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Rationing - just to emphasize the point
Posted by: McQ on Wednesday, July 25, 2007

It really doesn't matter how much insurance you have or whether everyone is covered if there aren't enough of those performing the services you seek:
Tamar Lewis runs a makeshift hair salon out of her one-bedroom apartment in Roxbury, a low-income neighborhood here. She's 24 years old and has been cutting hair since she dropped out of high school in 2002. Until recently, she never had health insurance.

"Good thing I never snipped one of these off," Ms. Lewis jokes, wiggling 10 fingers. Earlier this month, she signed up for state-subsidized insurance under a new Massachusetts law that aspires to universal coverage. The plan costs her $80 a month.

But it takes a lot more than an insurance card to see a doctor in this state.

On the day Ms. Lewis signed up, she said she called more than two dozen primary-care doctors approved by her insurer looking for a checkup. All of them turned her away.
Check out this graph of 3rd year internal medicine residents going into primary care (courtesy of the WSJ).

Think about it. You're looking at professions, and one of them seems ripe for takeover by government. Not only that, liability costs are through the roof and you have to spend 8 years and go into an enormous level of debt just to get started. Sound attractive to you? So if you decide to go into the business why would you ever choose the least lucrative part of it, where, in effect, you're more of a referral service than an MD? Why not specialize and at least raise the level of your compensation?

Here's the problem, however:
The advent of managed care in the mid-1990s added to the burden as insurance companies called on primary-care doctors to serve as gatekeepers for their patients' referrals to specialty medicine.
So because primary care doctors are overworked (they are seeing many more patients now than in the past) and underpaid (median income for primary-care doctors was $162,000 in 2004, the lowest of any physician type) they're just not going into that area of medicine in sufficient numbers.

So without the gatekeepers, you can't get through the gate.

Any guess as to why compensation is so low that residents are choosing other specialties rather than primary care?

I refer you to part 2 of yesterday's post.
 
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Not only that, liability costs are through the roof and you have to spend 8 years and go into an enormous level of debt just to get started.
But it’s supposed to be for the CHILDREN! Who cares if you are in debt and spent 8 years working for it. You will work for the guvmint for a living wage.
 
Written By: meagain
URL: http://
Perhaps we should just eliminate primary care physicians - most of what they do seems to be either extremely routine (treating colds/flu, immunizations) or requires a referral to a specialist. For the routine items I would rather see a nurse-practitioner (the wait is shorter, their attention span is longer, generally their attention to detail is greater).

More complex cases frequently require someone who is good at coordinating multiple specialists and communicating medical information between them and the patient (something the average GP doesn’t seem to have the time, training or inclination to do).

As far as I can see the only purpose the primary care physician serves is as a gatekeeper for the insurance company.
 
Written By: kodell
URL: http://
We could always import doctors like they do in England...never mind the flames :-)
 
Written By: Paul
URL: http://
Health insurance companies, even non-profits, stay in business by not paying for medical claims. Increasing the barriers to entry by their clients into the system makes perfect business sense. So they are reducing compensation paid to the gatekeepers.

Sounds like classic example of a market failure.

One effective way around the problem would be to have significant competition among insurers so that there would be effective competition in the issuance of policies based on service. But that only works if consumers (a) have access to multiple policies and (b) have the information needed to be able to choose better service.

On a, when was the last time the feds blocked a merger between insurers? How many insurers exist in your community? What is the difference in price between an individual policy and a policy through your employer? Does your employer provide the information needed to make an informed decision as between different policies?

On b, how easy is it to obtain information on the kind of denial of service discussed in the post?
 
Written By: Francis
URL: http://
Sooo, we don’t have enough primary care physicians and primary care physicians are underpaid versus the rest of the medical field. Isn’t this just the sort of problem that the Almighty Market is supposed to solve best? Where is the invisible hand when you need it? Is your pointer to part 2 from yesterday supposed to suggest that salaries for primary care physicians are set by legislative fiat? This suggestion is, um, - not entirely accurate.
 
Written By: Retief
URL: http://
Sooo, we don’t have enough primary care physicians and primary care physicians are underpaid versus the rest of the medical field. Isn’t this just the sort of problem that the Almighty Market is supposed to solve best? Where is the invisible hand when you need it? Is your pointer to part 2 from yesterday supposed to suggest that salaries for primary care physicians are set by legislative fiat? This suggestion is, um, - not entirely accurate.
You stopped reading pretty early on, didn’t you.

The market isn’t in effect here, because the Government has limited how much the doctors are rembursed. There is an artificial Price Floor on the fees. This means that they aren’t getting paid what the market would have them getting paid.
 
Written By: Scott Jacobs
URL: http://
the Government has limited how much the doctors are rembursed

I call BS on this. That’s only true for the Medicare/Medicaid program. I am not aware of any federal, state or local law capping fees paid by non-governmental insurers to medical professionals.

Btw, Floor should probably be Ceiling.
 
Written By: Francis
URL: http://
Medicade/Medicare prices are part of what is used to set prices for insurance companies, otherwise people would just use medicade/care, and not bother with other types of insurance. It would be cheaper for the consumer.

And you’re right, it’s price ceiling. ALWAYS mixed those two up, without fail.

Drives me nuts... Damn economists and their non-english english.
 
Written By: Scott Jacobs
URL: http://
McQ,

As usual, you make no sense when you talk about health care. First, the move toward using primary care doctors as gatekeepers was a move driven by the private insurance industry in order to control costs. You generally don’t need a referral if you have Medicare.

Second, most primary care doctors rely primarily on private insurers for payment, meaning that if there’s a problem here, it’s that private insurance companies won’t reimburse primary care providers at a level that makes the field sufficiently lucrative.

Third, as this study shows, the specialist/primary care reimbursement rate gap is much bigger for private insurers than it is for Medicare, meaning that private insurers are more responsible than Medicare for making primary care an undesirable field. If there were only Medicare, there would be more primary care providers (because there would be less economic incentive to specialize).

I know you desperately want to believe that all bad things in health care are the result of government intervention, and that the market, left to its own devices, would produce optimal incentives and quality of care, but that’s just naivete on stilts. Sometimes market forces lead to suboptimal outcomes. In this case, market forces are primarily responsible for the problem you’re complaining of, i.e., the shortage of primary care providers.
 
Written By: Anonymous Liberal
URL: http://www.anonymousliberal.com
"Health insurance companies, even non-profits, stay in business by not paying for medical claims."
They stay in business by paying less in claims than they receive in premiums. They thrive by paying less than they receive and the ones that last do this by managing risk effectively, not by witholding payments that are contractually required or by offering policies with so many restrictions that the coverage is poor. Oh sure, there are always companies that do try to screw people over, but those practices do not last in the long run.

 
Written By: Grimshaw
URL: http://
I should also add, that a big component of the problem here is the provider bottleneck created by the need for doctors to receive extensive training before being licensed to practive. The cost—both in time and money—of becoming a doctor creates a significant barrier to market entry. And, once there, doctors understandably gravitate toward the more lucrative fields. But these barriers to market entry are necessary and are not the result of "socialized medicine."
 
Written By: Anonymous Liberal
URL: http://www.anonymousliberal.com
McQ,

As usual, you make no sense when you talk about health care.
And, as usual, this is right where I quit reading your comments, AL. Perhaps a different approach is called for if you wish to discuss things here.
 
Written By: McQ
URL: http://www.qando.net/blog
And, as usual, this is right where I quit reading your comments, AL. Perhaps a different approach is called for if you wish to discuss things here.
Fair enough. You’ve got a point. In the future I’ll try to eliminate the unnecessary stark. I stand by my substantive point, though.
 
Written By: Anonymous Liberal
URL: http://www.anonymousliberal.com
A few points:
1. Medicare reimbursement rates do influence third party payment contracts (think of it as a baseline), though there is significant variation dependent on local market conditions. In general, there is still relative overcompensation of procedures and testing, which is why new physicians are drawn towards them.

2. The lack of new entrants into primary care is a warning flag, but the total numbers hasn’t been enough to change reimbursement rates yet. That will likely come when more PCP docs retire and are not replaced, but the cycle will run over many years, and the issue has certainly been noticed and already being debated at higher levels. If payments don’t shift in 5-10 years, and training programs collapse due to lack of interest, then you can call it market failure, not before.

3. Medicare makes up a big chunk of primary care, and is only getting bigger.

3. kodell....you’re joking, right? Right?

4. AL-you’re almost right. Unfortunately, profit margins for Medicare services are about half of that of private insurance, any will be lower still if the proposed cuts go through. The fact that Medicare will be sticking it to my specialists colleagues almost as much as I will be wonderful consolation when my paycheck drops by half as I start my all-Medicare practice.


 
Written By: Galen
URL: http://
Think about it. You’re looking at professions, and one of them seems ripe for takeover by government. Not only that, liability costs are through the roof and you have to spend 8 years and go into an enormous level of debt just to get started. Sound attractive to you? So if you decide to go into the business why would you ever choose the least lucrative part of it, where, in effect, you’re more of a referral service than an MD? Why not specialize and at least raise the level of your compensation?

So, your theory is that we don’t have enough primary care physicians because the profession is "ripe for takeover" by government? That’s the cause? And yet, we have as many cosmetic surgery specialists as we need? Isn’t that ripe for takeover as well? Same problem, different effects?

Wait. Or is your theory actually, in fact, that there aren’t enough primary care physicians because they get paid less relative to specialists. See, that sort of makes sense.

I can’t tell for sure from your post, but you seem to believe that you’ve demonstrated that, somehow, a recently passed plan for state-wide health care in Winsconsin has somehow caused low primary care provider salaries. Or perhaps you’ve just asserted it.

By the way, fantastic dodge of Anonymous Liberal’s 90% substantive post. It’s great when people making logical arguments decorate their statements with 10% insulting statements, eh? Then you can provide the insults as a public reason for ignoring the argument. When Francis makes an entirely insult-free counterpoint, that’s equally ignored, of course, but without any publicly provided rationale for doing so. Down here in the jungle, we often stoop to responding to factually-driven arguments even if they’re festooned with an obnoxious statement or two.

That’s why I, for one, don’t take any special precautions to be polite. Where’s the incentive? Lots of time spent with people entirely focused on insulting you is boring, perhaps, but people who are ready to debate openly on an issue come out and do it, sometimes simultaneous with the odd verbal backhand, sometimes not, and people who aren’t ready to debate openly, like you, McQ, won’t do it, whether you’re polite about it or not.

I’d love to see you debate AL on health-care politely on the front page. I have a feeling, with AL given the briefly dangled carrot of a fair hearing, however illusory, could be as polite as any leading ettiquete host you could name. Politeness has nothing to do with why no one could ever get front-page time on Q and O with an argument for government involvement in health care, even an argument debated against with the best libertarian counter-argument that the editors could muster. Q and O, at least on this issue, is not intellectually comfortable with anything more than whacking at straw pinatas (anyone think Ezra Klein doesn’t really understand or accept that low salaries lead to less labor-pool interest?)
 
Written By: glasnost
URL: http://

 
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