To Cut Health-Care Costs, Pay Doctors Less
As Democrats and Republicans argue about how to spread the pain of health-care spending cuts, one group has been curiously excluded from the discussion: doctors. There’s good reason to change that.
Everybody likes doctors. They deliver our babies, treat our ailments and often save our lives. In surveys of public trust, they rate higher than college teachers, police, even clergy, and vastly higher than journalists or politicians. Norman Rockwell painted doctors as kind, patient and wise. You probably hope your child marries one.
That public adulation is one reason why the 2010 health- care law, which imposed immediate and heavy cuts on hospitals, drugmakers and insurers, left doctors relatively untouched. A 1997 law that reduces doctors’ Medicare payments is consistently overridden by Congress. And none of the proposals for entitlement reform now circulating around Washington calls for significant sacrifices from physicians.
It’s worth asking whether doctors, who account for almost one-fifth of health spending, really need the special treatment.
After practicing for six years, the average U.S. family- medicine doctor makes $200,000; the average general surgeon, $350,000; and the average urologist, $400,000. (Spinal surgeons make $625,000.) Office- and clinic-based doctors are the most likely of any job category -- except for securities and investment lawyers -- to be in the top 1 percent of earners.
No other developed country pays doctors this much. In 2004, general practitioners in the U.S. were estimated to earn double -- measured by purchasing power -- the median for 21 nations in the Organization for Economic Cooperation and Development; for specialists, the difference was almost threefold.
Those earnings reflect higher payments per service. Last year, a routine visit to a U.S. doctor cost commercial insurers $89 on average, compared with $64 in Switzerland, $40 in Germany and $23 in France. For a normal birth in the U.S., doctors were paid an average of $3,390; in France they got $449. For a hip replacement, American doctors’ average fee was $2,966, while in Spain it was $1,123.
What explains the higher pay in the U.S.? Muscular lobbying may help. Over the past 15 years, the American Medical Association has spent $278 million lobbying the federal government -- more than any other group save the U.S. Chamber of Commerce and General Electric Co. That puts doctors ahead of the largest oil and defense companies in spending to influence policy makers.
Certainly, nobody should begrudge doctors a generous financial reward: They train for years, and we ask a lot of them. Even so, the arguments in support of maintaining their current levels of pay aren’t as convincing as they might seem.
One such argument is the cost of their education. Of the medical students who graduated this year, 86 percent had loans, averaging $167,000. But 30 percent of those graduates said they planned to enter loan forgiveness or repayment programs. And for those who don’t, a recent study in the Journal of the Association of American Medical Colleges found that even a primary-care physician with a starting salary of $145,000 can afford to pay off a $150,000 loan in 10 years.
Another argument is the cost of medical-malpractice insurance. Premiums vary by region and specialty: A doctor of internal medicine can pay anywhere from $6,000 a year in Arkansas to $46,000 in Miami, according to the Medical Liability Monitor, a trade publication. Specialists in higher-risk areas, such as obstetrics, pay more.
But average malpractice premiums have fallen for each of the past five years, and were flat the two years before that, driven by what the Medical Liability Monitor calls a “historically low” number of claims. And some states have begun capping malpractice awards.
A third argument is that the nation faces a doctor shortage, as older physicians retire, baby boomers require more care and the health-care law provides coverage to more Americans.
But that shortage is driven by a funding dispute between hospitals and the federal government, over whether Congress should increase subsidies, paid through the Medicare program, for medical residencies. It has nothing to do with people’s desire to become doctors: The number of medical-school applicants this year exceeded 45,000, about 35 percent more than a decade ago.
So what’s the answer? One option is to cut Medicare rates for specialists, using part of the savings to fund current rates or even gradual increases for primary-care physicians. That would ease some of the pressure on the broader economy, because Medicare rates affect payments by private insurers. It would also change the incentives that drive so many medical students away from family medicine toward more lucrative specialties.
Another option is to replace the current law on Medicare payment rates, which Congress consistently overrides, with legislation that would reduce payments by a smaller amount for all doctors and link them to the rate of economic growth. Congress has failed to stick to this approach before, but if lawmakers believe their own rhetoric about the dangers of rising Medicare costs, this is one way to act on it.
The government could also make an end run around doctors by allowing nurses and physicians’ assistants to do more of the work. That possibility alone, which would reduce the role of doctors, and therefore their leverage, should give them an incentive to compromise.
The solutions aren’t easy. But the question isn’t whether doctors deserve to be paid less. It’s whether they deserve a level of protection that’s unlikely to be afforded hospitals, nursing homes or Medicare beneficiaries.
Excluding doctors from spending cuts means greater sacrifice from the rest of the health-care world -- including their own patients. That’s not a picture Norman Rockwell ever painted.
(Christopher Flavelle is a health-care policy analyst for Bloomberg Government. The opinions expressed are his own.)
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