By SUSAN ADELMAN, MD
When I entered the medical profession 50 years ago, those were the good old days for doctors. Physicians enjoyed a windfall when Medicare and Medicaid were passed, then the appearance of new pharmaceuticals and surgical techniques enabled doctors to cure more conditions, which meant they had more lucrative business. Once regarded as poor, now doctors had the image of fat cats, rich targets to be taken down.
In 1993 the Clinton Healthcare Reform Task Force was in full throttle, and I had the dubious privilege of representing the AMA on a Healthcare Professionals Review Committee—not part of the Task Force, an afterthought. The committee was created after I asked the AMA about joining the Task Force, and the AMA Executive mentioned at a Washington conference that the AMA did not have representation on it. Newspapers across the country gleefully heehawed that the AMA had not been invited. The rest is history.
Members of this committee included doctors, nurses, social workers, physician assistants, pharmacists, a healthcare administrator, and other professionals involved with healthcare. Neither name nor place tags indicated who practiced what profession, certainly not who was a doctor. No such elitism would contaminate this group!
In those days the AMA Council on Medical Service, on which I served, figured that only 14% of the healthcare dollar went to doctors. Thus, we calculated that even if Washington eliminated half of the payments to doctors, it would only shrink the healthcare dollar by a few percent. In short, all their efforts to lower physician pay would have little effect on the national healthcare budget. It simply would lower physician pay and prestige. Then the Task Force would recommend raising the pay of nurses and physician assistants, so they could compete on a more level playing field with doctors, incidentally taking the doctors down a peg. In 2013, Uwe Reinhardt, a highly respected healthcare economist, wrote that “doctors’ net take-home pay (that is income minus expenses) amounts to only about 10% of overall health care spending. He also wrote that “over a 30-year period (1970–2000), medical malpractice premiums increased … to 7.5 percent of total physician practice expenses, and [that] represents “only” about 1–2 percent of overall health care spending.”
These numbers are 10 years old, but let us look at them. Suppose that Medicare reduced physician pay by 7.5%. Using Reinhardt’s calculation, this would reduce overall healthcare spending by 1-2%. In fact, in 2021 the AMA found that physician services still were 14.9% of the healthcare dollar, $633.4 billion. Now, suppose that the government cuts physician payments by 3.37%, as it currently threatens to do, how much would that affect the healthcare dollar? It would decrease by about .6%.
What would that mean to physician overhead? In many cases it would be the difference between a viable practice and one that is not. This is especially true since the AMA reports that “The looming 3.37% reduction comes after three years of consecutive cuts to Medicare services”, which would mean cumulative cuts in Medicare payments of almost 10% in four years.
In other news, one of the problems that many people are writing about these days is physician burnout. Physicians today are more likely to be employees than independent, with little autonomy, and with little or no opportunity to determine their fees, hours, or office arrangements. Physician assistants and nurse practitioners might or might not be distinguishable from doctors in the clinic anymore, subtly reducing physician prestige. We also must remember that all their domestic expenses have gone up while physician payments have gone down. Doctors no longer command the respect they once did, much of this engineered by an invidious bureaucracy that asks how physicians dare think they are better than anyone else. PAs and nurses can do the same thing, for less money. They have less medical training too, but let them go to Google when faced with a difficult clinical problem.
How does this affect the career choices of the best and brightest in college today? They must decide whether it is worthwhile to go through four years of college, four years of medical school, four to six years of residency and fellowship, and end up as employees of a clinic or hospital with a salary determined by the clinic directors, usually nurses. In fact, they must think, it should be more fun and rewarding to join a startup or a software company.
How will this affect the future healthcare of the general public? Not favorably, but this is the government they voted for, a government stuck in a time warp, that pushes consistently to devalue doctors and to pay them less. They can do that, but the public will get the doctors their government is willing to pay for, nothing more.