But in fact the real third rail of health-care reform — whether we’re talking about single-payer, a public option or anything else — is the question no one seems to be asking: Will you require doctors to make less money?
The United States spends a lot more on health care than other rich countries, about twice as much per capita. We have little to show for it, given our worse outcomes on key measures such as life expectancy and infant mortality.
Medicare-for-all proponents promise that their plans will cause us to resemble these other rich countries at last — not only in coverage, but in cost, too. How? By eliminating wasteful spending, which has lately come to mean taking on greedy private insurance companies and even greedier Big Pharma.
We heard this claim from Sen. Bernie Sanders (I-Vt.), Sen. Elizabeth Warren (D-Mass.) and others throughout the debates this week. And look, they’re not entirely off base.
The time spent dealing with billing and insurance is the main reason that doctor and hospital administrative costs in the United States far exceed those of other nations. Prescriptions likewise tend to be far more expensive.
So yes, we should try to wring administrative paper-pushing out of the system; and we should try to lower ridiculously high drug costs, particularly for life-saving drugs long off patent, such as insulin.
But even if we could wave a magic wand and reduce both of those line items to what they are in other countries — which, to be clear, the single-payer proposals on the table may or may not actually accomplish — that alone still won’t bring U.S. per-capita health spending down to what it is in, say, Canada. David Cutler, a Harvard economist who has done extensive work on both of these subjects,
told me he estimated that even these (improbable) changes would close only about half of the U.S.-Canada gap in per-capita health spending.
So what accounts for the rest of the gap? It’s mostly what we pay to providers. Or to quote the late, great health economist Uwe Reinhardt: It’s the prices, stupid.
Administrative costs aside, U.S. hospitals charge far more for MRIs, appendectomies and other common procedures than their counterparts abroad. U.S. primary care physicians and (especially) specialists also make way, way more. The average Canadian specialist, for instance, earns about $188,000, while the typical American specialist brings home $316,000, according to an article last year in the
Journal of the American Medical Association.
And unlike insurers, whose profits are effectively capped under current law, there’s no ceiling on how much doctors are legally allowed to make.
Of course, while insurers and Big Pharma are popular villains, providers are not. People like and respect their doctors, members of a noble profession who treated their cancer or delivered their babies.
Unsurprisingly, then, the two main Medicare-for-all proposals currently under discussion (authored by Sen. Kamala D. Harris (D-Calif.) and Sanders) are both silent about what happens to provider prices. Different assumptions made on this issue help explain the extraordinarily wide range of estimates for how much Medicare-for-all would cost.
Maybe providers would all get paid what they’re paid under the existing Medicare system. That’s substantially less than they typically receive from private insurance — which means doctors would make less money than under the current system, and probably some hospitals would close. Or, maybe providers would receive something closer to private insurance reimbursement rates, which would keep their incomes higher.
There are arguments to be made for either approach. Either we can decide to pay U.S. physicians
as physicians are paid in Canada, and dramatically reduce the cost of Medicare-for-all (and the taxes needed to pay for it); or we can decide that U.S. physicians are worth spending the extra money on (maybe because we’re worried they’d otherwise go into even higher-paying careers, like finance), and the plan gets more expensive.
But either way, candidates have to make a choice about a question that is fundamental to understanding what their plans would do, and whether they add up. So far, they haven’t.