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Medicare Meltdown: Why You Should Care

Some 600,000 physicians are facing a 10.6% cut in Medicare payments beginning July 1.

Congress failed to pass a measure to block a steep reduction in the Medicare physician payment rate before adjourning for a weeklong July 4 recess. That failure allows a 10.6 percent cut to take effect on July 1 that could end up limiting or denying care to millions of Medicare beneficiaries. [AAFP News Now]

I reached out to Dr. Nancy Nielsen, the President of the American Medical Association, for comment. [Listen to the podcast]

Dr. Val: How will the Medicare cuts affect seniors in this country?

Dr. Nielsen: Because the 10.6% cuts to all physicians who see Medicare patients goes into effect today, we are really on the brink of a meltdown. Physicians say that a cut of this size will force them to make terrible choices, just to keep their practices open. In a recent survey, 60% of physicians said that the cuts would cause them to limit the number of new Medicare patients that they treat. This is the last thing we need at a time when baby boomers are aging into Medicare. It’s not why any of us went into medicine – to shut doors and turn patients away. So this is really, really painful.

Dr. Val: What do you say to those who claim that doctors are simply protecting their own salaries when opposing this cut?

Dr. Nielsen: We’re really not hearing that argument because people understand that this is about whether or not payments keep up with the costs of rendering care. At least 50% – 65% of income that comes into a physician’s office is spent on overhead. That includes rent, liability insurance, staff salaries, equipment and supplies. None of the manufacturers of hospital gowns or exam table paper are cutting the cost of those supplies to us by 10%.

When you’re spending up to two thirds of your income on overhead, you simply can’t tolerate payments that haven’t kept up.

Dr. Val: What can patients do to protect themselves from being denied access to medical care?

Dr. Nielsen: Patients need to understand that this issue is about them. We physicians embarked on careers in medicine to serve them, and we’re hoping that Medicare beneficiaries and military families will reach out to the senators who did not vote with us and tell them that this is a critical issue that needs to be fixed. The AMA has a Patient Action Network available online or by calling a toll free number: 1-888-434-6200. Individuals should contact us to take a stand against these cuts. Patient groups have been very supportive – the AARP and representatives from the disabled community and assisted living were with us pleading with the Senate to block the Medicare cuts.

Dr. Val: What is the AMA doing to protect access to healthcare?

Dr. Nielsen: The Medicare crisis is an access issue. It is the insurance that seniors depend on and that our country has promised them. We do not want a Medicare meltdown. The responsibility for this crisis lies with the Senate. We are hoping that the Senate will come back from vacation and do the right thing.

Last year the AMA embarked on an unprecedented campaign to encourage all Americans to put pressure on politicians to find a way to cover the uninsured. This is the other major access initiative that we’re promoting.

Dr. Val: What do you make of the “concierge medicine” movement where doctors — who are fed up with insurance — simply stop accepting it?

Dr. Nielsen: It’s a symptom of doctors becoming frustrated with bureaucratic red tape and payment problems. Many don’t feel that they have enough time to spend with their patients, and can’t afford to practice the kind of medicine they want to with insurance-based payments. Concierge practice is not a big movement, but there are some good physicians who have made that choice. We’re hoping that more physicians are not forced to stop taking insurance, but those who choose this route report being very happy, and so are their patients. The problem is that for patients who cannot afford concierge medicine, it’s not a solution at all.

Dr. Val: What would you like to say to the American public today about the Medicare cut crisis?

Dr. Nielsen: We need your help and we need it immediately. Please call your senators over the long weekend and plead with them to do the right thing and help us avoid a Medicare meltdown – a crisis that is not in anybody’s best interest.

[Listen to the podcast]This post originally appeared on Dr. Val’s blog at

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3 Responses to “Medicare Meltdown: Why You Should Care”

  1. Bradly Jacobs MD MPH says:

    This decision will have devastating consequences for medicare patients.  There is no question that many many doctors will limit how many people with medicare can access them.  It’s not about greed- it’s about survival.    At this juncture, each doctor must decide how much charity work they can afford to do- most doctors will lose money with each medicare patient they see.  

    The health crisis will not be solved by reducing how much money you pay doctors.  Healthcare expenses are out of control because we allow people to pay $4 a pill for the ‘newest’ NSAID rather then pennies on the dollar, we spend 10% of the $2 trillion annual health expenses on ICU care where the chance of surviving is 40% (90 year old having cardiac bypass surgery, 90 year olds in the ICU for over 1-month etc. etc.).  

    Congress addressed the wrong side of the equation–  this decision will result in delayed or denial of care which could inadvertantly lead to an increase in health expenses. Imagine someone with shortness of breath and heart disease who is denied access to care by his regular doctor due to this congressional decision and can’t afford the co-payment nor the long wait to go the ER— days later his symptoms dramatically worsen at which point he calls 911 to go the ER and ends up in the ICU with intubated with CHF and respiratory failure.  NOW HOW DID THIS DECISION SAVE THE GOVERNMENT MONEY?? This will happen all over the country and mark my words- 5 years from now, there will be a New England Journal of Medicine article summarizing the effects of this decision on the nation’s elderly.

    I concur with Dr. Nielsen to call your Senators – they need to hear from you…..

  2. says:

    The biggest crisis in healthcare was triggered last
    week by the Senate’s failure to eliminate a 10.6% Medicare fee cut to
    physicians. performed an online physician survey in early
    June 2008 – see question #6 at
    — and found that if the fee cut goes through then 19.2% of physicians will
    increase their fees to non-Medicare patients to compensate for their Medicare
    cutbacks. Since most physicians are tied into fee schedules from HMOs and
    health plans, they will naturally increase fees to uninsured patients and
    patients with health insurance that has poor coverage. Additionally, our poll
    of 167 doctors indicates that 19% will stop seeing Medicare patients completely
    if the fee cut occurs. Those doctors will have to make up for all those lost
    Medicare revenues and will naturally charge more to the uninsured and to people
    who have poor insurance coverage. Additionally, 32% of doctors polled by indicated that they would reduce the number of Medicare
    patients they see – usually that means not accepting new Medicare patients.
    Finally, our survey indicates that 4.8% of doctors will shut their practices
    completely as a result of the Medicare fee cut. That means that a significant
    number of patients will have to find new doctors who accept Medicare. That will
    cause delays in prompt health care as the patients search out new doctors, and
    delays always result in increased tests, more severe health problems and increased
    expenses. Additionally it will burden the already overwhelmed emergency rooms.
    One can clearly see from our surveys, which have a history of accuracy, that
    the Medicare fee cuts to physicians will have a huge domino and ripple effect
    that will not only reduce quality and access to healthcare for senior citizens, but also increase healthcare costs dramatically for everyone else.

    Robert Cykiert, M.D.


  3. StevenKnopeMD says:

    I opened one of the first concierge medicine practices in the country 8 years ago.  It is a rewarding and wonderful way to practice medicine.  I could never return to the third-party nightmare that previously dominated my professional life.

    I’ve just written the first book on concierge medicine entitled, “Concierge Medicine; A New System to Get the Best Healthcare.” (Greenwood/Praeger, May 2008).  In this book, I confront the controversies surrounding concierge medicine head on.  For those physicians who would like to rekindle their love of medicine, concierge medicine is a viable option. 

    Steven D. Knope, M.D.

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