Marketplace - How Medicare payment cuts are hurting health care

Episode Date: November 26, 2024

Adjusted for inflation, Medicare pays doctors almost 30% less than it did in 2001, the American Medical Association says. And unless Congress intervenes, physicians will take another 3% cut in January. That decline in payment rates has a ripple effect through the health care system. Also in this episode: Investors celebrate Trump’s treasury secretary pick, print magazines are making a comeback and not everyone is thrilled with the outcome of COP29.

On the show today, we've got three M's, not the company, markets, magazines, and murals. From American public media, this is Marketplace. In Baltimore, I'm Amy Scott, in for Kai Rizdal. It's Monday, November 25th. Good to have you with us. We talk about the bond market a lot on this show because the $28 trillion Treasury market tells us a lot about the global economy and where investors think it's headed. And that's where we're going to start as the market reacts to President-elect Donald Trump's choice for Treasury Secretary, hedge fund billionaire Scott Besant. Bond yields had been rising steadily since September as strong economic data and then Trump's reelection

had investors worrying about inflation. But as Marketplace's Mitchell Hartman reports, yields have been coming down more recently. Up until the announcement of hedge fund manager Scott Besant as Trump's treasury pick, investors were focused intensely on inflation and whether it might soon surge higher again, in part because of what the incoming Trump administration is expected to do, says Thomas Urano at Sage Advisory. Tax cuts, tariffs, immigration, the market generally proceeding the Trump administration to embark on policy that might add to inflationary pressures, add to growth, but also add to the deficit.

Brings into question whether the Fed is going to continue cutting rates. There's a bit less worry now that investors expect Scott Besant to hold the most important economic position in the new administration, says Urano. It's just a little bit of a relief rally. He viewed more as a moderating force on some of the tax, tariffs, and deficit concerns. In particular, Besant is seen as ready to advocate for a balance between Trump's stimulatory wish list and fiscal reality, says Jennifer Lee at BMO Capital Markets. He said his first priority is delivering on all the tax cuts

the president-elect has promised instead of tariffs. The fact that he also wants to cut spending is also encouraging as opposed to spending, you know, like there's no tomorrow. Besant is on the record favoring gradual implementation of tariffs, which could reassure companies and consumers worried about higher import prices hitting right away. Some of the relief in markets comes simply from the fact that Besant is a seasoned Wall

Street hand at a time when the federal deficit is high and likely going higher, says Quincy Crosby at LPL Financial. The need to raise money to pay for that deficit via auctions, for example, you need to have someone highly experienced. I mean, that's something that the market was in essence demanding. But the Besant rally may not last, says Crosby. We get more inflation data later this week, and if the news isn't good, treasury yields could shoot up again.

I'm Mitchell Hartman for Marketplace. On Wall Street, you know what people say about Mondays. Yeah, not today. We'll have the details in Baku, Azerbaijan. Expectations were low given the absence of top world leaders from some of the largest greenhouse gas emitters, including the United States, China, and France, and the fact that for the third year in a row a petro-state hosted the meeting after Egypt and the UAE. In the end there was some progress.

Developed countries agreed to commit $300 billion a year to help poorer countries adapt to climate change by a decade from now. That's three times what wealthy countries had been contributing. But as Marketplace's Kaylee Wells reports, it's far less than experts say is needed. Developing countries and their advocates wanted to see a $1.3 trillion per year commitment. American University environment professor Dana Fisher calls this year's conference a carbon-infused nothing burger.

Anybody who expected this 29th round of climate negotiations in a petro state theoretically to stop the climate crisis was fooling themselves. And Fisher says it's not like there's an agreed upon punishment if countries don't fork over their share of that money. It's green smoke and mirrors. I mean, it's just, it's just performative climate action at this point. President-elect Trump pulled the U.S. out of the Paris climate agreement during his first administration, and he

has promised to reverse President Biden's decision to recommit to the treaty. Daniel Bursette, president of the climate nonprofit Environmental and Energy Study Institute, went to the conference and didn't come away too worried. The rest of the world has kind of been to this rodeo before and has found ways to cope. Plus, just because the federal government pulls out doesn't mean the whole country has to. One thing that was hard to miss was the sort of the state and local government,

the US subnational message was we're still in. And Berset says much of the corporate and private sector is still in too. There's nothing legally binding about the $300 billion deal, says Kava Gillampur, of the think tank Center for Climate and Energy Solutions. But... There are political and moral repercussions, and I'm pretty confident that they will deliver against that.

Gillinpour was also at the conference where he says cop leaders produced a blueprint for their next meeting. Which is essentially tasked with getting the incoming COP 30 presidency of Brazil to think about how you do move from these billions to the wider trillions. Meaning that $1.3 trillion per year target is still on the table for next year's conference in Belem, Brazil. I'm Kayleigh Wells for Marketplace. Kaylee Wells for Marketplace. As you may have heard, we have a Marketplace podcast focused on climate change,

policy, solutions, and your questions. You can find How We Survive wherever you listen to podcasts. Starting next year, doctors will earn about 3% less money caring for older patients with Medicare unless Congress intervenes before January. And that's even though the cost of providing care is projected to rise by about three and a half percent. Every year by law the Centers for Medicare and Medicaid Services makes adjustments to what's called the physician fee schedule, which determines how much doctors get paid for

different services. The American Medical Association and other groups representing doctors are pushing back against the cuts and say they're making the math of being in private practice increasingly difficult. Marketplace's Samantha Fields has more. Everything about running a medical practice has been getting more expensive, especially in the last few years. Staff salaries have gone up, our rent has gone up, all of our equipment. Bruce Scott is an ear, nose and throat doctor in Louisville, Kentucky and current president

of the American Medical Association. At the same time, what Medicare has paid us has gone down. Adjusted for inflation, Medicare now pays doctors almost 30% less than it did in the early 2000s, according to the AMA. And Scott says that ripples through the entire healthcare system. Private insurance tends to pay significantly more than Medicare. But when Medicare rates go down, private insurance rates often do too. As a result, physicians have made difficult choices. In some cases, it's to limit the number of Medicare patients that they're willing to see, to stop accepting new Medicare patients,

or close their practice completely. That's an issue in Stillwater, Oklahoma, where Mary Clark works as a family doctor. We see a lot of people having a hard time finding a physician who is accepting new Medicare patients. And I hear that from my staff on a weekly basis. She also hears it from colleagues in other rural areas. If you're a small, independent practice, you need at least some patients with private insurance to make the math work. You can't see every Medicare patient. It's not financially possible. Michael Chernew, a professor of health policy at Harvard Medical School, says

nationally people with Medicare report they have as good, if not better, access to doctors than people with commercial insurance. That's according to a recent survey from MedPAC, the Medicare Payment Advisory Commission, which he chairs. It can be hard to find doctors to take Medicare. It can also be hard to find doctors to take commercial insurance. There are huge variations in how all of this is playing out around the country and for big hospital systems versus private practices. And Robert Berenson at the Urban Institute says not all specialties are paid the same.

There's doctors who interpret images. There's doctors who do surgery. There's doctors who spend time in office visits. And some of those services are paid more highly than others. Have you ever had liquid nitrogen applied to a wart? It takes about a minute. And Medicare pays dermatologists roughly $165 to do it. Meanwhile...

A payment for 40 minutes with a very complex patient who probably has one or more chronic conditions is about the same $177 Baronson says the whole process is broken It results in overpayment for procedures and imaging and tests and underpayment for time spent with patients Even with the overall decline in rates He says plenty of doctors are doing just fine and big hospitals have leverage to negotiate higher rates with insurance companies. But small practices like Dr. Bruce Scott's do not. In Louisville, he says, one insurance company covers about 60 percent of patients with commercial

plans, and that company? It's actually offered us rates less than Medicare now, and we can't even bring them to the table to talk because they know that we can't even bring them to the table to talk because they know that we can't really say no. Earlier this year, Scott says a major cyberattack on the payment processing company Change Healthcare meant his practice didn't have any revenue coming in for about six weeks. Our practice had to take out a loan to be able to pay our staff and pay our rent and all of our bills.

And the physicians stopped taking paychecks for several pay periods. That's how close to the edge we are. Which is why he says every reduction in reimbursement rates matters. I'm Samantha Fields for Marketplace. Coming up. Over time, the hanging upside down became my trademark. Everyone has their thing, but first let's do the numbers. The Dow Jones Industrial Average rose 440 points, 1% to finish at 44,736.

The NASDAQ added 51 points, a quarter percent, to close at 19,054 and the S&P 500 gained 18 points, three-tenths percent, to end at 59.87. At least $132 million worth of small-package delivery expenses never made it onto the books at Macy's. The retailer reported today that a loan employee intentionally made bogus accounting entries worth at least that much between the second half of 2021 and this month. It also reported that while sales are looking pretty good in the current quarter, they weren't great during the third quarter. Shares gave up 2.2%. Per Mitchell Hartman's story, bond prices rose. The yield on the 10-year T-note fell to 4.27%.

You're listening to Marketplace. Understanding personal finance can feel like an impossible task, but it doesn't have to be that way. I'm Janelia Espinal, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts. Money, money, money. Kids always have questions about it, and maybe you do too.

That's why Million Bazillion, the webby-winning podcast from Marketplace, is here to answer the awkward and sometimes surprising questions your kids have about money. We explain concepts like savings accounts, retirement, and the differences between brand names and non-brand names. Million Basilion is the place for you and your kids to learn about money together. We helped dollars make more sense, didn't it? Listen to Million Basilion wherever you get your podcasts. This is Marketplace. I'm Amy Scott. If you were to move maybe to another part of town, maybe another

region in the United States, where would you go? The Sun Belt gets a lot of attention for the large numbers of people relocating and buying homes in states like Arizona, Texas, and Florida. But a new survey from the National Association of Realtors shows another part of the country is getting a lot of love too. The Midwest, Marketplace's Elizabeth Troval, explains. People moving Association of Realtors shows another part of the country is getting a lot of love to the Midwest Marketplaces Elizabeth Troval explains people moving to the Midwest are coming to cities like Kansas City and Columbus where there's been lots of development says Jonathan Rappa with brokerage advisory service MMG REA the confluence of factors that has really kind of

Seen development tick up in the Midwest take Columbus, Ohio confluence of factors that has really kind of seen development kick up in the Midwest. Take Columbus, Ohio, where Intel is opening up a new semiconductor plant nearby and home sales have been strong. Sean Simpson is a real estate agent there. We're seeing a lot of people come in from those California, the D.C., the New York, who are looking for a little bit more of an opportunity with a little bit more of an affordable housing aspect.

He says these newcomers are also willing to move further from urban centers in exchange for other perks. You get the schools they want, the parks they want, the amenities they want, and also a lot of them are bringing cash. Some people are also moving back to the Midwest after moving away, says Matt Kristopperson with the National Association of Realtors. It was about a quarter of movers to the Midwest moved back somewhere where they previously lived.

So combining that with the point that they're really driven by being close to family and friends, they're most likely moving back to their home, maybe hometown, or at least where their family lives. People have also moved away from the Midwest, but states like Ohio and Indiana have been seeing net migration gains with affordability playing a role, says economist Ralph McLaughlin at Realtor.com. Places like Akron and St. Louis and Cleveland and

Indianapolis, those are the places where you only need to make $50,000 to $70,000 to buy the median priced home. Andy says those markets are likely to stay affordable since they're less constricted by geography and zoning laws that limit new construction. I'm Elizabeth Proval for Marketplace. Earlier this fall, The Atlantic, the American magazine publisher, did something surprising. It announced plans to increase the number of print editions it puts out each year. That's right, increase from 10 magazines to 12. The Atlantic isn't the only magazine investing in print these days. This year, Sever, if I'm saying that right, Sports Illustrated, and Vice have all

committed to restarting their physical editions. Amanda Mull wrote about it in Bloomberg Business Week the other day. Amanda, good to have you back. Thanks for having me. Alright, so several magazines have actually restarted their print publications and there are some newcomers. What is going on? Right, so we're probably all pretty familiar with like the decline of print over the past 10, 15, 20 years. Over that period of time, a lot of longstanding publications that had started as print magazines decades or even a century prior had phased out their print editions and tried to funnel everybody online.

In the past couple of years, some of those publications have started to think twice about that decision. Just in recently Field and in, you know, recently Field & Stream, Nylon, Savoir, Sports Illustrated, Vice, all of these companies are like, well, hold on a second. Why don't we bring back a little bit of print magazine and see how it goes? And why do you think that is? Were readers clamoring for a print copy to hold in their

hands again? Well, I think that fundamentally the issue is that people didn't stop buying print magazines and companies didn't stop printing print magazines because consumers hated them. They stopped printing them because the economics of printing physical editions of a magazine became sort of untenable. And I think that what we're seeing is the realization among publishers of periodicals that they may have moved a little too swiftly to kill off this entire arm of their business.

And it turns out that advertisers really like print magazines as well. So you might not be able to print a weekly magazine anymore. And some of these companies probably can't print a monthly magazine anymore. But maybe like a quarterly magazine there's demand for it among readers, there's demand among advertisers, so like why not give it a try and see if it works. You mentioned that advertisers

like appearing in magazines. What, how are these ads different than what they might pay for online? Well I remember when I was a kid reading magazines there were lots of advertisements especially in the sort of fashion realm but also in consumer technology and beauty and lots of different industries that were like downright artistic that people would would tear out of magazines and put on their walls. These were advertisements for products but people didn't encounter them as an inconvenience or as something that was trying to get in their way. So that is still the case. It, in fact, it might be even more so the case.

You know, the bad online advertising or bad technology in implementing online advertising can make people think worse of your publication or of your product. If you're the advertiser and you really don't get that same capacity for blowback in a print publication because it is just a lot more standardized. It's a different user experience. And there's a lot more upside. So especially for high-end brands and advertisers,

going that direction gives you as an advertiser a lot more control over how your ad appears, over how obtrusive it is to people, and ultimately more control over what they might think of you as a result. So there's a lot of upside for advertisers. Well, and it's not just the advertisers who are high-end, right? You mentioned that a lot of the readers are going to be higher-, more educated, it's become kind of a luxury good? Yes. I think that a really beautifully designed magazine full of interesting, freshly reported stories is something that a lot of these publications look at as particularly marketable toward

a higher end subscriber, somebody who might pay $100 or $120 for an annual subscription. And then when you make a sort of like sophisticated, high-minded product that you can better sell to this like cohort of the population, you then make a publication that can make a really great pitch toward advertisers who are looking for people with disposable income, who are looking for, you know, that same cohort of the population essentially. Are you subscribing to anything in print that you might have read online previously? Oh, I subscribe to tons of things. My mailman is extremely busy. All right. Well, Amanda Mull, it's always good to talk to you.

She writes at Bloomberg Business Week, which has a print edition. We do. It's beautiful. Amanda, thanks was the last time you saw a good mural? I am lucky to live in a city full of them, giving life to an otherwise dull concrete wall or office space, telling a story, making you think. For this next installment of our series, My Economy, we hear from someone who creates these works of art for a living. My name is Cindy Fletcher Holden. I am a muralist, an artist, and a sign painter, and I live in Annapolis, Maryland. I graduated with a degree in painting.

Not quite sure what I was going to do with that. So I got a job in a sign shop, and I learned the trade of hand-painted lettering and got involved right away into the full career of painting names on boats. The interesting thing then was to learn the trade of sign lettering, my employer would cut out a stencil and I would literally go and hang upside down off the back of the boat and and use the brush to to form the letters and time, the hanging upside down became my trademark. My aunt asked me if I wanted some of my grandfather's art

supplies. So when I went to go get them, I was shocked to see that we had all the same supplies that I had. He had lettering brushes, he had gold leaf supplies, he even had the same one-shot sign paint. And as I went through his art supplies, I realized that we did the same thing. He did truck lettering, signs, and murals. And I did not know this until at that point. It made me realize that this whole lettering mural painting is in

my DNA. I do murals in businesses in private homes in private schools in public schools. I've done a couple of public murals as a result of a contest. They're all a challenge, each one is different. Even some of the ones that I've done that are the same logo, they might be on a different surface, some are outside.

So each job requires a whole different attitude. Some are hot, cold, high up in the air. I have to learn how to drive all kinds of lifts and climb scaffolding. So I love the challenge. I'd like to keep on going for as long as I can. It's physically fun. It's great to see it finished and have people tell me that they like it, of course. So I'm very lucky. I have not had a slowdown for a couple years at all. So I hope it keeps going. Cindy Fletcher Holden, muralist in Annapolis, Maryland. You know, we can't do this series without you.

Tell us what's happening in your economy at marketplace.org slash my economy. This final note on the way out today, did you catch Glickid over the weekend? Yeah, it's no Barbenheimer, but Wicked and Gladiator2 each did a pretty respectable business at the box office over the weekend? Yeah, it's no Barbenheimer, but Wicked and Gladiator 2 each did a pretty respectable business at the box office over the weekend. Wicked was by far the bigger attraction, bringing in a hundred and fourteen million dollars, the biggest opening ever for a Broadway adaptation. The Gladiator sequel brought in fifty five and a half million. It's a lot of popcorn. Our daily production team includes Andy Corbin, Nicholas Guillaume, Elise Hassan, Maria Hollenhorst, Sarah Leeson, Sean McHenry, and Sofia Terenzio. I'm Amy Scott. Hope to see you back here tomorrow. This is APM. Understanding personal finance can feel like an impossible task, but it doesn't have to

be that way. I'm Janelia Espinal, and on Financially Inclined, I'll guide you through simple money lessons that will change your financial future. Learn about credit scores, how to avoid scams, and why you need a savings account. Plus, we explore the brain science behind FOMO and what you can do to make smarter money decisions. Listen to Financially Inclined wherever you get your podcasts.