Obama pitches health-care reform to his toughest audience yet--a room full of doctors

This is a big week for health-care reform. Speaking today at the AMA's national convention in Chicago, President Obama will try to make the case that his vision for overhauling the nation's health-care system will ultimately lead to better medical care without disrupting the way doctors practice medicine. Look for polite applause and a speech short on specifics.

We spend about $2.5 trillion each year on health care. According to CBO, the President's reform proposals will cost upward of $1.5 trillion over 10 years. These numbers represent a staggering amount of zeros even for a robust economy; being in the midst of a recession will make selling this proposal that much  harder.

The first question the AMA will ask: how are we going to foot the bill for a massive overhaul?

Cuts in health-care spending are inevitable, but right now there's a lot of paper on the table but no specifics. According to Joseph S. Bailes, MD, chair of ASCO's government affairs committee, the Sustainable Growth Rate (SGR) issue is likely to come up soon. Instituted as a mechanism to hold down the growth of fee-for-service charges in Medicare Part B, the SGR has had mixed reviews at best from policy makers and a failing grade from the medical community. If not addressed, or, as in the past several years, overridden by Congress, we could see up to a 21% decrease in service fees for physicians.

Dr. Bailes also pointed out that the administration is looking to shave more than $300 billion from Medicare/Medicaid payments, which will undoubtedly impact oncology services. These spending reductions come on top of the $622 billion in cuts [mostly from Medicare] Obama requested for his 2010 budget.

In order to convince all the major stakeholders that a massive overhaul of the health-care system in both necessary and doable on Obama's ambitious time frame [he wants a bill on his desk by October] the President has to spell out exactly how the providers of care are going to be affected by the proposed cuts in spending.

As reported in the Wall Street Journal, the American Hospital Association is already pushing back at proposed cuts to hospital services of about $100 billion over the next 10 years.

There are two basic ways to reduce spending on medical care, reduce payments to physicians for their medical services or reduce the intensity of services, ie, volume. Doctors do not want a pay cut for the valuable services they provide and a recent Kaiser Foundation poll reported in the New York Times found that 67% of Americans want more medical services.

Between providers and patients [not to mention third-party payers], the President's proposals for sweeping reform might get caught between a rock and a hard place.