September 23, 2004

pay doctors less!

"great ideas" that will never happen, part 2

In another life I worked as a low-level health economist; and in the last few months of my time there, we had to produce at short notice a report on various international health care systems. What I learnt came to mind listening to [yet another] program on public radio about how we could lower health care costs in the United States. It came to mind, because the two representatives of the presidential campaigns were both doctors.

And my, how they waxed lyrical about cutting administrative costs by streamlining paper-work, and finding ways to reduce duplication of care, and cutting out layers of management, and everything but reducing the incomes paid to their colleagues.

A simple and traditional measure of how high health care costs are here, compared to other developed countries, is that the U.S. spend around 14% of its GDP on health care, whereas other Western democracies vary between about 7.5% (the UK) and 10% (with Switzerland a little higher, but don't let that make you believe that it's federal republics that have high health care costs).

All this would be money well spent if collectively we got something for it, relative to foreigners. The trouble is that on the simplest measures, such as life expectancy and stature, the U.S. comes out behind countries that spend a lot less per capita on health care.

One generally overlooked reason for this is that, again, compared to other countries, American doctors are very well paid. For that matter, American health care administrators are unusually well-paid too. You get that when you privatize the provision of health care, and when health care administrators and managers get private sector salaries, rather than state and federal government pay scales.

Few people have any objection to paying managers less, and paying less managers, if that could be worked out. But no-one ever proposes paying doctors less, even though doctors do very well for themselves. (In case anyone reading this is public spirited enough to be working as a public health physician or in some rural practice, I know, you get paid pretty poorly for bringing more health to more people than most other doctors.) Since we are facing a nursing shortage, it's not surprising that nurses are getting paid somewhat more these days. But there's no real doctor shortage, except (!) in rural areas and some inner cities.

The financing of medical education reflects this -- doctors put themselves into vast debt to graduate, but over their lifetime they do pretty nicely for themselves. Medical school is a good investment.

It's not like doctors in Europe or Australasia or Canada have to shake the Dunkin' Donuts cup at you outside the train station to make a living -- they just don't earn quite as much compared to other professional occupations as they do here.

We're never going to hear about this, because the press and politicians believe that doctors have unique and valuable insights into how to fix the health care system. And they do. They just don't happen to include understanding that someone's health care costs are someone elses health care derived income, Turkeys will vote for a second celebration of Thanksgiving before doctors propose reducing their own incomes.

I guess that's why they call it political economy.

Posted by robe0419 at September 23, 2004 8:36 PM