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My understanding is that Medicare sent out surveys to physicians and asked "What would you charge for x?", then paid the 75th percentile of responses to all physicians. They sent out surveys and updated their payment amounts annually which created sharp inflation for medical services. Slightly more nuanced than what I wrote, but still pretty similar. If you believe otherwise, send me a link, I'm open to reading.
Not quite. The fees were based upon a preexisting system used by the blues; while the exact formula for determination was proprietary, it basically capped the fees at a percent of community based charges. The 75% figure you are using comes from MC setting their discounted rate at 75%
of the preexisting prevailing charge. Medicare was a steeply discounted service from day one; remember, while it did add some percentage of people to the insured rolls, more than half of the elderly were already insured... thereby providing a large number with an immediate 25% coupon. This sudden drop in fees per unit work, combined with the increase in utilization within that cohort, led to a not unexpected -- indeed, predicted -- increase in the rate of physician fee inflation (almost doubled from 3-4% to 7-8% annually from what I recall) in order to maintain practice profitability and income.
Somehow Congress, in their infinite wisdom, thought that providers would take this on the chin for the greater good... and was fairly pissed off when they did not. This, taken in combination with the deluge of delayed care, resulted in cost overruns within the first few months of Medicare's existence (did you know that Part B premiums were initially supposed to cover 50% of the expenditures? Ha!), prompting HHS to come back to Congress hat in hand during the very first year and requiring a special session of Congress.
This went on for years... until the RBRVU system went into effect in the early 90's.
Look, I'm not asking for lower pay. I'm more than happy to get paid as much as possible. I'm not looking to be a pauper.
However, the average medical student can propel him/herself into the 99% of US incomes if that's their priority. So, I get a little sick of the chicken little attitude on SDN. The funny thing is that it's coming mostly from attendings in well-paying specialties.
I believe that you presume far too much -- it is not as easy to pull down $5-600k before taxes as you may think.
As a total aside, you will be well served in life if you nurture and develop the capacity to look around you, see who's doing what well, why and how they're doing it, learning from that, and incorporating their ways into your own. You will be even better served to learn who your friends are and who's fighting the right fight for you. Just some words of advice....
I'm actually glad medstudent debt is going up now that I'm out of school because it puts an upward pressure on physician salaries.
Question -- was that said with a straight face?
