The Depressing Future of American Health Care

Dr. Chaouill had difficulty finding any lawyers willing to take his case, so he eventually decided to represent himself. He embarked on his own independent study of law, and eventually, got accepted into the Montreal University School of Law. After getting into numerous debates with his professors over the interpretation of Canada’s Charter of Rights and Freedom (analogous to the U.S. Bill of Rights), he left law school, and pursued his legal education independently.

Ultimately, after many years, his efforts bore fruit. A lower-level court had ruled that Dr. Chaouilli was correct in contending that the prohibition of private health care violated ones rights to “life, liberty, and security,” as guaranteed by the Charter of Rights and Freedom, but that the development of a two-tiered medical system was unacceptable to the Canadian vision of “equality.”

In 2005, the Supreme Court of Canada heard Dr. Chaouilli’s appeal, and ruled that the Canadian single-payer system led to situations whereby patients suffer and die on government waiting lists, in violation of their rights guaranteed by both the Canadian and the Quebec Charters of Rights and Freedoms. The Supreme Court ruled as unconstitutional the prohibition of a parallel private medical system in addition to the government mandated single-payer system.

Dr. Chaouill’s heroic eight-year effort, during which time he sacrificed priceless time with his family and with his patients, left him financially distressed, but morally vindicated.

The Court’s decision has since led to the growth of numerous private clinics, throughout the provinces, where patients can obtain private medical care for cash, in a consumer-driven market, and avoid having to travel south of the border to get off the queue.

A May 2011 article in the Canadian Medical Association Journal (CMAJ) stated: “What once was privatization trickle may soon become a wave.” Dr. Zoltan Nagy, President of the Canadian Independent Medical Clinics Association, estimated that in 2011 there were over 300 private clinics in Quebec alone, including clinics emphasizing executive health and cosmetic services. A spokesperson for the Quebec Department of Public Health Services said that the clinics are not only increasing in number, but also in size, becoming “mini-hospitals.” He noted that one-day cataract, knee, and hip surgeries are increasingly being performed in private clinics.

The colleges of physicians and surgeons for British Columbia and Alberta publish lists of independent clinics providing surgeries outside of hospitals. As of 2011, they listed 66 clinics in British Columbia and 60 in Alberta, providing multiple types of surgeries and dozens of services. Their lists don’t include the many private imaging and executive health centers in those provinces.

The former President of the Canadian Medical Association, Dr. Brian Day, owns the private Cambie Surgery Centre in Vancouver, BC. In an interview in the CMAJ article, he says the proliferation of private clinics is a function of the inability of the public system to meet demand.

In an interview in 2009 by the Los Angeles Times, Dr. Day said, in justifying the proliferation of private clinics, “What we have in Canada is access to a government, state-mandated wait list… You cannot force a citizen in a free and democratic society to simply wait for healthcare, and outlaw their ability to extricate themselves from a wait list.”

The Canadian experience provides an opportunity to anticipate the future of health care delivery in the United States.

Over the past 20–30 years, the practice of medicine has been slowly morphing into a government-run enterprise, often with private health insurance companies acting as the intermediaries. Medicare price controls serve as templates for private insurance reimbursement arrangements. Managed care, encouraged and nurtured by federal legislation, requires providers to obtain authorization from faceless bureaucrats in order to provide many services they deem necessary for their patients. Guidelines and protocols, drawn up by committees and panels serving federal regulators, are imposed upon providers, requiring them to practice according to one-size-fits-all to models or face financial or even legal sanctions.

While not the simple Canadian style single-payer system, the U.S. system, especially with the advent of the Affordable Care Act, gets us to the same place—only in a more Byzantine fashion. True, there are multiple payers, but the insurance companies, as a result of the ACA, have become nothing more than publicly regulated utilities. The policies they will be allowed to offer patients are all designed and predetermined by the U.S. Department of Health and Human Services. The provider payment provisions, as well as the coding system, as has been the practice for years, will be pegged to Medicare reimbursement schedules.

Already we are seeing increasing numbers of doctors retire or slow down their practices in response to the changing practice environment. Many are selling their practices to hospitals and becoming shift-working hospital employees. Still others are dropping out of all insurance plans—even Medicare in some instances—and embarking on cash-only “concierge” medical practices.

In the meantime, demand for health care continues to rise, as 10,000 baby boomers become Medicare beneficiaries every day—and will continue to do so for the next 18 years. Emergency rooms continue to be overcrowded, as many people use them to obtain services that would otherwise be given by primary care providers, because they can’t get in for appointments.

As perhaps another 32 million people are added to the Medicaid or private health insurance systems—the purported goal of the ACA—without a commensurate increase in the number of health care providers, one can expect wait times for physician appointments to only grow longer, and emergency rooms and urgent care centers to grow more crowded. The experience in Massachusetts after its health care reform of 2006 (upon which the ACA is largely modeled) tells us what to expect.

If Canada’s experience serves as any guide, one can expect the one-tiered system in the U.S.—where anyone, regardless of socioeconomic status gets the same quality health care by the same physicians in the same hospitals with the same promptness—will slowly evolve into a two-tiered system, whereby those who can afford it will get state-of-the-art, prompt, courteous, consumer driven health care, while everyone else waits on line.

In fact, right before our eyes, it is already happening. The advent of “concierge” or “boutique” medicine was just a harbinger of things to come. In 2009, Dr. Keith Smith, anesthesiologist, managing partner and co-founder of Surgery Center of Oklahoma, took the radical step of posting online the list prices for 112 common surgical procedures. This includes the surgeons’ and anesthesiologists’ fees. They operate their clinic in a cost-effective, customer-oriented manner, and are able to provide their services for a small fraction of what a hospital would charge. They are attracting the business of increasing numbers of employers who provide health care coverage and are trying to rein in costs, as well as individuals with high-deductible insurance. Because of their competitive prices, they are attracting an increasing number of “cash pay” clientele.

In 1997, Vern Cherewatenko, MD of Tacoma, Washington founded SimpleCare, a patient and physician cash only provider network. According to a 2009 USNews​.com article:

The demographic cliff has been reached. With increasing numbers of Medicare and Medicaid beneficiaries stressing state and federal budgets—and future liabilities impossible to fund, provider reimbursements will continue to drop. Add to this the piling on of regulatory compliance costs, from electronic health records, to complex coding requirements, and we can expect to see more and more doctors unable to survive in private practice. The current trend of private practice consolidation and corporatization will only be matched by doctors closing their practices and becoming hospital employees. The old model of the private physician or small group practice giving personalized, one-to-one patient care will soon fade from memory.

Concurrent with the end of the physician as independent agent we see a shift in work incentives. Therefore, one can expect a decrease in physician productivity. Decreased physician productivity only exacerbates the physician shortage, which is, in turn, exacerbated by the sudden influx of Medicaid and privately insured patients. Wait times, a form of stealth rationing, will only get longer. It is worth remembering the adage: “Just because you have health care coverage doesn’t mean you will receive health care.” Ask any Canadian on a waiting list in the government-run system.

As the situation worsens, look for the growth of private, cash-only, clinics, specialty hospitals, and surgical centers across the nation—and perhaps some closely offshore. As part of the deal to get the American Hospital Association’s endorsement, a feature of the Affordable Care Act denies Medicare certification to physician-owned hospitals other than those already in existence. However, physicians can still build and run their own hospitals if they are not interested in participating in the Medicare system. Therefore, look for groups of physicians to organize consumer-driven hospitals—not unlike Lasik or cosmetic surgery centers—that take no insurance and no Medicare. Finance companies already exist to help clients of cosmetic surgery centers finance their surgery, and it would be easy for these companies to expand into the growing niche of private direct-pay clinics and hospitals.

If the healthcare systems of the UK, the European continent, and now Canada provide any glimpse into America’s future, look for a future where the affluent and the connected get state-of-the-art personalized, prompt health care, while the masses wait in line for delayed, impersonal, and often substandard care.

As PJ O’Rourke once said, “If you think health care is expensive now, just wait until it’s free.”