The April 1, 2009 New York Times carries a story “Doctors Opting out of Medicare” that finds that only about 40 percent of medical doctors at a New York City hospital would accept Medicare reimbursement. The remaining 60 percent were able to earn more money by taking patients who paid cash or had private insurance. The article fails to mention the fact that U.S. has fewer physicians per capita than other developed countries (the OECD average was 3.1 per 1000 residents; the U.S. has about 2.4; France has 3.3; Israel has 3.8). The U.S., despite our recent bout of attempted national economic suicide, has a tremendous amount of personal wealth. What do you get when you combine wealth with a limited supply? High prices. State and federal governments are pushing forward various schemes to increase the number of Americans covered by health insurance, thus increasing demand for health care. The supply of physicians, however, is already extremely tight. Any attempt by the government to offer compensation below a market-clearing level will result in physicians opting out and saying “I’m only going to work for rich people who pay cash and/or pay a lot more than their standard insurance reimbursement.”
Decades of immigration to the U.S. and the resultant population explosion (from 200 million people during the 1970s to more than 300 million today) have not been matched by an explosion in the number of medical schools or the size of med school classes. This means that virtually all health care cost control measures, short of sending American patients to Europe or Cuba for treatment, are doomed to fail.
The U.S. government controls how much is paid for more than half of American health care dollars spent, but the American Medical Association (doctors’ union) controls how many doctors will be licensed to practice in the U.S. Unless we can somehow revoke the laws of supply and demand, we’ll probably have to spend a dramatically higher percentage of GDP if we want the currently uninsured to enjoy comprehensive medical care. We’ll have to pay existing doctors enough that they’ll be happy to work 6 or 7 days per week.
Phil,
When a friend recently died by way of a tragic hospital mistake (mix up of medication, i think) everyone who hear the story uttered some form of “that health care provider is going to be sued…”
A doctor friend of mine (internal medicine with a small practice) pays over 8k a month on malpractice insurance.
What is your opinion on litigation and the threat thereof driving up the costs of health care?
Your friend who pays $8,000 per month needs a new carrier! Most physicians in lower-risk specialties pay closer to $8,000 per year (varies a lot by state). http://www.iii.org/media/hottopics/insurance/medicalmal/ indicates that in 2006 medical malpractice torts cost Americans $30 billion. That’s about 0.2 percent of GDP. Health care overall is 17 percent of GPD and expected to reach 20 percent of GDP before 2020.
http://www.rwjf.org/pr/synthesis/reports_and_briefs/pdf/no10_primer.pdf suggests a lower amount spent on malpractice claims, closer to 0.46 percent of total health care spending.
Since the subject is supply and demand, one topic on the table might be the extent to which a medical licensing system is a conspiracy in restraint of trade. I suppose a principled libertarian would want to do away with state licensing of doctors altogether. Short of that, there are a great many changes that might be made at the margin to reduce the realm of medical care that is restricted to those who enjoy state protection for their economic rents.
In the same vein, I suspect nothing would change the shape of American medical practice faster than allowing medicare patients to take their benefits abroad.
There’s a very simple way to do so: massively increase admissions at the US’ military medical schools. Private schools are part of the cartel just as much as the AMA, so you can’t expect any help from that quarter.
The first step would be to remove licensing from AMA, the current situation creates obvious conflicts of interest.
I am not sure why the cushy position of physicians is such a taboo in all public discussion of health care. It’s almost as bad as the utter silence on discussing how class inequalities rather than racial inequalities are what matter in universities.
My Canadian sister stopped by to visit yesterday during an extended stopover on a flight. She is a reconstructive plastic surgeon in training. Her friend, a pathologist in training was with her.
While we were touring around, they could not stop beaming about how awesome the weather in California is. I asked if they would consider moving down here once they finished training. “Nope.” They didn’t even have to think about it. Even though doctors in the US make much more money than doctors in Canada, they have absolutely no interest in dealing with the US healthcare industry. It is not worth the hassle.
If you want to increase supply, you have to make the system a place where people want to work…
Some time ago I spoke with a local MD who had given up his private pratice to work for a large, non-profit hospital group. He explained that the costs of running his own pratice simply wasn’t worth it any longer.
After about three years with the hospital, he returned to private practice.
His reason: The long hours at the hospital and meager salary just wasn’t worth it.
Not all doctors can choose to work in a large, wealthy city. It seems to be an entirely different ballgame in more rural areas.
Phil,
Why didn’t you mention the same OECD data that shows the number of doctors in OECD countries has increased by 35% over the past fifteen years?
It may be reasonable to take a pessimistic view and to be concerned that the US physicians per capita is lower then the average yet I wonder if that statistic paints an accurate picture of the care available to people in the US. I have seen a nurse practitioner for my annual physical for the past two years. The nurse practitioner can spend more time discussing my health in a less intimidating manner than the typical physician. I suspect that patients are more likely to raise a minor concern or pose a question to a nurse practitioner or physician’s assistant than they are with a doctor who might make them feel that their questions are beneath him.
The OECD data also indicated that more physicians are specializing. I see this as a good thing as the medical knowledge base continues to grow. Save the doctors for specialties and let nurse practitioners and physician’s assistants be the first level of care. Maybe there is validity in letting Google be your doctor as described by Dilbert creator, Scott Adams:
http://dilbert.com/blog/entry/google_is_my_doctor/
Given the options available to people in the US I would be interested in statistics that show the total number of “care givers” per capita.
I am reminded of similar concerns over the declining numbers of priests in the Catholic Church. There may be fewer priests but the lay people in the Church have taken on more significant roles over the years. A young married couple experiencing problems has more access to lay people in the church who can provide guidance, counseling and support than they would have 30 years ago when the main option available was to talk to the parish priest. The couple is more likely to identify with the lay people than they are to a priest who has chosen a life of celibacy and has not experienced firsthand the challenges of being in a relationship and/or being a parent.
Dave
Dave: http://www.nationmaster.com/graph/hea_nur-health-nurses shows the number of nurses per capita. The U.S. is below average. France is also below average, but mostly because they have plenty of doctors and need not substitute a nurse when someone is sick. The idea that a doctor’s time is so precious that he or she cannot talk to a patient at length is a natural result of scarcity. It is also likely a source of medical errors and higher costs. A patient goes to a nurse-practitioner, who writes down what she heard the patient say. The case is reviewed by a doctor, who based on her understanding of what the nurse-practitioner wrote, refers the patient to some other doctor. The third person to review the patient’s case, and the first to propose any treatment, relies to a substantial extent on second- and third-hand information, written down by the nurse and the first doc. Essentially we’ve turned our health care system into a game of Telephone (known as “Chinese Whispers” in England).
In France, you go to a doctor, who talks to you however long he or she thinks necessary. In most cases, the doctor then prescribes a treatment of some sort.
How do the systems compare in results? The U.S. spends nearly twice as much per capita and Americans are substantially less healthy (see http://eurpub.oxfordjournals.org/cgi/content/full/ckm084v1 for some data).
I recently saw a really interesting documentary on PBS’s independent lens about the failing state of the American health care system. It is extremely current, and a bit eye opening. It is stated that 24 cents of every dollar goes to administering the system. I thought it would be higher.
They mention specifically Massachusetts due to its high medical costs and mandated insurance experiment.
http://blip.tv/file/1849618
My conclusion was that as long as there are for-profit insurance companies, the system will be broken, though a little IT and a few less lawyers would go a long way to reducing the administration cost.
The government can still keep prices low by coercing doctors into accepting Medicare at whatever price they offer. Of course, that will just make shortages worse, especially in the long run if it becomes bad enough that people stop applying to medical school. But it would be the better part of a decade before that would actually affect the number of working doctors, and it would be some other president’s problem by then.
They already do something like that to pharmacies. In some states pharmacies are compelled to accept whatever Medicaid offers for a drug, even if it’s below cost. I expect that they’ll probably abuse that to the point that pharmacies start shutting their doors sooner or later.
The AMA doesn’t control the number of physicians in the US. Supply reflects the number of US medical schools, the number of foreign medical graduates allowed into residencies here, and the decisions of 50 state medical licensing boards.
The cost of malpractice lawsuits includes defensive medicine, which is huge. Much testing is done with the expectation that the results will be normal. Doctors here get in legal trouble for not ordering tests, not for ordering tests that turn out to be normal.
The study you link to seem pretty worthless to me. Many differences between New York and Paris, other than the health care systems, could be the cause of differing mortality rates. For example, diet. A contrary anecdote; I think most American physicians would be appalled at the treatment Princess Diana received after her Paris auto accident.
Phil-
There is something (many things actually) that I don’t understand. Some people see being a doctor or a lawyer as the road to riches, while others see the exact opposite. I remember reading your article on why there aren’t more women in science, and you pointed to lawyering and doctoring as two careers that leave people far ahead financially and with respect to lifestyle. I read a few doctor’s blogs on a regular basis and have read a lot of lawyer career advice, and the feedback there is the polar opposite. Doctors lament reductions in reimbursement, rising malpractice rates, ridiculous insurance paperwork schemes, the opportunity cost of medical school, the staggering student loan debt, and the general lack of a balanced lifestyle and long work hours that go with the profession. Many seem to want to get out altogether. Lawyers lament the student loan debt, the lack of decent income (or even a job) for all but the top tier students, the long work hours, and the overwhelming odds of making partner today. I completely agree that the PhD to tenured professor route is difficult at best from what I have seen, but with so many complaints about the other prestige professions it seems like there is a contradiction. (Sidebar – I have considered getting a PhD in engineering part time while working, would not be done until I am probably 44 or so, but had a professor tell me that I could still be a good candidate for a professorship anyway. I am not too sure that many schools are looking for new professors in that category, but I could be wrong.) Engineering in general still pays well for a “normal” profession, but the constant threat of outsourcing and downsizing is always there. Finance and Wall Street was the road for average intelligence people to have decent incomes, and the road for really smart people to have enormous incomes, but the price of entry there was your soul and 80-100 hour work weeks. So it seems that nobody is happy. Maybe the notion of becoming an electrician or plumber, and maybe starting a small contracting business, isn’t so bad after all? I am thinking that becoming a civil engineer and getting a state job would have been the best scenario – decent income, great benefits, and a pension plan that kicks in after maybe 20 years? I am not trying to disagree with your points in the women in science article, just wondering how there can be such dramatic differences in opinion among people who seem to know a thing or two. What do you tell teenage kids today? What careers advice do you give? What degree programs do you recommend? As a parent these are difficult questions to answer. Actually, as an adult these are difficult questions to answer for myself.
-Mike
There are more physicians. They’re just not generalists like family or general internal medicine anymore.
http://www.aafp.org/afp/20031015/graham1.html
There are some nice books about medicine:
Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer
http://www.amazon.com/Overtreated-Medicine-Making-Sicker-Poorer/dp/1582345791
Brownlee discusses some of the bugs in healthcare in the U.S. like defensive medicine and the wrong incentives for those in the medicine. It surprised me that the Veterans Affairs Dept got good ratings for standards in care.
How Doctors Think
http://www.amazon.com/How-Doctors-Think-Jerome-Groopman/dp/0618610030