By Dan Calabrese ——Bio and Archives--June 25, 2013
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And American physicians earn multiple times the incomes of their peers in other developed countries. Although they endure long training and graduate with six-figure debt, most are able to pay the loans off within 10 years. "Doctors are a sympathetic group and act beleaguered," says Robert Berenson, a doctor himself and a senior fellow at the Urban Institute. Many physicians, he says, could absorb a pay cut and still prosper. Medicare typically pays doctors less than private insurers do, which is why, in surveys, doctors say additional cuts would cause them to favor higher-paying clientele. In a recent survey from the Medical Group Management Association, a physician-practice group, more than half of practices said they'd be somewhat or very likely to stop taking new Medicare patients if Congress abandoned the doc fix. More than one-third said they'd stop taking Medicare altogether. Yet while some doctors could afford to do so, most probably could not. In primary care, particularly, where physicians are in short supply and young patients need their services, it would be easy for doctors to protect their incomes by reducing their share of lower-paying Medicare customers, and many already do. But in several medical specialties -- orthopedics, cardiology, oncology, rheumatology -- the elderly are the core of the customer base. People over 65 tend to use medical services at four times the rate of younger Americans, meaning it would be hard for many doctors to turn away seniors and maintain a viable business. It's not like physicians can't get a haircut. Doctors recently absorbed a 2 percent pay reduction, their first in a decade, when the sequester kicked in. Industry consultants have seen few major ripple effects. "There are a lot of scare tactics going on," says Martin Gaynor, a health economist at Carnegie-Mellon University. Gaynor doesn't endorse the big, all-at-once hit that would ensue if Congress failed to pass a doc fix, but he doesn't think the sky would fall if it did. "For all the gnashing of teeth and the tearing of clothes and the wearing of sackcloth by the medical profession and their advocates, I don't think things would be nearly as bad as they say." The Medicare Payment Advisory Commission, which analyzes the program for Congress, suggests eliminating the unpopular pay formula but financing it with steep cuts in the rates paid to specialists and freezing payments to doctors in primary care. In 2011, it recommended cuts totaling 18 percent of current fees to be phased in over three years -- and did not predict access problems for seniors.That last part slays me. It's basic economics that if you lessen the rewards for a service, you will get less of the service. But because some advisory commission theorized that it wouldn't be a big problem, that's good enough for Sanger-Katz. Hey, go ahead and make steep cuts to what you pay specialists. Nothing will change! Does anyone in Washington know even the slightest thing about what drives economic behavior? You don't invest money and time in medical school to become a specialist so you can accept a modest government wage, or even a healthy one that's less than you know you're capable of making. And primary care physicians are no different. They work as hard as they do so they can earn as much as possible. Some journalist can demand their pay be cut and declare "they can afford it," but when you limit their rewards for the work you want them to do, you will change their behavior. At least some of them. Certainly enough that you will impact the availability of services, no matter what this "advisory commission" thinks. Liberals make the same mistake when they talk about business finance. They are forever demanding that businesses pay more taxes and insist "they can afford it," and then when you point out that this will limit their available capital and endanger jobs (among other problems it will create), they act as though every business in America has a gigantic room full of cash, and if they don't use it to hire workers, lower prices, give to charity, pay higher taxes, save the earth, etc., it's only because they're a bunch of greedy fat-cat bastards. It doesn't matter how well you think someone is compensated. If you limit what they can make, you will change their behavior. If Margot Sanger-Katz doesn't understand that, she should learn, and people should stop reading her material for insight on health care finance. Because she doesn't understand it.
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