Op-ed: Doctors’ pay cuts save little in health costs

The following op-ed was published on August 22nd, 2008 in the USA Today.

“Why should I care if doctors get a pay cut?” my patient recently asked me.

Therein lies the delicate dilemma physicians face today. While the common perception is that the medical profession is well-compensated, there are serious implications in targeting physician pay to control medical spending.

Congress recently passed a bill protecting doctors from a 10.6% cut in Medicare payments, overriding President Bush’s veto in the process.

The U.S. boasts the world’s most expensive health care system. Costs exceed $2 trillion annually and outpaces inflation and growth in national income. In an attempt to cut costs, Medicare has instituted a formula that calls for regular decreases in physician payment of more than 20% by 2010.

The number of physicians who do not accept new Medicare patients is dramatic; in states like Texas, this number can exceed 40%. No wonder, as Medicare pays less than half of doctors’ fees. This scenario comes as a record number of Boomers approach Medicare age.

Those without Medicare are not spared the consequences. Seniors sometimes delay their care, leading to expensive treatment in the emergency department. Doctors who lose money seeing Medicare patients could pass on the costs to the privately insured.

According to the Kaiser Family Foundation, there are more significant drivers of health costs, including new prescription drugs, technology and administrative needs. Princeton economist Uwe Reinhardt estimates that physicians’ take-home pay represents roughly 10% of national health care spending. Cutting physician pay by 20% would only reduce spending by 2%.

A more effective option would be for the government to enhance the nation’s primary care by paying physicians to coordinate care between specialists, install electronic medical records and encourage patient communication via e-mail or telephone. The New York Times recently reported that a pilot program increasing primary care spending in North Carolina saved Medicaid upwards of $160 million in 2006.

Furthermore, improving access to providers such as internal medicine and family physicians would provide timely care and keep patients out of the hospital and emergency room.

With medical spending estimated to rise nearly 10% annually, costs need to be curbed. But by focusing on physician payments, government alienates the profession for little in return.