To Control Health Care Costs, Put Docs on a Different Pay Scale

by Suzanne Gordon on September 20, 2011

Mention escalating health care costs and how to control them and most people, including many health care activists, focus on the administrative overhead that comes from having an employment/private insurance based health care system. Or the high cost of pharmaceuticals or the misuse of technology – like having an MRI machine on every block. Turns out another huge factor in our out of control health care spending is physician fees. According to a new study in the journal Health Affairs, the US spends more on physician fees than any other industrialized country (and our health care outcomes are often poorer). The study, by Miriam J. Laugesen and Sherry A. Glied documents that physicians, whether paid by private or public insurers, are paid and thus earn a whole lot more than docs in Australia, Canada, France, or Germany.

Go to a primary care doctor in any of those four countries and a public payer will pay 20 percent less and a private payer 70% less than in the US. For a hip replacement, American orthopedic surgeons are paid between 20 and 70% more from public payers and 120 % more from private ones than their counterparts in those four other nations. Not surprisingly, American physicians also earn more. The average income for a PCP in the US is $186,582 and for an orthopedist its $442,450. To put this in perspective, in 2006, the average US median income for a family of four was slightly over $50,000.

Most physicians argue that their medical school debts justify the fact that they earn from between three to almost ten times as much as a family of four. Medical school is indeed more costly here than in the four countries listed above or in any other country with a national health care system (which will also probably have free education). The average physician leaves medical school with $158,000 in debt. So does anyone with a graduate degree. And people like myself who studied French Literature or Social Work or Nursing don’t have a prayer of earning the kind of money a physician earns when they enter into practice.

Physicians, however, have made themselves a special case and we are supposed to pay them a whole lot more than doctors earn in other countries because of their so-called financial sacrifice. While I have little sympathy with people whose earning power far outstrips the average person who invests in their higher education, the fact is that physicians have turned their medical school debt into a powerful stick and have effectively used it secure higher and higher incomes.

The only way to deal with this particular cost escalator is to take that stick away once and for all. How can we do this? By making medical education free. And by this I don’t mean that a few select docs can get free education by promising to work on an Indian reservation for a couple of years. What I mean is that we make graduate medical education free for every doctor and then insist on payments that are in line with the international standard.

(If we had a national health care system, patients would also be less inclined to sue for malpractice because they would be assured of the care they needed after a medical injury. That would take away yet another excuse used to rationalize higher fees).

If physicians did not have to pay thousands for their medical education, then perhaps doctors would claim that they deserve higher fees because they put in years of residency training before they can reach their full earning power. This too is a bogus argument, since doctors-in-training do not work for free but are paid (albeit modestly compared to their future earnings) throughout their apprenticeship training.) Those who put the most years into training earn the most – way more than that average family of four.

The place to begin the work of removing physician fees as a healthcare cost escalator is with primary care physician education. We now have a catastrophic shortage of primary care physicians in America. Only about 15% of medical students show an interest in going into primary care. Again, medical school debt is a disincentive. So if we really want more primary care physicians, make their education free, if that is, they pledge to work as PCPs not for just a few years, but for most of their career.

Once we’ve established this precedent, then we can move on to the orthopedists, neurologists, and other specialties. Until we can the debt issue off the table, doctors will continue to justify the unjustifiable and we will continue to have the most costly and inefficient healthcare system in the industrialized world.

Author and journalist Suzanne Gordon has written or co-edited thirteen books, many of them about healthcare. For more information on her work, see

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