How Your Doctor is paid/Cadillac Tax explained - HealthCare

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Health plans, by and large, pay doctors for every check-up, surgery and other medical services they perform.

In other words, health insurers tend to pay their doctor a fee for each service — regardless of how the patient feels about the services, or whether the patient gets any better.

Paying doctors this way, many economists argue, is problematic: it creates an incentive for doctors to provide as much health care as possible regardless of whether it makes patients healthier.

Obamacare takes some steps to change that. Many people know Obamacare for programs that increase access to health insurance, but there's a whole other half to the health-care law that aims to curb growing health-care costs by changing how the US pays doctors.

The basic idea is to move the system from paying doctors and hospitals for each service, test, and treatment they provide and instead reward doctors and hospitals for providing the best, most cost-effective care.

This is all done to, ideally, accomplish a three-fold goal: simultaneously reduce costs, improve quality, and enhance the patient experience.

The programs involved are largely pilot programs in Medicare, a health insurance plan the government runs for the elderly.

Because health-care cost controls have upset consumers before, the White House and Congress wanted to try various measures to see which ideas worked best without damaging health outcomes or public perception of the health-care system. This led to a piecemeal approach with a lot of different smaller takes that will presumably grow if they prove to succeed.

Obamacare's excise tax, commonly known as the Cadillac tax, is an attempt to discourage employers from providing incredibly generous health plans. When it goes into effect in 2018, it will put a 40 percent tax on the most expensive insurance plans.

It might seem unfavorable, but many health economists think the most generous health insurance plans should be less generous. To understand why, think of two scenarios:

1) A patient with an extravagant health plan, often dubbed a Cadillac plan, goes to the doctor's office. She's told by her doctor that she should take a bunch of tests, even though the tests seem unnecessary. The patient knows most the tests are unnecessary, but she figures that since her health insurance covers everything, it's better to be safe than sorry — it's not like it's costing her anything except a little time, anyway.

2) Another patient with a less generous health plan goes to the doctor's office. She's also told by her doctor that she should take a bunch of tests, even though the tests seem unnecessary. But this time the patient also knows her health insurance will charge her a bunch of extra fees for each test. Wanting to avoid a lot of costs, she decides to talk to her doctor about what tests are actually necessary, and she declines to take any of the tests that she and her doctor decide are unnecessary.

More at the link

http://www.vox.com/cards/how-doctors-are-paid/how-are-us-doctors-paid-today

Will Munny

Most overpaid and over-respected profession out there.