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Throwing good money after bad (Doc Scream 2)

July 2009

As health care reform continues to simmer on the front burner, one reality seems indisputable: Controlling costs has no easy solution, especially when you throw the goal of universal health care into the mix.

This isn’t to say that the Obama administration has not found some key players willing to offer concessions. For example, the insurance industry, in principle at least, offered to stop denying coverage based on preexisting conditions.

Hospitals are said to be willing to accept some cuts – to the tune of $155 billion – to Medicare and Medicaid reimbursement in hopes of decreasing the number of uninsured. The pharmaceutical industry is at least paying lip service to controlling costs. And many physician groups are cautiously calling for improved comparative-effectiveness research to make practice more uniform and evidence-based.

Still, when push comes to shove, it is unlikely that any of these stakeholders is going to significantly, voluntarily change its practice. After all, money makes the world go round, and given the current political climate, it is far from clear that any reform that could get through Congress would be powerful enough to deliver the substantial cost control that is needed. A recent editorial entitled “In Retooled Health-Care System, Who Will Say No?” offers an excellent primer on that impasse.

I’ve already speculated on how hospitalist salaries could be affected by the poor economy, so let me go ahead and surmise how reform might affect our income.

While I initially held out hope that controlling costs would mean improving the lot of primary care physicians, both outpatient and inpatient, I am beginning to doubt it. What seems more likely is that we will continue to be expected to do more with less as a result of the poor economy.

Further, bureaucracy, which is a leading dissatisfier for most primary care physicians, shows no signs of abating. One recent study found that 78% of primary care physicians “noted low control over their work” – largely due, I suspect, to the endless paperwork needed to get anything done for our patients and or to get ourselves paid.

So if costs can’t be cut, controlled or moderated, the only other option is to find more money to pay for health care. Borrowing the money is likely out of the question, given the enormous stimulus package recently passed in hopes of stemming the recessionary tide. So paying for health care would mean increased taxes.

Tax increases come in a variety of flavors. One option, which is more than a bit ironic for physicians, is to tax our health care benefits.

While the particulars are far from clear, it is suggested those making more than 100K would have their health care taxed as ordinary income. (As an aside, there are approximately 1 million physicians in practice. The vast majority of them make 150K or more, placing them in the top 5% of earners in this country – a group composed of 6 million people. Said another way: One in six high earners is a physician.)

For a physician insuring a family of four, this would amount to new taxation in the 33% tax bracket on $13,000. Adding in state and local taxes, take-home income could be affected to the tune of $5,000 a year.

Another plan looks to tax higher-income brackets, levying a 2% surcharge on those making more than $250K. For most hospitalists at least, the “good news” is that only our subspecialty friends would get hit with this tax, perhaps proving that one reaps what one sows.

So what is my take-home point? Stop kicking the can down the road! Physicians make plenty of money, even hospitalists. But the real problem in U.S. health care is that the system itself is broken, not underfunded. I would readily take a pay cut if I believed that the gains would improve how health care is delivered. However, I am furious about the idea of paying more to feed the same inefficient system.

Simply put, legislators must come together to put the politics of special interests aside and figure out a way to control costs. Increasing the tax burden on physicians and other high earners may have its merits to extend insurance to all Americans. But as the saying goes, “We must stop throwing good money after bad.”

We have an unruly health care system that will gladly keep eating all the good money we feed it. But we will run out of money before the system is satiated. By then, health care will be even more bloated, putting us at risk of losing our standard of living if we don’t act now when we have the opportunity.

Perhaps this diatribe is not quite the scream made by a much more famous physician named Howard Dean during his 2004 Presidential campaign. But I am every bit as agitated by concerns that nothing is going to change in health care, except the ever-rising price tag.