Physicians have reason for concern with recently passed health care reform (HCR). Their experience with government-run care may present austere days ahead for them.

There are two primary government run health insurance programs, Medicare for the elderly and Medicaid for the financially at-risk.

Today, Medicare pays physicians on average 25 percent less than private insurance plans and Medicaid pays 28 percent less than Medicare. For a service reimbursed at $100 by a private plan, a physician receives only $75 from Medicare and $54 from Medicaid.

From 2003 to 2008, Medicaid reimbursement rates increased actually below the rate of inflation and surveys show doctors are refusing new Medicare/Medicaid patients.

Michigan is a case in point: A March 2010 New York Times article titled “As Medicaid Payments Shrink, Patients are Abandoned” reports that Michigan’s Medicaid reimbursement rates are only 63 percent of Medicare, the sixth lowest in the country.

Doctors are increasingly turning away Medicaid patients. In Flint, waits for appointments in the city clinic increased from four months to six in 2008.

Potential new doctors are fleeing, too. One surgeon reported that of the 72 residents he trained only two remained in the area and they were both natives.

HCR will cut physician reimbursement rates even further. Analysis shows Medicare alone is targeted for $500 billion in program cuts over the next decade.

In turn, both Medicaid and commercial insurers historically peg their reimbursement rates to Medicare and are projected to cut rates under reform, too.

On a positive note, HCR will increase Medicaid reimbursement rates for primary care physicians to equal that of Medicare. But this reprieve is short lived as it only applies for years 2013 and 2014.

At the same time, HCR will create the highest spike in service demand since Medicare and Medicaid were created in 1965, adding approximately 32 million newly insured.

Southern Ohio will be particularly impacted as it has a high number of citizens who will be financially eligible for government run care.

Currently, Ohioans earning up to 90 percent of the federal poverty level (FPL), or about $20,000 annually for a family of four are eligible for Medicaid.

According to the Ohio Department of Jobs and Family Services figures, 1-in-5 residents in Lawrence, Jackson, Pike, Scioto, Adams, Brown and Clermont counties are on Medicaid, with a combined enrollment of 95,182 in 2008.

Under HCR, however, Ohio will have to expand Medicaid coverage to residents earning up to 133 percent FPL.

U.S. Census data shows the average family size in Ohio is 3.02 persons. For a family of three, 90-133 percent FPL equates to an annual income range of $16,500 to $24,400. Census figures show that in 2006 just over 11 percent of Southern Ohio residents fall into this income range and when applied to latest population data approximately 53,509 persons would be newly eligible for Medicaid under reform.

Census data also shows there is a ratio of 67 primary care physicians for every 100,000 residents in Southern Ohio. Applying this ratio to latest population data, there are approximately 315 physicians in Southern Ohio. Therefore, under HCR each physician can expect to serve on average up to 170 newly eligible Medicaid patients.

At present, doctors recoup some of their losses in Medicare/Medicaid patients from the commercially insured.

However, after HCR drives down reimbursement rates across all plans, doctors will be left with three stark choices: 1) provide medical services at a lower standard of living; 2) throw in the towel for another profession — an unlikely scenario for the currently practicing, but a real option for the young and talented choosing a career; or 3) provide services on the black market, i.e., deliver quality and attentive care to wealthier nationals and foreigners willing to pay under the table in cash.

Joe Green is from Piketon and is President and CEO of NPRC, a management consulting firm, and may be reached via e-mail at joe@ohiogo.us