Tackling a sacred cow (MD earnings)

[John Gear]

"Let's live on the planet as if we intend to stay."

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http://www.slate.com/articles/business/moneybox/2013/02/american_doctors_are_overpaid_medicare_is_cheaper_than_private_insurance.html


   /America's Overpaid Doctors/


   /Time/’s long investigation of American health care prices missed
   one thing: We pay our doctors way too much.

By Matthew Yglesias <http://www.slate.com/authors.matthew_yglesias.html>

Steven Brill’s 24,000-word magnum opus in /Time/ on health care billing
practices in the United States
<http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/>
is remarkably easy to summarize: American health care costs a lot
because the prices Americans pay for health care services are very high.
And hospitals charge those high prices for the same reason any other
business would—because they can.

It’s easy to see why a health care provider is almost uniquely
well-positioned to bilk you. If you don’t get treatment, you or someone
you love might die. It’s a high-pressure emotional situation that makes
it extremely difficult to bargain, comparison shop, or just decide to
cut back. Most of us, fortunately, get to outsource most of that
bargaining to our insurance companies. Cold-blooded executives, not
stressed-out patients, cut the deals that determine how much actually
gets paid. This means that the real price of health care services is
driven largely by the purchasing clout of the buyer. An uninsured
individual gets totally screwed. A big insurance company can drive a
harder bargain and get a better deal. But as Brill shows, the best deal
of all goes to the biggest insurer around: the federal government, whose
Medicare program for senior citizens is such a large purchaser that it
and it alone can drive a truly hard bargain and squeeze provider profit
margins to the bone.

The policy upshot of this seems clear enough. Rather than /cutting
/Medicare as is currently all the rage in deficit-hawk circles, we ought
to be /expanding/ it and enlarging the cheapest and most cost-effective
part of the American health care system.

But of course only left-wing crazies think that, so though Brill
concedes that this is precisely the reason that more-statist foreign
health care systems have much lower costs than ours, he rejects the idea
out of hand.

But Brill’s reason for rejecting the idea is interesting. He doesn’t
care a fig for the hospitals, which are the villains of his story.
Rather he rejects Medicare expansion because if Medicare expanded, “no
doctor could hope for anything approaching the income he or she deserves
(and that will make future doctors want to practice) if 100% of their
patients yielded anything close to the low rates Medicare pays.” It’s
true that many American doctors do /believe/ that they would be crushed
if they were paid only Medicare rates. They insist they’re hard-pressed
as it is, barely getting by, and practically treat these Medicare cases
as acts of charity. There’s no way they could swallow those
reimbursement rates without the whole system collapsing.

But that’s not remotely true. The last time the OECD looked at this (PDF
<http://www.oecd.org/health/health-systems/41925333.pdf>), they found
that, adjusted for local purchasing power, America has the highest-paid
general practitioners
<http://www.motherjones.com/kevin-drum/2013/02/charts-day-doctor-pay-america-and-other-countries>**
in the world. And our specialists make more than specialists in every
other country except the Netherlands. What’s even more striking, as the
/Washington Post’s/ Sarah Kliff observed last week, these highly paid
doctors don’t buy us more doctors’ visits. Canada has about 25 percent
more doctors’ consultations
<http://www.washingtonpost.com/blogs/wonkblog/files/2013/02/utilization.png>
per capita than we do, and the average rich country has 50 percent more.
This doctor compensation gap is hardly the only issue in overpriced
American health care—overpriced medical equipment, pharmaceuticals,
prescription drugs, and administrative overhead are all problems—but
it’s a huge deal.

Doctors aren’t as politically attractive a target as insurance
companies, hospital administrators, or big pharma, but there’s no
rational basis for leaving their interests unscathed when tackling
unduly expensive medicine.

If doctors earned less money, fewer people would want to be doctors. We
could offset some of that impact by helping doctors out with medical
malpractice reform and more government funding for medical school
tuition. But a shortage of people wanting to enter the medical pipeline
is the last thing we should be worrying about. As it stands, medical
school is getting harder to get into
<https://www.aamc.org/download/321494/data/2012factstable17.pdf>
(continuing a longtime trend
<http://mjperry.blogspot.com/2008/07/why-couldnt-we-have-200-medical-schools.html>)
even as it gets harder for medical school graduates to find residency
slots
<http://capsules.kaiserhealthnews.org/index.php/2013/02/the-yawning-chart-med-school-students-fear/>.
What’s more, in the 18 states where lesser-paid nurse practitioners are
allowed to do primary care without a doctor’s supervision, their
treatment is just as good in terms of health outcomes
<http://www.slate.com/blogs/moneybox/2013/02/19/nurse_practitioners_the_easiest_way_to_expand_access_to_health_care_is_out.html>
and /better/ in terms of patient satisfaction. Any shortage of primary
caregivers, in other words, is about bad rules limiting the number of
people who can practice, not a lack of monetary incentives. We need more
residencies and more scope for nurses to work unsupervised, not
higher-paid doctors.

When it comes to the federal budget, Medicare is a problem. An uncapped
commitment to finance the health care needs of elderly Americans is a
big challenge for an aging country. But when it comes to the question of
health care costs overall, Medicare is the solution. Its vast bargaining
clout lets it get much better prices than any private insurer, and we
should be relying on it /more/ to pay our bills, not less.

Matthew Yglesias is the executive editor of /Vox /and author of /The
Rent Is Too Damn High/
<http://www.amazon.com/gp/product/B0078XGJXO/ref=as_li_ss_tl?ie=UTF8&tag=slatmaga-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=B0078XGJXO>.