Wednesday, October 27, 2010

How to fix rising health costs: ax physician pay?

This was the thesis of a recent blog post by Matt Yglesias, who I regularly read. Here how I responded in the comment section:


I feel the same way about Yglesias' crusade against doctors as I do about his crusade for the oppressed rights of division-1 athletes. Which is, he is technically correct, but I really feel like there are bigger fish to fry in the worlds of labor exploitation and health care, respectively.

For starters, fully 1/3 of all health care spending is administrative; step 1 should be working to reduce some of this awful inefficiency. Step 2 in controlling health costs for me would be to devise a payment system that rewards outcomes, not service. We would see staggering increases in efficiency, as physicians respond to incentives just like everyone else if working in a market system (which our current health care system is not). We would also, incidentally, see a corresponding natural reduction in physician compensation, in particular as procedure-based specialties take a hit when there ceases to be funding for pointless interventions which have no proven benefit. This will solve a huge amount of the problem of physician overcompensation by itself.

And there is of course step 3, step 4, et cetera of things we could do to improve our health care system. Way down on that list somewhere I might include "axing physician pay". You should keep in mind though that the US economy has more inequality than Finland in general. That is of course a bad thing, but it applies to all industries, not just health care. Is the right way to approach a systemic problem like that really to just target the high earners in one field in particular? I'd be much more in favor of a more progressive tax code with drastic educational improvements, college assistance, and other things that will help reduce inequality across the US economy as a whole.

By the way, when you write "axing physician pay" on your list, you also better put in provisions that also allow for state funding of medical school. There will need to be drastic increases in resident salaries, too. Medical school and residency will also need to be less rigorous (in most European countries residents don't work over 40 hours per week).

I am a fourth year medical student. I will finish with about $ 230,000 of debt. It has been a tough four years, but I feel fortunate to be in medicine. Next year, I am starting residency in general surgery. My residency will be 9-10 years long. 5 years for general surgery, 2 years for fellowship in oncology, and 2-3 years of research built in. I will be working 80-100 hours per week during the 7 clinical years. I will be making about 45,000 dollars in salary in compensation during this decade, which incidentally will be covering the best years of my life (late twenties through mid thirties).

And sure, when I come out I'll be making 250,000 starting off. Perhaps overpaid, although I don't know anyone who is going into general surgery in particular for the money. There are a lot of battles to be fought, Mr. Yglesias, and its annoying to see you almost in passing mention that there are all of these lazy doctors who don't deserve half the compensation they get...and all we have to do to fix health care is pay them less. I will be more than happy to join you in calls for axing of physician compensation once the other dozens of awful inefficiencies and exploitations of the system have been ironed over.

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