincentive to treat Medicare patients.  The movement to avert a 27% drop is the so-called “Doc-Fix.”

The “Doc-Fix” will not fix much.  Aligning payments with physician-incurred costs for Medicare patient treatments will need an added $275 billion per year and will position Medicare patients as a financially neutral proposition for doctors instead of a deadweight loss.  The “Doc Fix” will not fix medical system overload when millions of added Medicaid patients arrive due to Obamacare at super-low reimbursements.  That overworked system is likely to push prices even higher, and we can expect widespread complaints of doctors refusing to accept patients with Medicare or Medicaid.

Meanwhile, Medicare beneficiaries can expect medical costs to increase relative to their retirement incomes – consuming more than half of their social security benefit.  Nationwide Financial estimates that just 51% of costs incurred by beneficiaries are covered by Medicare.  The rest is left for payment by beneficiaries and their Medi-gap insurance.  Fidelity estimates this non-Medicare lifetime burden to be $240,000 for a couple retiring at age 65 on an income of $75,000 per year.

Medical cost increases are the chronic symptom disabling our medical system.  The underlying illness is that the patients receiving treatments have neither the knowledge nor incentive to consider the actual costs being incurred in real time.  When families are motivated to consider medical costs, they spend 14% less.  Each of us has been unable or unwilling to tame the medical cost problem in our roles as politicians, patients, physicians, and payers.  Most just hope for an easy fix — a way to pass the invoice to someone else.  That fantasy is ultimately doomed.

Alan Daley is a retired businessman living in Florida and following public policy from a consumer’s perspective.