Everyone’s losing in America’s health care mess. Premiums for family coverage are doubling every ten years, and will hit $20,000 per family per year before 2015. While insurance costs are going up, physicians are actually making less. Physician income decreased 7% (registration required) in real terms from 1997 to 2003. Specialist earnings dropped the least (2%), while primary care docs saw a 10% decline. And Medicare reimbursement rates will likely decline in nominal terms in the near future.
The data, from a study by the Center for the Study of Health System Change, seem at odds with the daily torrent of reports on exploding health care costs. If health care costs and insurance costs are rising, how could docs be making less?
There is good news buried in CSHC’s report – the amount of time physicians spend actually treating patients has increased significantly, while the time devoted to administrative tasks has declined.
It appears the answer lies in declining reimbursement rates. These hard-working docs are spending plenty of time (over 45 hours a week) with patients, but their reimbursement rates have not kept pace with inflation. For example, Medicare has increased fees by 13% during the study period, while the underlying inflation was 21%. And, private payers’ reimbursement declined from 143% of Medicare’s rate in 1997 to 123% in 2003.
So, clearly physician income is not a driver of medical inflation. One driver appears to be the increased volume of tests performed; utilization in this area was up at a 6% annual rate over the study period.
But the real driver appears to be higher utilization of physician services (more docs doing more stuff), and, slightly less important, a significant increase in hospital and facility costs.
Oh, and drug costs continue to rocket skyward…
What does this mean for you?
Higher costs, lower incomes = unhappy consumers and providers does not = change…yet.
Jun
22
Joe, how could you have missed this one: the reasons docs have lower incomes, but costs continue to the go up is because EVEN THEY are paying more for their health insurance. It cuts into their salaries the same as it cuts into ours.
uh, thanks for the clarification – that likely contributes to their income problems, but given that other professionals’ income went up in real terms over the same period, i’d have to add just a bit more credence to the cuts in reimbursement.
Where do the $$$ go? To the insurance companies and big Pharma. Look at UH profits and executive compensation for example.
Also you must look at end stage of life do anything, pay anything to extend life no matter what the quality
I know. I was only kidding. Sort of.
Considering that docs are virtually guaranteed a high income due to payments from government and insurance plans, they are overpaid in my opinion. Before government medicare/medicaid and widespread insurance coverage came about, you could get a house call from a doctor and he/she earned about what any other professional earned – a middle class income.