Myths debunked: Physicians’ incomes are too high and they are the cause of rising health costs


It seems that whenever there is a discussion of health care costs in America, at least one critic pops up – usually more than one – who carps about physician fees, income, earnings, etc. and how they greatly impact rising health care costs. They don’t, and it is a false narrative to claim that they do, but critics continue to throw the charges out there in the expectation that some will stick. We hope that this blog will shed some light on the subject and that it will help put an end to the misinformation.

Economist Dean Baker, co-founder of the Center for Economic and Policy Research, is merely the latest critic to slam physicians for their role in rising health care costs. In a recent article in Politico, he is quoted as claiming that “physicians are being paid twice as much on average as physicians in other wealthy countries,” and that “getting U.S. health care costs down is a Herculean task; getting doctors’ pay in line is a big part of the solution. It’s time to break up the doctor cartel.”  If his comments weren’t so absurd, they might be amusing. Let’s look at the facts.

Several years ago, Princeton Professor Uwe Reinhardt (who sadly passed away several weeks ago) wrote an article for The New York Times on the subject of rising health care costs in America. He was surprised when several readers criticized him for not even mentioning physician incomes as one of the salient factors. Reinhardt, also an economist, responded to the critics with an extensive letter to the editor. He suggests that instead of comparing “the incomes of American physicians with those earned by doctors in other countries, a more relevant benchmark would seem to be the earnings of the American talent pool from which American doctors must be recruited.” As he points out, “any college student bright enough to get into medical school surely will be able to land a high-paying job on Wall Street. The obverse is not necessarily true. Against that benchmark,” Professor Reinhardt went on to say, “every American doctor can be said to be sorely underpaid.”

The total amount Americans pay their physicians represents only about 20 percent of total national health spending. Of that, close to half is absorbed by physician practice expenses, including malpractice premiums, but excluding the amortization of college and medical school debt. These debt figures become all that more important when one considers that in many countries – but not in the U.S. – medical education is free. Even if physicians all took a pay cut of 20 percent, the savings would amount to a minuscule two percent of our health bill.

The deeply respected and revered Pulitzer Prize-winning columnist, Mike Royko, who wrote for the Chicago Sun-Times and the Chicago Tribune is remembered as a no-nonsense, tough but fair and probing reporter. Politicians cringed at the very mention of his name, especially if he was doing a story on them. When asked about a poll critical of physician earnings in April of 1993, he did not mince any words – in typical Royko style. In a column entitled, “Doctors’ Pay Poll Reflects a Whiny and Stupid Society,” he addressed those who felt that physicians were being paid too much. “Maybe the poll questions should have been phrased this way,” he began: “How much should a person earn if he or she must, (a) get excellent grades and a fine educational foundation in high school in order to, (b) be accepted by a good college and spend four years taking courses heavy in math, physics, chemistry and other lab work and maintain a 3.5 average or better, and, (c) spend four more years in grinding study in medical school, with the 3rd and 4th years in clinical training, working 80 to 100 hours a week and, (d) put in another three to ten years of post-graduate training, depending on your specialty and, (e) maybe wind up $ 100,000 in debt (editor’s note-more than $166,000 today) and, (f) then work an average of 60 hours a week, with many family doctors putting in 70 hours or more until they retire or fall over?”

He closed with one other pertinent comment: “Let us talk about medical care and one of the biggest problems we have. That problem is you, my fellow Americans. Yes, you, eating too much and eating the wrong foods; many of you guzzling too much hooch; still puffing away; getting your daily exercise by lumbering from the fridge to the microwave to the couch; doing dope; filling the big-city emergency rooms with gunshot victims; engaging in unsafe sex and catching a deadly disease while blaming the world for not finding a cure. You and your habits, not the doctors, are the single biggest health problem in the country. If anything, it is amazing that the docs keep you alive as long as they do.” Harsh words perhaps, but he uttered them 24 years ago, and there is still some truth in them.

With respect to the health of our citizens and the costs involved, Peter Laakman also said that “factors such as genetics, behaviors, lifestyle and social environment (disparities, etc.) explain far more about American health outcomes when compared to other countries than any other factors. And relative to other highly developed countries, the U.S. has higher rates of obesity and diabetes, car accidents, homicides, lack of exercise, drug abuse, poverty and more.” These unfortunate truths also greatly impact our overall health care costs.

Those are the facts. Can we finally put to rest the inherently false charges and accusations that physicians’ earnings are too high and responsible for rising health care costs and, along with them, the phony comparisons of countries and other bogus misinformation?

Walker Ray and Tim Norbeck are president and CEO, respectively, The Physicians Foundation.

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