We are beginning to see a two tiered system of health care delivery in America - the publicly insured and the privately insured. Medicare is single payer public insurance. Virtually every American age 65 or over is covered by Medicare. Medicare dictates the fees that they pay for medical services that are below cost for the providers .Those of you on Medicare have probably been shocked to see how little Medicare pays doctors, hospitals, and other health care providers. It's not unusual to see Medicare pay only 10% of the providers' bill, leaving them to write off 90%.

Second Rate Treatment

Most health care providers need Medicare patients for volume - pays the overhead, etc. So they are figuring out how to provide a lower level of service for Medicare patients - similar to a retailer creating products with lower price points for less affluent customers. I'll give you an example: Yesterday, I was treated at the Newport Beach Orthopedic Surgery Center for a procedure I've had several times over the last couple of years - an epidural steroid injection (ESI) to treat back pain. Previously, I was treated in a state of the art operating room with lots of staff showing great concern for my well being. The procedure was done under sedation so I was very comfortable throughout. That was when I was covered by private insurance. My Medicare experience was different. This time I was not treated in the surgery center but in one of the regular examination rooms crammed with equipment. The same highly trained doctor performed the ESI procedure, but she was assisted by only one x-ray technician. I was told there would be no sedation. I discovered that enduring an ESI procedure without sedation is on a par with enduring a root canal - about 30 minutes of tedium punctuated by moments of pain, all the while imagining that at any moment something terrible will happen. I was shown out of the room as the next patient was ushered in - mass production style. I had just experienced what I consider to be second rate treatment. I was not a happy camper. A day later, I'm thinking, "The outcome is what really matters. My back is pain free today. So the "bare bones" epidural treatment was apparently just as effective as the "premium" treatment." If American medicine comes to this, I may not like it, but I can live with it.

The Public Good

As a nation, we are struggling to reform the most expensive health care system in the world. It's gotten to the point that health care spending threatens our nation. We are undoubtedly going to end up with a lot more people on public health plans, not a universal single payer plan like Medicare for everyone, but certainly an expansion of Medicaid to cover the uninsured poor and an expansion of CHIP for the children of low income families. We may also get a public healthcare option to compete with private health insurance.

Private Insurance for the Affluent

Germany has a two tiered health care system of public insurance and private insurance. People with public insurance get good treatment for low premiums. People who pay more for private insurance get spa-like treatment that seems over the top even by US standards. Private health insurance in the US should find it easy to capture the affluent market, offering plans that provide personalized services, 24/7 access to their doctors, private rooms when hospitalized, etc. As public health care continues to expand as it inevitably will, private insurance will not be able to compete with public insurance for the masses. One option will be to develop "Cadillac" health plans for those that want preferred treatment.