Should the doc fix get fixed?

at 11:12 AM ET, 12/20/2011


(Kelley McCall - AP)
It’s become a tenet of conventional wisdom for Republicans and Democrats alike: The government will not cut Medicare doctors’ salaries. For 15 years now, the formula used to determine how much doctors get paid has not kept up with growth in health-care costs. So Congress reliably passes a “doc fix” and appropriates additional funds to cover the shortfall, sometimes giving providers a slight raise.

The latest doc fix is set to run out at the end of the year; a new one is caught up in the debate over over the payroll tax extension. But even so, the working assumption is that doctors’ salaries will remain steady. The federal government will even hold off on processing claims for the first 10 days in January, just to make sure Congress has enough time to get its act together and pass their pay raise.

Should they? American doctors are among the highest paid medical professionals in the world, as well as top-earners domestically. As Congress weighs another patch to doctors’ salaries, it’s worth looking at what it’s buying us.

Primary care doctors in the United States earn just over $186,000, about $20,000 more than any colleagues abroad. The disparity is even greater among specialists: Orthopedic surgeons here have an average salary of $442,450, which is just about double what other developed nations pay the same medical professionals. Here’s what all that looks like in a chart from the Commonwealth Fund, which uses OECD data:

We pay more for doctors, but we don’t necessarily get better health outcomes. That same Commonwealth Fund survey found that the United States lagged on a number of health-care measures, from how long patients wait to see a specialist to life expectancy.

Nor have the higher salaries bought us more doctors. Another chart from the Commonwealth Fund shows the United States is slightly behind OECD averages in terms of doctors per capita:

This chart could be read a few ways. You could see that higher salaries have not bought us more doctors. Or, it could be read as a cautionary tale: Reduce provider salaries and we’ll be left in an even more perilous situation, with even fewer doctors than we have right now. The American Medical Association tends to highlight the latter interpretation, regularly releasing member surveys suggesting doctors would flee the Medicare program if their salaries dropped.

That might be true if Medicare payments fell by 27.4 percent, the amount they would drop if Congress does nothing before the end of the year. But what if they fell by about 5 percent or so? Medicare pays a decent chunk of most doctors’ salaries, accounting for about one-fifth of national health-care spending, making it a pretty difficult program to leave.

Politically, reducing Medicare reimbursements is pretty much a non-starter; the campaign ads against members of Congress who vote to cut doctor pay just about write themselves. But in terms of policy, it’s an area that matters: Labor costs make up 56 percent of the $2.6 trillion we spend on health care annually. As we look at ways to bring down our ever-growing health-care costs, it’s at least worth examining how much we pay those who deliver our health care.

 
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