The following is the sixth in a series of ten articles that originally appeared in the Indiana Medical Society’s monthly magazine “The Bulletin.” As President of the Indiana Medical Society over the past year, Dr. McGoff wrote on a wide variety of topics, most importantly the current condition of health care in the United States. These articles will help illustrate Dr. McGoff’s views and beliefs. This article appeared in the April 2009 issue.

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“Be thankful we’re not getting all the government we’re paying for.” – Will Rogers

For those of you who are regular readers, you may remember an article I wrote a few months ago about how disillusioned some of the young, idealistic, first time voters were going to be after the November election. Specifically, that all of the many campaign promises President Obama made, would never see the light of day. Well after the first thirty-five days of his Administration, I can say I was definitely wrong. He has a new $787 billion stimulus plan already passed and has proposed a ten-year budget with all of those grandiose campaign promises and then some.

I would like to touch on two topics in this new White House proposal that I think are particularly important to physicians: his new health care agenda and his income redistribution plan. Anyone who thought that the loss of Tom Daschel as the nominee for HHS Secretary would slow this train down was sorely mistaken.

President Obama’s comprehensive ten-year budget plan includes a blueprint to create a $634 billion reserve fund as a “first step” towards health care reform. It is described as a “down payment” and it will probably end up to be over a trillion dollars by the time it is fully implemented. The plan’s stated goal is to “put the United States on a clear path to cover all Americans.”

As it stands now the budget blueprint provides only general guidelines on the reserve funds creation and its use. Here are of the few highlights contained in the recently released document.

Health and Human Services

The agency will actually get $1.6 billion less in 2010 than the previous budget, but it emphasizes healthcare information technology ($19 billion was already included in the stimulus bill) and use of cooperative effectiveness research to determine the most effective therapies and treatments for certain conditions. Be sure and stay tuned on how this is going to affect your practice.

Drug Prices

The new plan will negotiate with drug makers to reduce prices, similar to European models, and will speed access to generic drugs. No estimate has been given on savings for capping biotech company’s market exclusivity for their new biologic drugs at 12 years. However, if you happen to have any pharmaceutical stocks in your 401K, see how the market reacted to these proposals. There will also be a “substantial” boost in funding to the FDA to improve drug safety.

There will be an increase for wealthier beneficiaries to pay higher Medicare Part D premiums and will call for pharmaceutical companies to increase rebates on drugs sold to Medicaid patients from 15-21%, resulting in a savings of $19.5 billion over the next decade.

Workforce Shortages

To address shortages, the plan allocates $330 million to be used towards loan repayment programs for physicians, nurses and dentists, who will work in underserved areas, as well as $73 million for improved access to care in rural areas.

Physician Payments

Noting that the SGR formula used to calculate Medicare payment changes would reduce payments by 21%, the proposal resets the budget baseline to zero taking the automatic cut off the table for now. No other details are provided in the document. It also signals the desire to tie incentives to the quality, rather than the amount of care provided.

Hospital Payments

Changes in reimbursement will include bundled payments intended to cover the cost of care for Medicare patients during their stay and 30 days post discharge, which will net $17 billion in savings over ten years.

Imaging Costs

To help build the proposed reserve fund, the plan would task radiology benefit managers to reduce Medicare imaging costs by a projected $70 million over the next 5 years and $260 million over the next decade.

Cancer Research and Disease Prevention

There is $211 million for autism research, screening and public awareness, as well as an additional $6 billion for NIH cancer research, which double current expenditures. One billion in new funding for community based programs for disease prevention and healthy behaviors. The budget includes funding for enhanced emergency care systems and expands treatment for addiction and substance abuse. It provides resources to reduce health disparities, which the President has identified as an important goal of his Administration.

This is just the opening salvo and must wind its way through Congress. Perhaps you noticed that your practice may be affected in one of those areas mentioned. It is imperative that organized medicine follows this dialogue closely as it unfolds and works with our Congressional delegation to ensure that our patients are protected, as well as allowing for the continued viability of our practices.

The Administration said it hopes the plan includes a “little bit of pain” for every major healthcare stakeholder, and “that the appeal of insuring millions more people” will outweigh the objections to those changes. You have to ask yourselves how much more “pain” can we endure?

The more disconcerting piece of the budget plan is how to pay for this ambitious proposal. Half of the funding for the $634 billion dollar program is by a provision that would cap itemized deductions for Americans who make more than $250 thousand dollars. These changes would be phased in over the next few years. The other half would be achieved by cost savings to federally funded health programs, including $177 billion over the next decade by restructuring Medicare Advantage programs through a regional competitive bidding system.

Most physicians I have spoken with are conflicted. While all agree universal access is important, but at what cost? A good number of doctors will be caught by a combination of an increased tax rate on capital gains and their income, as well as a decrease in the ability to deduct their mortgage interest and charitable donations. Many of the physicians I know have a similar story to mine. We put ourselves through college and medical school with a combination of summer jobs, student loans and scholarships. We spent some 11 to 15 years, depending on your specialty, after high school graduation learning to become physicians. It represents years of incredible hard work and personal sacrifice.

To be a physician is one of the most rewarding careers one can have and that reward comes from not only knowing that you have somehow improved the health of others, but also with monetary remuneration. Many physicians are now being lumped in with Wall Street millionaires, because they have crossed that threshold of the group of “rich” people the President wants to make pay more. This small subgroup of people making more than $250,000/year, if taxed at 100% of their income generates less than a trillion dollars, which is not nearly enough to fund the ambitious goals of this budget plan, which include not only a new agenda for health care, but education and the environment. Will there be incentive for future physicians to work that hard, if you are only going to be told your not giving enough?

As Hoosiers, we like gradual change and anything too radical we tend to be wary. With a market that is in a free fall, dropping 31% in the first six weeks of our new President’s administration, I think we will need Congress to step back, take a deep breath and have some prudent deliberation before considering many of these proposals.