Will Health Care Reform Create (More) Health Care Shortages?

MSNBC recently did an interesting piece on the shortage of primary care practitioners, which has become particularly acute in rural and low-income areas. As a result, many older doctors feel that they cannot retire because there is no one to take their place:

There are not enough general care doctors to meet current needs, let alone the demands of some 46 million uninsured, who threaten to swamp the system.

It’s a problem growing worse in Everson and across the country, where more aging doctors are finding they can’t retire. In the U.S., there are at least 4,500 primary care doctors older than 75, according to figures from the Physicians Masterfile database maintained by the American Medical Association. Overall, there are about 270,000 doctors practicing primary care, which includes family, general medicine and internal medicine…

Between 1997 and 2005, the number of medical graduates going into primary care fell by half, and fewer than one in five new graduates now say they intend to pursue the practice, the AAFP notes.If current trends continue, the U.S. will be short by about 125,000 family care doctors by 2020, according to Dr. Ted Epperly, president of the AAFP board. He estimated that the U.S. needs between 40 percent and 50 percent more family practice doctors than the nearly 100,000 working now.


“The pipeline of family physicians has dried up,” said Epperly, who’s hopeful that health care reform will help correct the problem. He’s particularly optimistic that conversations now occurring are focusing on two key issues: incentives for new primary care doctors and adjustment of payment rates.

The article discusses the prestige of cutting edge specialty practices that lure new doctors away from entering primary care, before mentioning a more likely explanation for the shortage:

And then there’s the compensation question. The median annual wage for a family physician last year was about $190,000, according to a survey by the American Medical Group Association, a physician search firm. In contrast, a dermatologist earned nearly $345,000 and an orthopedic surgeon earned about $450,000.

The difference is driven largely by Medicare-related reimbursement rates, which pay more to doctors who perform specific procedures than to doctors who diagnose and treat general illness. Under so-called fee-for-service Medicare rates, a Boston primary care doctor received $103.42 for a half-hour office visit, but Medicare paid $449.44 for a diagnostic colonoscopy, a procedure that takes about the same time, according to a 2008 Government Accountability Office report.

Compensation becomes key at a time when the average graduate leaves medical school with student loan debts that top $141,000 and can approach $200,000, according to the Association of American Medical Colleges. Many new doctors worry it’ll take decades to repay loans, experts said.

This article highlights two of the concerns I have about the current public health care reform proposals. The first is that the government will manage health care poorly;  the evidence in the article suggests the structure of Medicare payments has had a potentially disastrous effect on the availability of family practitioners in rural and poor areas (ostensibly the people such programs should help the most).  The profit motive has its flaws, but ignoring it or removing it altogether also has risks.

My second concern is related more directly to doctor pay. Doctors in the United States are currently compensated at a much higher rate than doctors in other countries, and doctor compensation comprises about one quarter of U.S. health care costs.  The government currently accounts for roughly 40%-45% of U.S. health care expenditures. Further expanding government health care expenditure will inevitably result in efforts to reduce doctor compensation; it’s one of the easiest (theoretically, if not politically) cost inputs to reduce. Nevertheless, as the family practitioner v. specialist example suggests, incentives matter an awful lot to individuals choosing a career path.  Public Medicare funding has already resulted in nearly a fifty percent reduction in the number of doctors becoming primary care practitioners. Will increasing public control of health care costs create a similar shortage of doctors in other specialties?

4 Responses to Will Health Care Reform Create (More) Health Care Shortages?

  1. Phillip says:

    Will it reduce specialists. Yes. Will it reduce general practicioners. I suspect so also. It costs about 40 K a year for a medical school degree. Add to that cost of living and a med student comes out with a huge bill at the end of four years. Now add to that three to five years of residency at very low pay. If someone wants to specialize that may take another 2 – 4 years. That’s in a residency and fellowship that they may be working 80 – 100 hours per week. Many doctors are in the mid 30’s before they start to make that big paycheck. They now have to pay that back in the form of loans and interest on those loans. Cut their pay, it won’t make sense to do that work.

  2. norris hall says:

    Does government run healthcare work?
    Do people in countries like Canada and Britian dislike their government run healthcare systems. Do they wish they were more like the US?

    In 2008 Harris conducted a poll of 10 industrialized countries to see what their people thought of their healthcare system

    Here are the results


  3. Phillip says:

    Just one other thought for tonight. The average orthopedist works 34 days to cover his malpractice insurance costs. A OB/GYN may work up to 70 days. Part of the high cost of practice.

  4. Gusto says:

    To norris hal:
    Note that the Harris survey (for the USA) was an online poll of 1,000 persons; meaning it’s a very unscientific poll. This recent CNN poll (http://www.cnn.com/2009/POLITICS/03/19/health.care.poll/index.html) claims that 80% of Americans are satisfied with the quality of the healthcare they receive. So putting the two polls together we conclude that Americans are satisfied but want a more, bigger and better. That would seem a cultural trait more than a real argument for changing the system.

    Polls should always be taken with a lot of caution -remember the election eve poll fiascos- because their results can be easily manipulated to reflect the biases of the pollsters. There are more scientific ways to measure the quality of healthcare with indicators such as patient wait time for surgery or patient cancer survival rates by most scientific measures the US comes on top (see http://www.freemarketcure.com/whynotgovhc.php).

    The big problem with our system is cost not quality. The tried and true way to lower cost is by increasing competition (even President Obama has made this argument). In our current system the Big Insurance cartel negotiates with the Big Medicine/Pharma cartel and the Big Government cartel (Medicaid/Medicare). To lower cost all that is required is to return the power of choice to the consumer. Have you noticed how Cosmetic Surgery cost have gone down (a recent radio ad in this market announces free lipo with the purchase of breast enhancement). The reason is that Cosmetic surgery is outside the cartel since it’s “not covered”. Government makes everything more expensive (ever heard of NASA); competition reduces prices.

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