Ezra Klein: How Much Should Doctors Make?

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April 18, 2006

How Much Should Doctors Make?

In the comments to my post on Wal-Mart's health offerings, Joel writes:

when you try to make the much needed cuts in healthcare cost---leave the doctors pay alone. Why? Say for one of my patients with prostate cancer who i do a prostatectomy (removing their prostate) the hospital bill is around $24K. But I only get $1,800. Do the math the doctors are no longer these fat cats. After 4 yrs of college, 4 years of medical school, 6 years of residency, and 3 years of fellowship...whewww I need a break. I think I deserve all of that $1,800.

Fair enough. Which reminds me of a graph I've been meaning to post, an international comparison of doctor's salaries:

Doctor_salaries

Quite a jump we have on the rest of the world there. Now, Joel is right: given what it costs to go to medical school, cutting doctor's salaries would be a foll's maneuver. But what about a bargain? Doctors, to some extent, work for the public good. Why shouldn't the country subsidize their education -- particularly if they go into high-need specialties or work in inadequately served areas -- but lower their pay? Or at least allow for many more nurse practitioners? As part of it, we can follow this doc's advice and use the power of the state to restore job quality for doctor's, allowing them to turn their attention from paperwork and bureaucratic haggling and back to patient care. Because the truth is, our nation's doctors are great, but they're not twice as good as Germany's, or Canada's, or Japan's. Not near it. Our rates of negligent malpractice remain high, and our outcomes are no better. And being a doctor shouldn't be about the money anyway, though the cost of following that route has ensured it will be. We've scattered perverse incentives all about, and offering a more affordable path and enjoyable career in return for somewhat lower salaries would go far towards fixing them.

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Comments

Well, if there was any doubt as to why foreign doctors are flooding into the US instead of the other way around, that chart sure clears it up!

Posted by: Fred Jones | Apr 18, 2006 2:51:10 PM

Open up immigration for doctors and let the market set prices. Personally, I think that if you offer docs the choice of (a) single payer, or (b) relatively unrestricted immigration for any and all doctors, most doctors will choose (a).

Posted by: SomeCallMeTim | Apr 18, 2006 2:54:41 PM

I've heard that the AMA does some bad stuff where it tries to restrict the number of doctors coming out of medical schools, to constrict supply and drive up prices.

Posted by: Neil the Ethical Werewolf | Apr 18, 2006 2:58:13 PM

I can see one argument against subsidization. It IS hard to get through medical school. Probably for a reason. We don't want Dr. Boob working on you. But subsidizing a bunch of potential drop outs seems a bit, well, wrong.

Posted by: Adrock | Apr 18, 2006 3:22:11 PM

I've heard that the AMA does some bad stuff where it tries to restrict the number of doctors coming out of medical schools, to constrict supply and drive up prices.

You are correct, Sir. It is not a free market. The AMA is arguably the most powerful lobby organization on the hill. They lobby for legislation making it harder with more red tape to even build medical schools. The answer is to include other disciplines as we do with the Osteopaths.

Posted by: Fred Jones | Apr 18, 2006 3:32:45 PM

I indeed agree under the preface that doctors' focus should be on patient care and not like that of an automobile machanic. I have had several experiences in which the almighty, untouchable healthcare professional has reccommended expensive procedures in cases where multiple opinions have revealed them to be unnecessary.

Posted by: Darren Dalsis | Apr 18, 2006 3:47:20 PM

Oh the poor doctors! Social workers have 2 additional years of education to the doctors' 4, but when they graduate, they often make less than doctors do when they are a resident. It could be worse than being a doctor in America.

I do agree that it's a crime to let medical schools profiteer off their students like this, though, just because they know their students will be making a ton of money later. It's a self-supporting loop at this point. Med school is expensive because doctors make a lot, but they need to make a lot because med school is so expensive, but as long as they make so much, med schools can pricegouge, etc...

Posted by: spike | Apr 18, 2006 3:55:01 PM

Ezra
You are correct docs in US are paid more than docs in other countries. Unfortunately comparing US docs to docs in other countries is like comparing apples to oranges. Our training is so different and our practice can vary too. I had to go through 17 years (gulp...it still amazes me) of training to get to where I am. In some countries they have a combo university/medical school so that their training time is shorter. Subsidizing educational cost is interesting and would help. I won't tell ya how much debt I was in after 17 years. Plus in some countries like Germany they have a '2 tier' system (ie their are office based urologists---see patients etc and hospital based urologist---operates on patients. This too can decrease training time. Though we may not be worth our salary (well I am at least--prostatecomies are tough stuff a millimeter too much here impotent, millimeter too much there incontinent) there is a reason docs from other countries come here to train. We are without a doubt the country that 'can' (see I used the word can) deliver the best healthcare.
As for limiting the # of medical students...usually we do not. But we can tweak the # of residencies (and that is the true choke point). Less residents say in radiology does = increase demand and possible increase wages. But really I learned this a long, long, long time ago. Go into medicine because you have a passion for it, not for the money. There are a helluva lot of easier ways to earn a buck. And don't even get me started on lawsuits...

Posted by: Joel | Apr 18, 2006 3:59:36 PM

Right -- all that's correct, and what I'm recommending is that we rework our system to more closely model other, cheaper countries. As you say, you went through an excruciating training process that had, at the end of it, certain promises. You deserve to see them fulfilled. But maybe there's a better way to conduct the next generation.

Posted by: Ezra | Apr 18, 2006 4:05:16 PM

But subsidizing a bunch of potential drop outs seems a bit, well, wrong.

Well...you could structure a subsidy so that it starts small but increases with each year of med school; that would reduce lost investment from drop-outs. Or you could have a partial subsidy during med school with a back-end refund for those who graduate. Or you could make it entirely back-end and structure it as paying off some or all of student loans (100% for those who go into highly-needed practice areas or under-served locations, less for everybody else). In other words, there are a lot of ways to do it so that isn't much of a problem.

Posted by: Tom Hilton | Apr 18, 2006 4:09:23 PM

We do regulate and subsidize the education of doctors, but the policy has left us with too few doctors. A lot of distortions in medical care, not to mention malpractice, have to do with the shortage of doctors.

Posted by: Bruce Wilder | Apr 18, 2006 4:15:24 PM

Interesting stuff. A few disjointed thoughts (not sure where they lead):

1. I guess that not only is the *average* pay of doctors higher in the United States, but that it masks a huge variation in pay. Top spine surgeons make that much in six weeks. I'm not sure what to make of that -- my sense is that most American professions tend to spread pay at the top, so maybe that is an American thing rather than a doctor thing.

2. Although you hint at it with your comparisons to the quality of doctors in Japan and Canada, you do not tackle (in this post, at least) a very interesting question: How good should we want our doctors to be? Do we really need many of our best people going in to medicine? If we regulate compensation there and do not in other fields, are we worried that we will dumb down medicine? Should we care if we do?

3. You said: "Our rates of negligent malpractice remain high, and our outcomes are no better." Agreed on the outcomes (at least on average), but I don't know how you can unpack our rates of 'negligent malpractice' from the peculiarities of the American tort system (and, there is no doubt, the American tort system is both unique in the world and peculiar to everybody else). If you have some data on medical malpractice that control for the governing legal system, I would be thrilled to see it.

4. Doctors need to be paid a lot because of our tort system. Progressives don't want to hear it, but it is true, and it is not just about the cost of malpractice insurance (which for some professions is *more* than the average *salaries* for most of the other countries on your graph). In addition to the dollars, there is the damage to dignity. Other countries "pay" their doctors in social prestige, which seems to be what you are driving at when you write that "being a doctor shouldn't be about the money." We used to do that, too. Today, though, the trial bar has destroyed the prestige of the medical profession by various means (advertising, anti-doctor lobbying efforts, gum-flapping tort lawyers on TV, etc.). In addition to that, the mechanics of civil litigation (subpoenas, depositions, document production, the language of pleadings) are inherently degrading, especially to, er, arrogant people like doctors. Finally, the tedious CYA mechanisms that all doctors have to do -- more testing than in their heart of hearts they think necessary, lots of documentation, lots of extra consultation, maneuvering to avoid difficult cases or cantankerous patients -- further degrade them. After all of this, their attitude is that if they do not get to enjoy being the Medicine Man with all the attendant prestige, dammit, they're at least gonna get paid.

Can't say I blame them.

Posted by: TigerHawk | Apr 18, 2006 4:31:29 PM

I wonder what a graph similar graph would like like for plummers or computer programmers or professional athletes.

Wages vary dramatically from region to region and nation to nation for a variety of reasons. Just looking at the dollar ammounts doesn't tell you much.

Posted by: Dave Justus | Apr 18, 2006 4:46:48 PM

Really not enough information to say if the MD deserves his $1800 or not. How long is the procedure, how often does he do it, what do his outcomes look like . . . . the bottom line is, as we say about plumbers, you pay 10% for hammering and 90% for knowing where to hit the pipe. I don't want to begrudge a professional his due.

But the underlying issue is that everyone but the guy doing the work gets paid more than he does. Does managed care mean the managers make more than the caregivers? Should it?

Ezra knows more about this than I do but I think the blame for this, responsibility if you prefer, lies with the employers who bought insurance plans without looking at the costs. It's a great thing to take care of your workers, to supply a safety net, but I think it turned into a gold mine for the insurers as they raised premiums while squeezing the doctors.

We get less care for our dollar and it can't all be due to tort-related expenses. I think the buyers -- the employers -- should have taken charge of this with some kind of risk pool system or co-op to get control of the costs. Between the AMA cartel and the insurers, it's a mixture of inefficiency and greed and we all lose.

Posted by: paul | Apr 18, 2006 5:27:11 PM

Ezra,
Whoa so revamp the educational system for medicine too. Though it probably needs it...yet another tough order. Though other countries have cheaper education I'm not sure its better. But I'm sure it can be pruned. With that said then you'll hit salaries for medical school professors. Just like college professors they aint retiring at 45 with a boat load of money. Very tough...all the is spawned from heathcare cost. Maybe we should critically assess healthcare cost. How much profits are the hospital making, the pharmaceutical companies, etc? Where is the guys $24,000 bill going? Making changes at this level will eventual cause a trickle down effect to education. Its weird ...healthcare is cheaper in these other countries but their average hospital stay is significant longer. For example back to the prostatectomy. Patients are in the hospital an average of 2 days after surgery. They go home with their urinary catheter in place. Why...it doesn't take a rocket scientist to monitor a urinary catheter. With proper instructions patients can take care of them. (Plus on day 2 the insurance companies are already ushering the patients out da door). Now in Germany and Japan it is unheard of to send a patient home with this catheter. So they stay in the hospital for 2-3 weeks until its removed. On average hospital stay per night is around $220 in the US. Again how are we still not doing a good job?

Good point about American wages in general Dave.

Posted by: Joel | Apr 18, 2006 5:28:03 PM

Some notes:

(1) halving physician salaries would reduce overall health care spending by 5%. Reducing pharmaceutical spending by 70%—the estimated result of moving to bulk bargainin—would reduce spending by 9 or 10%. Reducing administrative costs of our patchwork system would probably be the same.

(2) Also, to some extent MD salaries are offset by higher malpractice insurance costs in the USA. If you have a private practice, your insurance costs come out of your salary. This is part of the argument for moving to a "no-fault compensation" system for medical malpractice or some right-wing tort reform. Without some form of "tort reform", it's going to be very hard to get the AMA to go along with anything that will reduce their salaries.

(3) A nurse with a masters in hospital adminstration can make $80K+. GP's and ER physicians tend to make between 90K and 120K depending on the region. Further cutting GP salaries might result in a bizarre situation where doctors make less than nurses. Now, senior secretaries at top law firms often make more than fresh-out-of-law-school associates, so maybe the world won't come to an end.

There are two killers here. First, for a long time, we have said in the US that being a doctor is a way into the upper class. Not upper-middle class, and not the Hilton's high society, but three-luxury-car-garage -in-a-large-house upper class. In Europe it's a way to have steady, upper-middle class work (remember that en Europe, everybody works less). Second, the insane student loans that you & Joel point out give people much more incentive to go into lucrative specializations. So if you look at the percentage of doctors who are GPs in the US, it's significantly lower.

Justus brings out the "averages don't tell you everything" canard, which is very much a canard here, since we're talking about reducing overall spending. Reducing the average wage would almost by definition reduce overall spending.

Posted by: Nicholas Beaudrot | Apr 18, 2006 5:33:12 PM

Now, senior secretaries at top law firms often make more than fresh-out-of-law-school associates, so maybe the world won't come to an end.

That hasn't been true for twenty years. Starting salaries for new first year associates at top law firms (meaning any of the top 200 or so firms that do corporate work) are in the $110,000 - $140,000. I'd be amazed if there are senior secretaries that make anything like that. Maybe the personal slave of a managing partner somewhere, but I doubt even that.

Posted by: TigerHawk | Apr 18, 2006 5:58:10 PM

Tigerhawk,

Nicholas touches on this a bit, but the problem is emphatically not the tort system. Malpractice insurance is the problem. It is a virtually unregulated industry that can make extremely risky investments and then use premium hikes as a way to recoup market losses. In states where "tort reform" has passed, malpractice insurance rates have gone up just as much as in other states, often increasing at a faster rate.

Reforming the malpractice insurance industry is a good way to reduce costs without touching doctors' salaries, since they don't take that money home anyway.

Posted by: Stephen | Apr 18, 2006 6:05:23 PM

Stephen, I hate to be dogmatic, but you are just wrong. Whatever the depredations of the malpractice insurance industry (and your arguments make no sense -- if the malpractice insurance industry is "virtually unregulated," there should be price competition in the pricing of premiums, and low barriers to entry), the tort system is a disaster for many reasons, including the largely non-monetary reasons I articulated in my comments above.

People who advocate reforms in Amerian healthcare finance frequently look at the examples of other countries and suggest we adopt the best attributes those other systems. Just fine, who can argue with that? But why is it that progressives who are willing to look at all kinds of financing alternatives from all kinds of countries suddenly close their minds to other systems for redressing malpractice damages? The American tort system is literally unique in the world. How can you be so sure that it isn't at least one significant cause of overutilization?

I can give you but one tiny example: the massive overscreening for cervical cancer in this country. Nobody outside the United States thinks a Pap smear is necessary more often than about every three years. Doctors push the test annually in the United States because of fear of liability. The new technologies for more accurate cervical cancer screening, and demand for those technologies ten years ago, were (in part) a function of the lawsuits brought over blown Pap smear screens.

Every expert on healthcare agrees that the American "worried well" grossly overutilize healthcare. It is also beyond dispute that we have a totally unique tort system that famously puts doctors on the defensive. It defies reason to put the blame for this on the malpractice insurance industry (however screwed up it may be).

Posted by: TigerHawk | Apr 18, 2006 6:32:49 PM

Ezra
One last comment(s)...
Its a very interesting idea to reform healthcare education. though a tall task its very interesting. Some reform has come over the last few years. Again not sure its been good. They have now enacted an 80 hr max work week for interns/residents. (Caused by some deaths presumably due to overworked residents, interns/residents cannot work over 80 hrs a week---this includes call). There were times, just a few years ago when I was a intern that I worked over 120 hrs/wk some months. Though it sucked...we saw a lot and learned alot. Now nothing could/would surprise me after such an extensive training. However interns and residents today are just a mere shell of the docs only from just a few years ago. So a change that hasn't worked out...in my eyes at least (Have there been less deaths due to well rested docs...haven't noticed it. Unfortunately most of the deaths are due to poor patient protoplasm.) So be careful with reforming medical health education.
And lastly being a doc takes a committment these days. My old cardiothoracic surgeon would always stress (and that's a nice way of putting it) that we must be committed to the proper care of our patients. "Do you know the difference between being involved in the care of your patients and committed to the care of your patients. Well when you ate your breakfast this morning the chicken was involved...the pig was committed" For being committed, it rare for a doctor to be overcompensated. But obviously I am biased.

Posted by: Joel | Apr 18, 2006 6:44:24 PM

Paul said: but I think it turned into a gold mine for the insurers as they raised premiums while squeezing the doctors.

The growth of HMO's and managed care created a new entity in the medical system - the Medical Group. Most people don't know they exist. But the medical group has become an essential mid-stream influence on medical costs in a major way. These kinds of entity now impact medicine very widely, not just for those in HMO practice. Nearly every hospital (particularly academic health centers) has a medical group now.

Here's what a medical group does, typically:

- MDs apply and join the group, and agree to accept in fees whatever the Medical Group negotiates with the major insurers. The patients and the insurers actually pay the bills, but the 'reasonable and normal' standard is created by the Medical Group negotiating with the insurers.

- Medical Groups usually have some supervisory role over things like average patient visit times, number of patients seen, etc. They do this through monitoring reports, etc.

- If an MD is substandard, they risk being dropped by the Medical Group and then in turn, the insurers.

- In effect, the Medical Group acts like a labor union but without formal bargaining rights under the law.

- In academic health centers (and perhaps some hospitals with staff MDs), the Medical Group acts as the billing and collection agent for all the MDs, including the faculty practices.

- In private practice, the medical group doesn't bill and collect from patients, the MD does. But the fees charged are within the range the Medical Group has negotiated with the insurers.

Unraveling the costs of physicians from the insurance company/medical group axis will be very difficult. The whole 'reasonable and normal' billing structure is based on these fees, which are local/regional in nature. Even Medicare depends on these structure, although Medicare discounts the fees - a constant source of complaints from MDs - as Congress annually determines the Medicare budget.

My guess is that Nicholas is right. The MD fee part of our health cost structure is not low hanging fruit, and will take decades to reform. Incrementalism!

We should not move from the near-in target: Single payer universal health care (rather than multi-payer private insurance), since there is at least a 10% overall savings from this move, but more importantly we establish the primary task of bringing basic health care to all within the US.

For now, the MD compensation, fee structures, medical groups, malpractice issues, and medical school issues (number of students, cost of education, etc.) are way more complicated to solve equitably and quickly. They should be reformed over time once we get a national health care platform.

Posted by: JimPortlandOR | Apr 18, 2006 6:51:21 PM

Ezra,

I don't know the source for your graph, but I think there is a serious factual error there. According to the 2000 US census (http://www.census.gov/hhes/www/income/earnings/call2usboth.html) (sorry for the long link) the median compensation for a full time doctor in the US is closer to $125,000.

Though I was surprised to see that in the same data pool the average pay for our bete noir, the lawyers, was lower -- about $82K. I wonder why.

And don't conflate outcomes with the quality of care. Remember that in the US, 45 million folks are uninsured and thereby with restricted access to healthcare, which will tend to skew the outcomes curve.

Posted by: shadowfax | Apr 18, 2006 6:56:42 PM

if the malpractice insurance industry is "virtually unregulated," there should be price competition in the pricing of premiums, and low barriers to entry

This is just incoherent. Regulation is hardly the sole (or even prime) nemesis of price competition and high barriers to entry. I think Tigerhawk is conflating his Randian fantasy world with the actual world where capital, technology, connections, and imperfect information actually act as barriers to both of those things.

Tigerhawk's attack on the US tort system may not be incoherent, but it's deceptive. There are three ways to make sure that an industry treats the general public well: perfect information and competition (unlikely for any industry delivering a complex service or which is able to otherwise hide its costs from the relevant market), regulation (libertarian bogeyman), or tort (libertarian bogeyman -- despite their doctrinal position on courts). It's no coincidence that most other western countries have more regulation than the US does, and less tort. The US has relied more on tort and competition, less on regulation.

And now pro-big-bidness conservatives want to eliminate tort as well, leaving only competition, which assumes away most of what we actually know about how markets work in favor of Randian platonic ideals.

Posted by: paperwight | Apr 18, 2006 6:58:13 PM

Tigerhawk: Today, though, the trial bar has destroyed the prestige of the medical profession by various means (advertising, anti-doctor lobbying efforts, gum-flapping tort lawyers on TV, etc.

Maybe that's part of it but my opinion of doctors deteriorated from personal experience. While there are some truly excellent doctors practicing, I think too many people become doctors for the money and prestige but have no real interest in the profession, i.e., helping people and/or scientific curiosity.

...

Posted by: Emma Zahn | Apr 18, 2006 7:24:06 PM

People become doctors for the money & prestiege? Oh my God!!!1

Posted by: Dustin | Apr 18, 2006 8:02:45 PM

But why is it that progressives who are willing to look at all kinds of financing alternatives from all kinds of countries suddenly close their minds to other systems for redressing malpractice damages?

I don't know of any progressives who have closed their minds to other systems for redressing malpractice damages. What I (and, I think others) have closed my mind to is not redressing malpractice damages at all (or applying artificial limits to damages, or making it more difficult for genuinely injured people to recover damages).

You know what actually reduces malpractice claims? Apologizing. That, and a little more openness about what actually happened. There have been studies showing definitively that this is the case. The instinct to circle the wagons (for which the doctors, the administrators, and their lawyers all share blame) ends up costing everyone more money.

Posted by: Tom Hilton | Apr 18, 2006 8:30:30 PM

Dustin: People become doctors for the money & prestiege? Oh my God!!!1

Those shouldn't be the only reasons. It's too demanding a profession-mentally, physically and emotionally--to not have any innate interest in the field.

Posted by: Emma Zahn | Apr 18, 2006 8:39:35 PM

Well, paperwight pretty much took care of your whole "no regulation creates competition and lower prices" thing. I mean, it's worked so well with telecommunication companies, right? Oh, and back in the days of Standard Oil, the complete lack of regulation was really good for consumers.

My point was that malpractice insurance premiums have been shown to rise independent of and often in spite of tort reform. After 25 seconds of Googling, clicking a link and reading an article, here is some backup for my claims.

Oh, and thank you so much for such a courteous reply. Next time, try to make it less full of total crap and I might be more willing to overlook the tone.

Posted by: Stephen | Apr 18, 2006 8:47:06 PM

Tom Hilton, on the matter of apology, you and I agree. However, a genuine apology is tough to do if the fact of the apology can be introduced into evidence to demonstrate liability. As a result, I am a huge advocate of a national "apology privilege," and I think it should extend beyond doctors to all tortfeasors. My two posts on the subject are here and here. May you be entertained (and apologies to Ezra for link-whoring -- but they are on topic...)

As for the argument over malpractice insurance, suffice it to say that insurance is not like oil. Insurance, including malpractice insurance, does not stay excessively priced for long, because the supply is a function of the capital invested (i.e., you can only write insurance if you have capital to write it against). If the capital invested in a particular kind of insurance earns excess returns, then that segment attracts more capital. The supply increases, and competition in underwriting ensues. Frequently, the pricing competition gets so severe in a particular market that premiums go too low. Insurers then suffer underwriting losses in excess of premiums and investment income, capital is destroyed, the supply of insurance decreases, and prices go up. It has nothing to do with being a "Randian." It's, like, freshman econ.

Now, if you want to argue that insurance regulation is particularly corrupt and stupid, I would agree. This is because insurance is the only major financial industry that is regulated primarily at the state level, rather than the federal, so you have 50 seperate bureaucracies licensing insurance companies. Some are corrupt and stupid, others are fairly competent. But they are different. Meaning that some states suck and others do not. Meaning that malpractice insurance regulation is a local problem, not a national one. The insurance capital cycle, however, is national.

I do agree, by the way, that for a lot of industries other countries regulate affirmatively, and the United States regulates via the tort system. Labor markets are a good example of this. This is not really true in either the practice of medicine or the sale of drugs and devices, however. The United States affirmatively regulates both these areas more aggressively than most other rich countries, and the tort system is an additional costly add-on.

Posted by: TigerHawk | Apr 18, 2006 10:04:25 PM

Perhaps you have accurately reproduced Economics 101 for us. But it doesn't matter, since in the "real world" this is not happening in any insurance market. Even the advent of national "discount" auto insurers such as Progressive and Geico have not substantially affected the rates at which premiums increase. Malpractice insurance premiums constantly increase, in every state, no matter the level/effectiveness of regulation, and even when malpractice payouts decrease, which would, under your thinking, lead to more capital being invested because of excess returns.

Freshmen economics aside, in the real world insurance companies have long ago left behind the idea that they exist as cooperatives for the purpose of spreading risk among a large group of people. Rather, they are now profit-generating enterprises, using money from premiums to invest in other industries, mutual funds, stocks, even currency. Since they are often lightly regulated in the area of the relationship of investment losses to premium rates, they can feel free to invest in high-risk ventures, knowing that they can just raise premiums to cover losses regardless of the amount of risk the insured present. And, since in the "real world" the number of malpractice insurance companies is surprisingly low, they can do so with impunity, knowing that there isn't going to be some new company moving into their territory.

Insurance and oil are actually quite similar. Both are absolutely necessary, and both are controlled by small groups of companies that receive little in the way of effective government oversight. And both industries are seeing, despite the best efforts of economics professors nationwide, rapidly increasing prices despite any and all efforts to keep them down.

Posted by: Stephen | Apr 18, 2006 10:20:59 PM

The United States affirmatively regulates both these areas more aggressively than most other rich countries, and the tort system is an additional costly add-on.

Now this I would like to see some data on, since it is both counter-intuitive and surprisingly supportive of Tigerhawk's "tort system evil, insurance companies good" attack on redress for the ordinary working person.

Posted by: paperwight | Apr 19, 2006 12:35:29 AM

Concerning the AMA and medical schools:

Contrary to uninformed opinion on this board, the AMA does NOT have any control over the number of med schools in teh United States.

Here's how the process works. Lets say I want to open a med school. Basically the only hindrance is that you need money--lots and lots of money. But as long as you have the money, its very easy to open up a new med school.

The LCME, Licensing Council on Medical Education, is teh only authority that you have to go thru to open an accredited allopathic medical school. As long as your new school meets those requirements, you are golden. The AMA has no say; they cant come to you and say "no we dont want you to open that new med school." They have no power over that. As long as you meet the LCME requirements, thats all thats required.

Thats why Florida is opening 2 new medical schools at FIU and UCF, only 4 years after another new medical school at FSU opened. The Florida state legislature decided "we want more med schools", then they appropriated the money, and the rest is history. The AMA was NEVER involved at any stage of the process.

Posted by: joe blow | Apr 19, 2006 3:12:56 AM

Concerning the AMA and residencies

Where the AMA DOES have some influence is the number of residency training slots (where doctors go after med school). The AMA lobbies the ACGME, the Accreditation Council for Graduate Medical Education, who controls the number of residency slots in the United States.

US Congress is the ultimate authority on the number of residency slots, because residencies are funded by Medicare. Politicians in Washington decide how much Medicare funding will be used for residencies, and this in turn sets the overall number of residency slots in the United States.

Currently, there are about 2 residency slots for every US medical student. That means that almost HALF of all residency slots go to foreigners.

Somebody stated above that the US doesnt allow in enough foreign doctors. I beg to differ. The total doctor population in the USA is almost 35% FOREIGNERS. Thats more than enough. The USA takes more foreign doctors then ALL OTHER COUNTRIES COMBINED. Everybody in teh world wants to come to america to be a doctor.

Contrast that to CAnada or Europe, where its EXTREMELY DIFFICULT for foreign doctors to practice there. If you want to lay charges of self protectionism or xenophobia, look to those nations.

Posted by: joe blow | Apr 19, 2006 3:17:10 AM

Concerning the doctor supply in the United States

Bear in mind that the USA ranks #3 in the world in number of doctors per capita. We have more than enough doctors relative to other nations.

Also, I would argue that the current studies of doctor supply are flawed for the reasons below:

1) They ignore DOs. Osteopathic doctors are fully equivalent to MDs. There are some 35 DO schools in the United STates, with plans in the works for 10 more schools.

2) They ignore the contributions of physician assistants and nurse practioners. These studies assume that ONLY a doctor can deliver healthcare, which is patently false. NPs and PAs can script meds just like doctors.

Posted by: joe blow | Apr 19, 2006 3:20:18 AM

Concerning doctors salaries:

I agree with shadowfax that Ezra's data is wrong. The median pretax income for all US doctors (including specialists and GPs) is about 130k according to the US Labor Department. Thats still a very nice sum of money, and it puts doctors in the top few % of income earners, but 130k is not the same as 200k.

As others have stated, some specialists make millions. But you dont base health care policy on what a few individuals make, you craft it based on medians and averages for the whole profession.

So given that the median income pretaxes is about 130k for doctors, is that too much? Its certainly higher than any other profession. But bear in mind that doctors train longer than any other professional, save perhaps PhDs in some cases.

Somebody said that social workers train longer than doctors. Thats outright false. Entry level social worker is 4 years of college. Entry level doctor is 4 years college + 4 years med school + 3 years residency. Thats the absolute bare minimum to become a doctor. Like I said, the only "profession" that comes close is perhaps PhDs. But even PhDs are tremendously variable. Some take 3 years, some slave away for 15 years. I dont know that you could consider PHDs a "profession" at any rate because its an academic degree, not a professional degree like JD, MD, DDS, etc.

I strongly believe that doctors should make somewhat more than any other profession that requires training post college. Law school is 3 years after college, and the average lawyer makes about 90k. I think doctors should average more than what other professions make, because otherwise no sane person would choose that career path.

At the same time, some of the superduper specialist salaries need to be toned down. Some specialists AVERAGE over 400k per year. That seems excessive to me. I'd like to see primary care docs salaries remain unchanged, but bring down some of the other groups like neurosurgeons.

The biggest difference between USA and other nations regarding doctor salaries is specialist income. In the USA, specialists get paid several times more than GPs, but in other nations, specialists are fortunate if they pull down 30% more than GPs.

If Ezra wants to model a healthcare system on other nations by reducing pay level to those other nations, then its absolutely essential that med school is "free" (taxpayers pick up the bill). Otherwise you would have to turn all of healthcare over to nurses because it wouldnt make any financial sense at all to pursue a medical degree. Nurses are fine for routine illness, but they are not trained to handle complex multifactorial illness, critical care, or surgery.

Posted by: joe blow | Apr 19, 2006 3:30:29 AM

There are a couple of other distortions in Ezra's graph. The first one is that the U.S. has a higher percentage of highly paid subspecialists which tends to distort the average pay. It would be more instructive to compare primary care docs to primary care docs or interventional cardiologists to interventional cardiologists.

Additionally, salary structures are different from country to country. In general there is a much wider gap between American professionals and less educated workers than there is in Europe. You would see a similar discrepancy if you posted average salaries for electrical engineers by nation. On the other hand, you would find that U.S. elementary school teachers are paid about what their French counterparts are paid which would imply, by Ezra's reasoning, that U.S. school teachers are well paid.

Posted by: J Bean | Apr 19, 2006 7:47:49 AM

Oh yes, in the lies, damn lies, and statistics department, what about posting data that isn't a decade old, too? That will tell a different story.

Posted by: J Bean | Apr 19, 2006 7:49:04 AM

Two things: Tigerhawk has accurately described the problem with malpractice insurance, which is that it operates on the boom-bust cycle of insurers generally. He is simply wrong on how it contributes to overutilization. Cervical cancer screenings, for instance, are triannually because various evidence suggests that that works (some of which is referenced here). I've actually spent the last two weeks working on medical malpractice, so we can get into this on numbing detail if anyone wants.

2) The graph may be bad. I found it in a pdf I was reading, I'll look around to check it once I get to work.

Posted by: Ezra | Apr 19, 2006 8:48:00 AM

I don't know precisely what that graph is measuring, but it looks wrong from here, too. According to the British Medical Association, cited in a Guardian article today ( http://society.guardian.co.uk/publicfinances/story/0,,1756572,00.html ), the average salary for a GP (general practicioner) in the UK is £95k, which is about $170k. Of course, many hospital doctors earn less than GPs, but specialists and consultants earn more, so I've no idea what the comparable figure would be.

Posted by: Ginger Yellow | Apr 19, 2006 9:52:58 AM

I just want to throw in my (rather, my husband's) point of view. My husband is an ER doc from Spain, but we now live here. His MD took him 6 years, I think, and it was almost entirely paid for by the government. There, doctors work in ambulances, trauma helicopters, hospitals, street corners ... There's so many doctors because there's no cost of med school to contend with. They have no need for paramedics or EMTs because there's plenty of MDs to fill those jobs. Because the education is free, if you want to be a doctor, you become one. And the salary for many doctors is probably about $50K a year, pretty low to have the responsibility of a life. (Electricians and plumbers on the other hand ... they make bank because there are so few.)

He lives here now, not practicing because of paperwork issues and because no med school will admit someone who already has a degree - a Catch-22. But because of the glut of doctors, it's difficult to re-enter the profession in Spain once you have left for a while

He tells me, and this is probably biased, that Spain has the highest quality of patient care in the world. The U.S. is excellent for research and cutting-edge technology (which also could be why we pay docs so much here), but that in Spain, even though the health care system is socialized, they provide excellent patient care.

It's a trade-off. While we live here for now and probably will for a long while (my career and his new one are here), we will likely retire in Spain for several reasons, not the least of which is that we will pay very little for quality geriatric health care.

Posted by: Carrie | Apr 19, 2006 10:11:25 AM

In my view if everyone stopped buying gasoline, getting their cars repaired and getting convenience items at local Exxon/Mobil stations we can force the Exxon/Mobil Corporation to lower gasoline prices.

If we lessen the demand of Exxon/Mobil gasoline gasoline and car repairs at their local gasoline stations we will pressure the gasoline station owners to go to the parent company to lower their price.

We pressure Exxon/Mobil through their gasoline station owners.

Exxon/Mobil gives alot of money to the cheap labor GOPranos so that appears even more incentive to boycott their gasoline stations.

So if you currently buy Exxon/Mobil gasoline or any products or repairs at an Exxon/Mobil gasoline station, stop and switch over to another station.

We will foce Exxon/Mobil to lower their prices and the other companies will have to eventually follow suit when Exxon/Mobil drops their prices.

The price of gasoline on Long Island has gone up to $3.00 a gallon.

Personally I drive an electric motorcycle so this does not affect me whatsoever but I do care about others who have to pay high gasoline prices.

Boycott exxon/mobil gasoline stations today. Don't even get your car repaired there or buy food or other convenience items there. Begin the pressure on their gasoline station owners and allow the law of supply and demand to take hold.

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Dell Computers, Walmart,
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health clubs, General Electric
and Exxon/Mobil.

Spread the word.

boycott-republicans.com

Posted by: mighty maximus | Apr 19, 2006 10:37:34 AM

Oh, yeah! (Like that'll work)

Personally I drive an electric motorcycle so this does not affect me whatsoever...

You have already been locked in, my friend. New leading-edge technology is always very expensive from the intitial costs comparted to standard alternatives to upkeep with few dealers translating to high parts and labor costs. Next you could try an all solar home if you really want to know what expensive is!

Posted by: Fred Jones | Apr 19, 2006 10:49:14 AM

Until the last two posts we had a very good thread going.
Tigerhawk : Nice to have you aboard. There's a lot of past discussion on healthcare to be up on : check Ezra's link to Healthy Policy. Kevin Drum occasionally shows up but may post complementary coverage at Washington Monthly.

Posted by: opit | Apr 19, 2006 12:55:33 PM

And who exactly gets to decide which specialties are "high-need" and which areas are "inadequately served"?

Hmm?

Every advocate of central planning always -- always -- envisions himself as the central planner.

Posted by: KipEsquire | Apr 19, 2006 1:59:31 PM

FYI the US government DOES subsidize medical education for those going into specialties where they do primary care. It's called the National Health Service Corps and the penalty for defaulting is very high (so no worries about funding all of these potential dropouts). I am one such scholarship recipient. The federal funding is limited and only about 200-350 students per year get funding including dental students, nursing students, etc.

Also, as far as I know, immigration is pretty open for doctors coming to the US if they pass the licensure exams, which many don't. I personally know of at least a few foreign medical grads who have been unable to pass the USMLE.

For those not so lucky to get a scholarship, going to a medical school will cost you anywhere from $100,000-250,000 in loan principle, not including the interest that will accrue (some of those loans will likely have to be private loans, as it exceeds the federal cap), and that doesn't include loans from undergrad either. You do the math, most people's loans payments are around $2000/month after residency. I'm not saying doctors need to roll in a ton of dough, I personally think many of the salaries are excessive (specialists mainly, since primary care docs aren't paid as well, thus the shortage). I'm just saying it's naive to think anyone would be willing to go to medical school if they didn't think they could afford to pay off the loans later. I can't imagine, either, the American taxpayers willing to foot the bill for medical education when American education in general is not as well subsidized by the government as it is in other countries.

Posted by: misterbeans | Apr 19, 2006 2:17:56 PM

But again, that's not a function of bad data, it's a function of the fact that the US has more specialists than anywhere else. So we could spend less money by paying doctors less, which we could do by simply moving more specalists into general practice. But then we get back to the cost of medical school.

Posted by: Nicholas Beaudrot | Apr 19, 2006 2:27:50 PM

I guess that I'm one of those overpaid specialists. I am an OB/GYN and I made $256,000 last year. I'm still paying off my student loans. I graduated from med school with a debt of $110,000 in 1990, which grew to $155,000 during my residency which I completed in 1994. I have since paid $280,000 back and now owe only $5000.

If I was paid by the hour, I earned $59/hr last year. I am on call every third night and every third weekend (FRI 7 am to Mon 7AM)

So is that overpaid? I did 4 yrs of college, 4 yrs med school and 4 yrs of residency before I was a "real" doc. And now I work very hard....if you cut my salary in half, I'd quit. The stress and aggravation of my job would be too much to put up with....

Posted by: storkdoc | Apr 19, 2006 2:36:24 PM

"I wonder what a graph similar graph would like like for plummers or computer programmers or professional athletes."

I'm pretty certain that for CEO's it would be much, much steeper. You want to talk overpaid? Doctors are pikers compared to corporate executives.

Posted by: Cal Gal | Apr 19, 2006 3:06:34 PM

I have since paid $280,000 back and now owe only $5000.

Christ Almighty! And no, you're not overpaid, based on what you've done and what you owe....which is kinda the point (see comment above yours.)

Posted by: Adrock | Apr 19, 2006 5:12:42 PM

[i]FYI the US government DOES subsidize medical education for those going into specialties where they do primary care. It's called the National Health Service Corps and the penalty for defaulting is very high (so no worries about funding all of these potential dropouts). I am one such scholarship recipient. The federal funding is limited and only about 200-350 students per year get funding including dental students, nursing students, etc.[/i]

Yes the NHSC does exist, but its EXTREMELY underfunded. Many many doctors are turned away who want to practice in rural areas. NHSC is very competitive and only a few people get it.

Furthermore, its not just for doctors. The NHSC funding pie is split up between ALL healthcare professionals, including dentists, nurses, technicians, etc.

NHSC needs to be expanded greatly. NHSC should accept every primary care doc who wants to practice in a rural area. As it stands now, it is tremendously inadequate because so many people get turned away

Posted by: joe blow | Apr 19, 2006 5:42:39 PM

There are a variety of serious problems with the graph:

1. It is misleading. According the the US Bureau of Labor Statistics in 2003 average physician salaries were as follows:

Internists $166K
Pediatricians $161K
Family Practice $156K

2. It is the wrong comparison. It makes no difference how physician salaries compare to those in other countries. College graduates are not choosing between becoming a physician in the US and becoming a physician in Denmark. They are choosing between becoming a physician here or becoming a lawyer, investment banker or business person.

According to the American Lawyer, the average compensation for partners in the top 10 law firms range from $1.75 MILLION per year to $3.5 MILLION per year.

When it comes to MBAs, partners in investments banks can earn considerably more.

Any doctor could easily have gotten a JD at a top ranked law school or an MBA at a top ranked business school. If you lower physician compensation further, that's where most of those people will go.

3. The staggering rise in medical costs is not due to doctors salaries. It is happening because we are turning previously fatal diseases into chronic diseases. Expenses on technology, drugs, and administration have all risen faster than expenses for clinical services.

The solution to our health care crisis does not lie with lowering doctor salaries or manipulating doctors with financial penalties and incentives. To solve the crisis we will have to come to grips with many other areas of healthcare first.

Posted by: Amy Tuteur, MD | Apr 19, 2006 6:59:02 PM

Newbies. When a new post of the same subject (roughly) is made, most follow to post comments there rather than filling up an abandoned thread.

Posted by: opit | Apr 19, 2006 10:45:10 PM

"I've actually spent the last two weeks working on medical malpractice, so we can get into this on numbing detail if anyone wants."

Well that means your well versed in "medicine" I am sure.

Posted by: elmo | Apr 20, 2006 3:40:06 AM

Joe Blow, I didn't say it wasn't underfunded, nor did I say it was only for docs (in fact I said it included other disciplines in my post, though I may not have been very clear). I agree with you, the reason for my post was to make it known that there was already a program that existed to do exactly what people were saying there ought to be a program to do. No, it doesn't cover everyone, it's way too expensive. They're shelling out $250,000 for me alone, I'm just one person. Think of all the other docs out there simultaneously needing the money. This is the crux of the issue.

Anyway, I don't think Primary Care salaries are the problem with health care costs anyway... its the cost of specialists (and sometime the overuse of them, oh, and storkdoc: if you're an OB/GYN you're considered primary care), malpractice costs, and lawsuits and defensive medicine. It's nice to suggest that the NHSC should expand and cover everyone who wants to practice in underserved areas (not just rural... 40% of placements are cities: think New Orleans and Detroit, etc), but its unlikely to happen and there are bigger fish to fry first.

If medical costs bug you, there is legislation up right now in the senate about a nationwide cap on non-economic damages of $250,000. I suggest writing your senator about it. The legislation would limit lawsuits' punitive damages. If people weren't getting $9 million awards, malpractice premiums wouldn't go as high and states without tort reform wouldn't be losing all of their doctors (esp OB/GYN's). If money can't buy happiness, why do you need $9 million? Note: I am talking about non-economic damages, no one is going to try to limit giving people the money they need for the costs they will have to bear because of the malpractice (medical bills, loss of income, etc).

Posted by: misterbeans | Apr 20, 2006 8:11:25 AM

I noticed at least one response pointed out that there are government subsidies for certain professionals who agree to work in the public service (tangentally that was the premise behind Northern Exposure, a New Yorker goes to rural Alaska under a contract with that state). On another point, the fact is that medical education, while ridiculously expensive for the students, is subsidized. The schools themselves generally lose money for the university they are part of (undergraduate liberal arts, law schools and MBA programs are cash cows generally) and teaching hospitals get higher CMS reimbursement rates.

And while this was not the subject of the original post, misterbeans has brought up the issue of 'tort reform'. While I will not defend the system as it exists now, I will point out that here in Texas where such caps do exist, doctors, hospitals and nursing homes can kill, maim, and hire violent criminals with impunity so long as the victim is a child, elderly and/or poor. Med mal insurance rates went up for two years after the imposition of caps and only plateaued when the stock market started going up again. Several studies have shown that the strongest factor affecting ALL insurance rates are stock and real estate prices. Another factor in med mal rates is the quality of the state medical board (eg Florida's rates fell noticeably after its board started doing its job a few years ago.) Damages caps have less effect than whether a state is primarily urban or rural.

Posted by: matt | Apr 20, 2006 3:50:04 PM

"I will point out that here in Texas where such caps do exist, doctors, hospitals and nursing homes can kill, maim, and hire violent criminals with impunity so long as the victim is a child, elderly and/or poor."

Whatever that highly biased statement means I have no clue. The caps have NOTHING to do with criminal behavior. Clearly criminal and civil law are two different things. With a statement liike that you are clearly being intellectually dishonest.

"Several studies have shown that the strongest factor affecting ALL insurance rates are stock and real estate prices."

Of course you have to look at the studies themselves, who funded them, and the methodology. Some of those "studies" were actually "consumer organizations with ties to ATLA. Though I have little doubt the stock market has played a role the question is "how much".

"Another factor in med mal rates is the quality of the state medical board (eg Florida's rates fell noticeably after its board started doing its job a few years ago.)"

Please give the reference when you make a statement like that. It is easy to say anything without a reference. I also live in a state with an "aggressive" medical board (Arizona). The fact is our rates are "not dropping". Of course we also have no cap whatsoever, given your reasoning that has nothing to do with rates at all.

Posted by: elmo | Apr 20, 2006 9:44:23 PM

"But subsidizing a bunch of potential drop outs seems a bit, well, wrong."
Better to subsidize a dropout than to have an incompetent medical student stick it out due to financial pressures and become an incompetent doctor.

Posted by: Michael Rack | Apr 20, 2006 11:29:57 PM

I've just had to file chapter 13. The result of declining reimbursement, increasing malpractice insurance costs, and the flood of bad debt from illegal immigrants. That's the strategy...bankrupt us all. We'll likely still work for food. Just don't complain when I run out of gas getting to your kids delivery.

Posted by: D2K | Apr 21, 2006 2:24:54 PM

hello,
im 17 and thinking about becoming a doctor!!!
if is ok i would like to ask you a few questions

Posted by: martina sims | May 8, 2006 3:44:49 PM

i totally disagree... doctors are out there saving, improving, and extending lives and their job requires about 10-15 years of university, why should their wages be lowered? if not, they should ne much much higher. how come athletes make more money? their jobs requires no education except knowing how to play the sport. if i am not mistaken, it costs about 25 thousand dollars a year on average!

Posted by: julia | May 26, 2006 7:22:19 PM

Who ever is not a Doctor and making comments can go to hell. Unless you have experienced the intensity of being an MD and making life and death decisions you are totally insignificant to this world!

Posted by: abc | Jun 20, 2006 7:56:54 PM

I'm sixteen and I want to be a Trauma Doctor. Because Think what they is great!

Posted by: Derlisa Laws | Aug 16, 2006 8:59:04 PM

im 13 and ever sense i was a little kid i always thought about being a childrens doctor, i questioned myself if i could really do this and if i try really hard i know i can. i think doctors should make way more money than they do today. simply because they have to but there whole life to this and really focuse on thier jobs to help the sick inicent little kids. i am a a,b,c student and i know i need to get my grades up and really start putting alot of effort into my schoolwork, i mean if i dont start now at a younge age then i know i''ll just mess something up when i become a doctor, and anything that happens to thoughs kids will just tear me apart

Posted by: madison | Mar 18, 2007 5:27:00 PM

Posted by: madison | Mar 18, 2007 5:27:02 PM

In case you didn`t know, GPs in the UK make around 200K (£ 106k) on an average for doing very little work..Some of them make double that working 3 1/2 days a week with no oncall commitments. As a hospital doctor who makes only half that, I`m absolutely hacked off & am planning a move across the pond, like many of my colleages.

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Posted by: china mbbs | May 8, 2007 8:27:15 AM

i think doctors should be given more opportunities to choose their income

Posted by: tunde okuboyejo | Jun 8, 2007 10:15:19 AM

Residencies are the true limiting factor for doctors produced. However, we have enough in the US. It is just that are spread out unevenly since not many want to live in certain areas. And therefore, the salary should be competitive.

Doctors' salaries have been dropping compared to inflation so we are not making more. Hospitals and insurance companies take the biggest cuts from the payer (example given previously). So how am I making more money? I already paid 200K for medical school.

Doctors take care of your life. Ahhh...much more serious than not getting that checkbook balanced today at Chase Bank. Get a demanding job, then talk. Look at ABC's post.

Quality is necessary. It doesn't come from treating them like an adjustable factor by subsidizing someone else. I love how every middle class American is ready to exploit an immigrant doctor to get free care for himself. You have personal responsibility over your life so like your car, get yourself insured. Take a lifestyle hit. It's what my family did when I was growing up so I'm only hearing excuses right now.

Posted by: Darsh | Aug 12, 2007 8:41:27 PM

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