Medicare, budget woes, and your future

[Nilf]

Recently, a bi-partisan Presidential commission suggested paying physicians less as ways of balancing the federal budget.

For healthcare, the commission suggested:
--pay doctors, other health providers and drug companies less and improve efficiency and quality;
--replace cuts required by SGR through 2015 with modest reductions while directing Medicare to create a new system;
--require rebates for brand-name drugs as a condition of participating in Medicare Part D;
--increase cost-sharing in Medicare; and
--enact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law

Go to page 31 of the following document:
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdf


My commentary:

IMO the budgetary situation is still not dire enough that any substantial budget-reducing legislation can make it through the congress. I don't expect it to occur before 2012. There will, be however, a lot of posturing on both sides of the isle as everybody is trying to portray themselves as fiscally responsible.


Because of utter lack of political muscle and our spineless leaders, there is a good chance that eventually the budget will be balanced on doctors' backs. The CUTS WILL COME... IT'S ONLY A MATTER OF WHEN. And not they WILL NOT be accompanied by any meaningful tort reform... The lawyer lobby owns the DC and will never let that happen.

So, here is the handwriting on the wall for you. Keep in mind that these 200K+ salaries that you are drooling about while attending orgo, will likely NEVER MATERIALIZE. Not in inflation adjusted dollars. Not unless you do plastics...

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[jvesco22]

 

[eablackwell]

Fat chance is used incorrectly in this post. The phrase "fat chance" is actually meant to mock what is being suggested and therefore means exactly opposite of what you meant.

 

[Nilf]

Fat chance is used incorrectly in this post. The phrase "fat chance" is actually meant to mock what is being suggested and therefore means exactly opposite of what you meant.

Duly noted and amended.

 

[IvyHopeful20]

They probably won't.

 

[DrYoda]

They probably won't.

Why not? Docs are the easiest target in the medical field. Not necessarily the most effective in terms of saving money, but far and away the easiest.

 

[Narmerguy]

Why not? Docs are the easiest target in the medical field. Not necessarily the most effective in terms of saving money, but far and away the easiest.

Definitely the easiest. But there's little likelihood that that will change. We are hardly a united bunch. We are all driven to medicine for what are often vastly different reasons. It's hard for many of us to find a common thread upon which to latch, especially when it comes to money. Simple fact is that many physicians are very ambivalent about their salaries while others monitor it meticulously. Expecting the two (and all beyond and between) to unite behind such a cause is really difficult.

I mean, just think about it. Some of our most brilliant physicians (academic physicians and Mudphuds) willing forgo tens to hundreds of thousands of dollars just to practice and research the way they like while many other physicians wouldn't take $100k less for anything. This has nothing to do with tuition as plenty of academic physicians and researchers were not MDPhD students.

 

[IvyHopeful20]

Why not? Docs are the easiest target in the medical field. Not necessarily the most effective in terms of saving money, but far and away the easiest.

I mean they won't be making the high salaries. I think most people know that going in.

 

[cliffhuxtableDO]

can we please just have a free market. k, thanks!

 

[IvyHopeful20]

can we please just have a free market. k, thanks!

Outside of Somalia, it doesn't exist. Healthcare is not your normal commodity. Good luck getting unsubsidized insurance for 60+ year olds.

 

[Pons Asinorum]

Awesome. Will be used in a future thread.

 

[gettheleadout]

So, here is the handwriting on the wall for you. Keep in mind that these 200K+ salaries that you are drooling about while attending orgo, will likely NEVER MATERIALIZE. Not in inflation adjusted dollars. Not unless you do plastics...

I have a hard time believing the average physician salary is going to go down to around $100k. If it does, no one will be able to justify the debt of going to medical school.

 

[Nilf]

I have a hard time believing the average physician salary is going to go down to around $100k. If it does, no one will be able to justify the debt of going to medical school.

I don't know how low it will go. We haven't touched the bottom yet.

I have met primary care docs who changed specialties because they were making less than 100K.

You can stick your head in the sand, deride and scorn my posts, but YOU CANNOT ESCAPE REALITY.

Here is a Politico coverage of the deficit subject:

http://www.politico.com/news/stories/1110/44972_Page2.html

I direct your attention to the following sentence:
Nevertheless, elements of the attempt by Bowles and Simpson to spread the pain across both sides of the aisle are likely to become part of the budget debate that is expected to dominate Congress next year.

Cuts to doctors' payments are the easiest to implement politically, and I bet diamonds against walnuts that they will be among the 'elements' which will effortlessly sail through the Congress.

 

[mijlee]

I direct your attention to the following sentence:
Nevertheless, elements of the attempt by Bowles and Simpson to spread the pain across both sides of the aisle are likely to become part of the budget debate that is expected to dominate Congress next year.

Cuts to doctors' payments are the easiest to implement politically, and I bet walnuts against diamonds that they will be among the 'elements' which will effortlessly sail through the Congress.

How might Congress implement such a pay cut? Hard pay caps on various specialties? Requiring median physician pay at hospitals to be below a certain median by some designated time? I'm unfamiliar with how much government can do to regulate this; I would appreciate it if you guys helped me understand it a little better.

 

[accidentprone]

I think seniors rather than doctors will be the people who temper cuts to medicare. Seniors vote in significant numbers, and if they feel ill-served by medicare, they'll let their representatives know. With this in mind, I suspect the biggest medicare cuts in physician reimbursements will target certain specialties in order to increase parity of payments across the board and because fewer seniors will be affected daily by specialty cuts. I also suspect that cuts to primary care that end up reducing access would rouse faster opposition among seniors.

If hospitals start receiving a fixed amount based on diagnosis, then all sorts of interesting things may happen.

 

[DrYoda]

I have a hard time believing the average physician salary is going to go down to around $100k. If it does, no one will be able to justify the debt of going to medical school.

It probably won't, I'd be surprised if we even see a large reduction in those in the 150k-200k range. It's the ones making the really good money that are going to get dinged the most.

How might Congress implement such a pay cut? Hard pay caps on various specialties? Requiring median physician pay at hospitals to be below a certain median by some designated time? I'm unfamiliar with how much government can do to regulate this; I would appreciate it if you guys helped me understand it a little better.

They can regulate it however they want, it's the federal government. Most efforts to regulate in the past have failed because they were on a local level (clinton era TN disaster, possibly current MA, Ontario's pay ceiling). If the feds start regulating you either have to eat it or leave the country.

 

[ucladoc2b]

I think seniors rather than doctors will be the people who temper cuts to medicare. Seniors vote in significant numbers, and if they feel ill-served by medicare, they'll let their representatives know. With this in mind, I suspect the biggest medicare cuts in physician reimbursements will target certain specialties in order to increase parity of payments across the board and because fewer seniors will be affected daily by specialty cuts. I also suspect that cuts to primary care that end up reducing access would rouse faster opposition among seniors.

If hospitals start receiving a fixed amount based on diagnosis, then all sorts of interesting things may happen.

Too late.

http://en.wikipedia.org/wiki/Diagnosis-related_group

 

[Remuneration]

can we please just have a free market. k, thanks!

It's adorable that you think free markets:

A) Exist

B) Would work in your favor


Not that this would be terribly shocking, given that the rich and their legislative cronies have already squeezed most of the middle and lower class dry.

 

[cliffhuxtableDO]

It's adorable that you think free markets:

A) Exist

B) Would work in your favor


Not that this would be terribly shocking, given that the rich and their legislative cronies have already squeezed most of the middle and lower class dry.

ok ok i guess you're cute too.

 

[Cleavername]

It's adorable that you think free markets:

A) Exist

B) Would work in your favor


Not that this would be terribly shocking, given that the rich and their legislative cronies have already squeezed most of the middle and lower class dry.

u seen the movie capitalism haven't you ?

 

[Lokhtar]

Haha, free market would cause physician salaries to plummet. You worry about midlevels now? Wait for an influx of 10 million mid levels and a million FMGs putting up shingles charging less than you. Unless you are an ivy league candidate and can set up some kind of exclusive botique type practice, you'd be screwed. And there'd be no healthcare whatsoever for 60+ group.

 

[ModerateMouse]

Haha, free market would cause physician salaries to plummet. You worry about midlevels now? Wait for an influx of 10 million mid levels and a million FMGs putting up shingles charging less than you. Unless you are an ivy league candidate and can set up some kind of exclusive botique type practice, you'd be screwed. And there'd be no healthcare whatsoever for 60+ group.

It's true... the government is protecting American medical graduates from FMGs

(I didn't even connect the dots myself when the other poster mentioned the 'free market')

 

[Remuneration]

More important than restrictions on FMGs are the limited number of medical school slots and thus accredited physicians relative to their demand in our current system. If the LCME was as profilic as the ABA in accrediting schools and cranking out graduates (relative to demand, you wouldn't see quite as preciptious a drop, as demand for lawyers has been decreasing as new schools open while physicians are still in high demand in many areas), you'd eventually see would-be physicians in a similar situation to would-be lawyers. Relatively select few with pedigrees from the most highly considered medical school/residency would continue to make exceptional salaries serving the wealthiest clientele. Everybody willing to spend the time and money to complete medical training could find acceptance, spend 4 years building debt, and a life-time fighting over table scraps.


Even if a truly free market, perfectly competitive and perfectly efficient were possible to create. You would not benefit, unless you killed off the vast majority of the populace a la the plague. Capital is relatively scarce and, especially and increasingly in the US, highly consolidated. When capital is scarce and labor is plentiful, capitalists are able to bid down the price of labor and pocket the difference. <-- Not quite.
Basically, you'll be bid down to a wage that is just above what you could make by abandoning employment in your field either to self-employ or change fields.

 

[Lokhtar]

Also, residencies are subsidized by the government. Get ready to pay for your residencies and no limit on how many. Let the underbidding begin.

 

[AgentBlue]

Wow this is really gonna suck for us aspiring physicians, I just hope that doctors will get paid enough to at least be able to pay back their med school debts...

 

[Dr Oops]

I have a hard time believing the average physician salary is going to go down to around $100k. If it does, no one will be able to justify the debt of going to medical school.

Look at primary care the avg FP makes around 120-150K (a fortune to 90% of the pre-meds) yet med students run from it currently. Some pediatricians make well under 100K (this could be due to the fact that many are female and work part time to have a family, but think about the fallout of having Many part time docs.)

I think seniors rather than doctors will be the people who temper cuts to medicare. Seniors vote in significant numbers, and if they feel ill-served by medicare, they'll let their representatives know. With this in mind, I suspect the biggest medicare cuts in physician reimbursements will target certain specialties in order to increase parity of payments across the board and because fewer seniors will be affected daily by specialty cuts. I also suspect that cuts to primary care that end up reducing access would rouse faster opposition among seniors.

If hospitals start receiving a fixed amount based on diagnosis, then all sorts of interesting things may happen.

Do you mean specialists like orthos who do hip and knee replacements (the kind old people get) or neurosurgery (you know for the old people who are more prone to subdural/extradural hematomas) lets not forget the anesthesiologist required to do these procedures?

Haha, free market would cause physician salaries to plummet. You worry about midlevels now? Wait for an influx of 10 million mid levels and a million FMGs putting up shingles charging less than you. Unless you are an ivy league candidate and can set up some kind of exclusive botique type practice, you'd be screwed. And there'd be no healthcare whatsoever for 60+ group.

I agree. Polticians are *****s. They will cut and cut and cut (because we are an easy target) until most of the qualified people will go into something else. For those skeptical think about how many more people apply when the finance market goes down or when the tech bubble burst. The intelligent and capable go where the money is. If its not medicine they will go somewhere else. Especially when the 7 year investment returns a <100K result, something easily had after a couple years of business, CS, engineering, etc. with better lifestyle.

 

[IvyHopeful20]

That's not the way it'll work. Medicine is fiercely competitive even in countries with really bad physician salaries. It's just a profession that a lot of kids want to do.

 

[Cleavername]

That's not the way it'll work. Medicine is fiercely competitive even in countries with really bad physician salaries. It's just a profession that a lot of kids want to do.

lol no.

second thought, i actually wouldn't mind practice in britain or australia just so i wouldn't suffer a heart attack anticipating what politics is gonna do to my practice, at the expense of a couple tens of thousands of dollars off my salary. but then again, there aren't much of my race over there so i dunno about that.......

 

[IvyHopeful20]

It's certainly extremely competitive in the European countries. And Canada. Unbelievably competitive in India.

 

[Nilf]

Haha, free market would cause physician salaries to plummet. You worry about midlevels now? Wait for an influx of 10 million mid levels and a million FMGs putting up shingles charging less than you. Unless you are an ivy league candidate and can set up some kind of exclusive botique type practice, you'd be screwed. And there'd be no healthcare whatsoever for 60+ group.

Not necessarily. For some specialties, yes, but not for all.

Elective plastic surgery industry is thriving without much government interference.

IMO, those specialties which have something to do with beauty, and which offer elective procedures and treatments (DERM) can and will thrive. Sadly, people are paying more attention to their skin than to their livers.

 

[IvyHopeful20]

Not necessarily. For some specialties, yes, but not for all.

Elective plastic surgery industry is thriving without much government interference.

IMO, those specialties which have something to do with beauty, and which offer elective procedures and treatments (DERM) can and will thrive. Sadly, people are paying more attention to their skin than to their livers.

Ah, but that industry is still not a true free market. The government dictates who can perform procedures. I can't just open up shop and perform plastic surgery. Neither can the NP or the PA unassisted. The prices are high because the supply is lower than demand (the choke point is the # of residency spots, the fact that a US residency is needed, and it's restricted who can perform the procedure ie. government dictates not the free market). You flood the market and the price of that goes down, just like anything else.

 

[DrYoda]

That's not the way it'll work. Medicine is fiercely competitive even in countries with really bad physician salaries. It's just a profession that a lot of kids want to do.

Students in those countries don't shell out six-figures for their education. It's not an apples to apples comparison.

and even then Germany has had issue with it's docs leaving for other, higher paying countries. We also have to consider that many countries with lower physician salaries, the docs don't work the hours they do here. It would be stupid to assume that there won't be changes in the way docs practice (or where) that accompany a significant reimbursement cut.

 

[IvyHopeful20]

The debt argument is irrelevant. You only need to make a couple thousand more a month to be on par counting your loan payment. Actually not even that since the tax rate is often higher in those countries....

 

[DrYoda]

The debt argument is irrelevant. You only need to make a couple thousand more a month to be on par counting your loan payment. Actually not even that since the tax rate is often higher in those countries....

It's not irrelevant. Lower costs increase accessibility to the career. It's also not a 8 year path to an MD in most of those countries...

Side note: Most anything you see on US vs. X country doctors/healthcare (cough:newspapers:cough) is at best oversimplifying and at worst intentionally omitting. It's really a difficult thing to do (compare between countries).

 

[littlejuan]

What is the point of discussing the Co-Chair's draft, a draft that has not even been approved by the majority of the Commission's members, and will probably barely resemble the final draft?

 

[AgentBlue]

The debt argument is irrelevant. You only need to make a couple thousand more a month to be on par counting your loan payment. Actually not even that since the tax rate is often higher in those countries....

No, taking your debt into account is relevant since your NET income will be much lower than what you think it would have been. Also what DrYoda said is true, usually in those other countries you go straight into med school right out of high school and it usually takes about 6 years to get your md.

 

[IvyHopeful20]

It's not irrelevant. Lower costs increase accessibility to the career. It's also not a 8 year path to an MD in most of those countries...

No, it doesn't. I don't know many people who are unable to pay off their loans. The default rate is less than 1% at every medical school in the US.

 

[DrYoda]

No, it doesn't. I don't know many people who are unable to pay off their loans. The default rate is less than 1% at every medical school in the US.

We're not talking about ability to service debt.

What is the point of discussing the Co-Chair's draft, a draft that has not even been approved by the majority of the Commission's members, and will probably barely resemble the final draft?

Why not? This country is getting closer to having to deal with the fact it's heading for a cliff. There's a lot of things on the table that are going to affect the whole population. If you ask me it's a shame more people aren't talking about it.

 

[Drrrrrr. Celty]

I don't know if this has been brought up before in one of your older posts. But what does your name stand for?

 

[circulus vitios]

I've stopped caring about my future. I'll get my pound of flesh out of the system, either by going into private practice and refusing Medicare or by moving to another country and neglecting to pay my quarter million dollars in student loans.

 

[ModerateMouse]

or by moving to another country and neglecting to pay my quarter million dollars in student loans.

In this case, good luck being satisfied with your salary. Physicians in the US, on average, make more than physicians in any other country in the world.

 

[circulus vitios]

In this case, good luck being satisfied with your salary. Physicians in the US, on average, make more than physicians in any other country in the world.

That's true...but doctors in England seem to make decent money.

 

[IvyHopeful20]

Recently, a bi-partisan Presidential commission suggested paying physicians less as ways of balancing the federal budget.

That's a dead end. It's dead on arrival in the House, the Senate, and the White House.

It contains a bunch of provisions that both parties will latch onto and both parties will draw a line in the sand against. Particularly laughed at the bit about raising of the retirement age in 2070s....

 

[apoptosis123]

.

 

[DrYoda]

So at the end of the day, does anyone really know how much physician salaries are going to be lowered in the next 10-20 years? Are we talking 100k+ for the higher paying specialties, because with all the doomsday rhetoric that is thrown around on SDN that is what it seems like.

No one knows anything since this hasn't been close to passed, and lately even when this country passes legislation (read: healthcare reform) it doesn't say anything substantial.

I've yet to see a good argument for sub-100k physician salaries, or even sub 150k. There is good reason to think some of the high paying specialties will be targeted for pay cuts (already happening, talk to a radiologist). But even then there's just reason to think, nothing is written in stone.

Also, there's a million posts on SDN asking what's going to be the next big thing to make bank in 10-20 years, or what the field will look like. No one ever knows this for sure, not in health-care or any other field.

 

[gettheleadout]

Also, there's a million posts on SDN asking what's going to be the next big thing to make bank in 10-20 years, or what the field will look like. No one ever knows this for sure, not in health-care or any other field.

 

[Nilf]

No one knows anything since this hasn't been close to passed, and lately even when this country passes legislation (read: healthcare reform) it doesn't say anything substantial.

I've yet to see a good argument for sub-100k physician salaries, or even sub 150k. There is good reason to think some of the high paying specialties will be targeted for pay cuts (already happening, talk to a radiologist). But even then there's just reason to think, nothing is written in stone.

Here is a good argument:

Short term, the looming 23% cuts in physician reimbursements (no NET INCOME) are planned to take place in two weeks. If you are running a business and have any sort of overhead, 23% cut of reimbursements means something like 30-50% of cut of your NET income. You are intelligent people, so you can figure this causality.

This is happening in the political climate when everyone is talking about austerity and deficit... which brings me to the second point...

Long term, the political pressure to balance the budget lower doctors' reimbursements, who have little leverage. Yes, I am repeating myself. Most importantly... now we are stuck with Obamacare... It will overregulate medical industry to death... You might not be able to 'drop Medicare', and charge whatever you want... You will likely be forced, either directly through letter of law, or indirectly through regulations, to accept whatever payments the central bureaucrats give you.

To sum it up:

Medicare cuts + deficit hawks from the right + Obamacare bureaucrats from the left = R.I.P. US medicine

 

[Lokhtar]

Here is a good argument:

Short term, the looming 23% cuts in physician reimbursements (no NET INCOME) are planned to take place in two weeks.

That's an almost weekly thing. It's not going to go through this time either.

You might not be able to 'drop Medicare', and charge whatever you want...

That's not anywhere in the bill.

 

[mishaS]

The medical system has to change, and part of that change will unfortunately likely be cuts in the salary of physicians. I can't imagine this coming change will be the end of medicine as we know it, and it certainly won't put doctors into the poor house. The fact remains that if the political system screws doctors, they will simply either stop practicing, going into other fields, or simply leave. We already have a doctor shortage, and I imagine it would be political suicide to exacerbate this problem, especially when considering the voting power of the aging baby boomers, who will likely be the most seriously affected by doctors leaving.

Though it is obviously unpredictable what will happen, I imagine PA's and nurse practitioners playing a more dominant role in primary care, a larger emphasis on preventative medicine, and more prudential fiscal practice in terms of always using the latest, greatest, and most expensive treatments/diagnostic techniques.

 

[Lokhtar]

Considering the number of people who want to be doctors, and the number of spots at medical schools, I highly doubt there will be any shortage of applicants anytime soon.