Last Thanksgiving my father-in-law made an unscheduled pit stop to put some fresh tread on his heart valve. After a few scary moments, we decided discretion was the better part of valor and made a 911 call. The EMTs asked us where we wanted to go; based on their recommendation we chose a brand new hospital around the corner from us. It turns out the decision was good one. The care was excellent and, at age 92, he is back to chasing my mother-in-law around the house.
The hospital of choice is part of a larger chain, located in suburban North Dallas. No one has donated a billion dollars to fund the hospital and yet, as we were checking in, I noticed the impressive display of Chihuly glass adorning the ceiling. The only comparable permanent display of the artists' work I had seen was in the lobby of the Bellagio Hotel and Casino. Reportedly, Chihuly is proud of his work and charges accordingly. I have personal experience explaining how the Bellagio pays for its exhibit but I got to wondering, why was there this sort of artwork in a brand new hospital, when everyone knows, there is no more money in medicine?
The answer is, of of course, there is still plenty of money in medicine. To begin the conversation, let's make sure we have our definitions straight. An industry becomes "socialized" when the government takes ownership of the means of production. Whatever Obamacare did to the medical system (and I think that is still an open question), it did not "socialize" medicine. The government does not own the hospitals or the insurance companies. So, how much the medical industry takes in is still a market based activity, even if it is a distorted market.
The government does pay for a staggering sum of the nation's medical expenses via Medicare. Scholars writing for the National Bureau of Economic Research peg that figure at $260 billion (with a "B"),making up 17% of all health expenditures and 1/8th of the federal budget. During the long legislative battle to enact Obamacare and through the 2014 elections we heard repeatedly that Medicare reimbursement rates would be slashed, resulting in a dearth of doctors willing to serve Medicare patients. Politicians scrounging for votes from senior citizens based the argument on the highly dubious proposition that Congress would refuse to act when the Medicare reimbursement schedule came to review in April 2015, at which time we would see a 21% decline in reimbursements. Lo and behold, a nearly unanimous Congress did not let the calamity happen. According to press releases from the politicians who forecast doom and gloom just before the mid-term elections, Medicare reimbursement is now on solid footing going forward.
The story is similar for Medicaid. One pillar of Obamacare was pumping more money into the Medicaid system. That money was an incentive for states to set up insurance exchanges. To gain favor with the Tea Party or prevent federal intrusion into the affairs of states, take your pick, some Governors and state houses turned down the extra Medicaid money by refusing to install state-based exchanges. These decisions resulted in this term's Supreme Court challenge to Obamacare which, if successful, would leave poor citizens in non-exchange states without a subsidy to pay for their Obamacare policies or Medicaid funds to pay for their otherwise uninsured healthcare. Faced with that possibility, no less of a fire-breather than Wisconsin Governor Scott Walker started to backtrack, saying in essence: "We cannot let that happen." Something tells me, regardless of how Justices Kennedy and Roberts rule this June (we all know how the other seven justices are going to vote), Medicaid reimbursements will continue to increase.
All to say, we still have a market for health care. And the biggest payer in that market is going to continue making big payments. In fact, America will continue to lead the world in the percentage of GDP devoted to medical care; a statistic that existed before Barack Obama came to Washington and has not changed since he has been there.
I was not surprised then, to read Medscape's 2015 report on physician compensation. The report found that primary care physicians earn about $195,000 per year while specialists take home over $284,000 annually. These numbers do not include income from non-patient care activity and it is unclear whether the figures include pre-tax deductions for retirement plans. As in most lines of work, physicians who own their business do better than physicians who are employees.The earnings numbers have continued to rise after Obamacare was installed. By and large, doctors are well paid.
To be clear, I am not complaining about how much doctors make. Physicians have a unique set of skills and they provide a service so valuable that one can literally not put a price tag on it. Follow a doctor around for a day and you find that they work hard and efficiently; there is not a lot of water cooler time. But the good news is that, even in medicine, if you are smart and work hard you get paid for it. And you even gaze at Chihuly glass on your lunch break.
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