Yesterday afternoon I was at my primary care physician’s office for a periodic warranty check. As medical examinations go, these are pretty simple affairs. He checks the blood pressure, puts me on the scale, has his assistant check the fluid levels, aka blood tests, and we make a little chit chat.

I’ve been a patient of this fellow for a number of years and we get along pretty well. We’re the same age, both Vietnam vets; both of us enjoy animals, travel and so forth so we have some pretty open discussions. He shared with me that he had just made the difficult decision to no longer accept Medicare/ Medicaid patients and to drop the ones he has. Between the paperwork administrative requirements and the reimbursement schedule the government mandates, he can no longer afford to absorb the cost. According to my doctor he was breaking even, but is now operating at a 40 percent loss on each and every Medicare/ Medicaid visit. He refuses to subsidize the government any longer.

In these days of ever increasing health care costs, we really have to do some thinking about what’s going on here. My friend runs a fairly simple business model. He has an austere office, two people on his payroll and nothing particularly high overhead. Yet he won’t work for the government. What is driving costs so high and can the government cut costs by cutting reimbursement to front line providers?

Now my bias is that government does nothing efficiently, just by the nature of being a large bureaucracy. But what else is in play here? Technology costs money. New wonder drugs cost lots of money because they are difficult to bring to market and because for every R&D success there are myriad failures. Research is expensive. Certainly malpractice insurance for physicians, nurses and other medical professionals is a huge expense. Insurance administration in and of itself is also a huge expense, as there is apparently no standardization. Medical administrators need to be paid too.

Another expense is the free medical care given to the indigent and to illegal aliens. Hospital emergency rooms have high overhead, yet they are required to provide medical care to illegals and then fight for cost reimbursement from the government. To the best of my knowledge, the hospital is not allowed to demand immigration status of people demanding service, and certainly is not reporting these folks to the Immigration and Customs Enforcement authorities. Now basic standards of humanity require we provide emergency care to anyone in need, but certainly we as a society have a right to demand some accountability.

Regards the huge costs of malpractice insurance, certainly tort reform is in order here. For simple negligence, reimbursement for out of pocket costs should be adequate. Huge awards for pain and suffering don’t appear justified. Alas, trial lawyers who are compensated by percentages of the settlements comprise a huge lobby at both the state and federal level. Their politicians tend to stay bought.

Could a single payer system coupled with significant cost reforms work? Perhaps, but history shows that government rarely runs anything efficiently or cost effectively. Our bias is to attack the expense drivers first, and then look at consolidation of services via private sector delivery or public/ private partnerships. In the meantime, we get what we pay for and, as of my discussion yesterday, we’re getting one less very good primary care physician.