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How 'Medicare for all' bills would worsen the doctor shortage

"Medicare for All" would drive out many doctors and nurses - and compromise the accessibility and quality of medical care for millions of Americans.

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“Medicare for All” may sound good to some Americans — until they take a closer look at how it would actually work.

Take something pretty basic: how it would affect the number of medical professionals we have in this country. “Medicare for All” would drive out many doctors and nurses — and compromise the accessibility and quality of medical care for millions of Americans.

The reason: “Medicare for All” bills mandate major payment reductions for America’s health care workforce. Vermont Sen. Bernie Sanders’ bill, for example, would use today’s Medicare payment system for reimbursing doctors, hospitals and other medical professionals. Medicare rates are fixed by law and regulation, not some private market-style “negotiation.” Those rates are set significantly below private sector rates, and often do not cover the true costs of providing medical services.

For example, in 2017 the American Hospital Association found that for every $1 American hospitals spent caring for Medicare patients, Medicare reimbursed hospitals only 87 cents. Likewise, in a study of major commercial insurers, the Congressional Budget Office reported that for 20 services provided by physicians, private payers paid amounts ranging from 11 to 139 percent more than Medicare paid.

Doctors and hospitals routinely depend on private health insurance to close the gap. The Senate and House “Medicare for All” bills, however, would outlaw private health insurance, and thus eliminate the freedom of medical professionals to negotiate payments outside of the government monopoly.

Under current law, we already have some idea what to expect with Medicare payment. Obamacare schedules major Medicare payment reductions for hospitals, nursing homes and home health agencies. In their 2018 report’s most realistic scenario, Medicare’s trustees warn that “by 2040, simulations suggest that approximately half of hospitals, roughly two thirds of skilled nursing facilities and over 80 percent of home health agencies would have negative total facility margins, raising the possibility of access and quality of care issues for Medicare beneficiaries.” Medicare law also schedules physician payment decreases relative to private-sector payment.

Today, Medicare enrollment totals more than 58 million Americans. Sanders’s bill, however, would expand Medicare’s payment rates to the coverage of more than 300 million U.S. residents.

Projecting a dramatic 40 percent reduction in provider reimbursement relative to private insurance, Charles Blahous, a former Medicare trustee, observes, “The cuts in the Sanders M4A bill would sharply reduce provider reimbursements for treatments now covered by private insurance, which represent a substantially greater (more than 50 percent larger) share of national health spending than does Medicare.”

True, American physicians are among the most highly paid medical professionals in the world. Overall, in 2018 the average American primary care physician earned $223,000, while specialists earned $329,000. In 2018, American staff nurses earned $73,287 on average, clinical nurse specialists earned $88,271, and nurse anesthetists earned $150,833.

Of course, liberals in Congress could cut American medical workforce compensation to “single payer” levels. Examining comparative 2016 data — including compensation in “single payer” Britain and Canada — researchers writing in the Journal of the American Medical Association found that American general physicians earn an average annual salary of $218,173. The comparable compensation for Canadian generalists was $146,286, while British generalists received just $134,671.

Medicine is, however, a tough and often stressful profession, and medical students routinely incur large personal debts. In 2018, according to the American Association of Medical Colleges, the median medical school debt amounted to $195,000.

Punitive payment cuts would surely be costly. By 2030, Americans already face a serious and potentially dangerous physician shortage, ranging between 15,800 and 49,300 primary-care doctors, and between 33,800 and 72,700 non-primary care doctors. Accelerated retirements, job-based burnout and growing demoralization fuel that shortfall.

Combining a mammoth pay cut with the abolition of private-sector alternatives would not only hurt morale. It would accelerate the shrinkage of the medical workforce.

Patients will suffer.

Blahous’s Mercatus study of the Senate bill — projecting a 40 percent reduction in provider reimbursement — is thus far the only such estimate of its impact on medical compensation. The House bill — creating a global budget for American health spending and government fee systems for doctors and other providers — is yet to be subject to a similar econometric analysis.

There is an obvious candidate to undertake such an analysis: The Office of the Actuary at the Center for Medicare and Medicaid Services. The Actuary has regularly estimated the impact of Obamacare’s scheduled Medicare payment reductions.

Congress and the Trump administration should ask the Actuary to conduct a similar analysis of the “Medicare for All” bills, not only assessing their impact on America’s doctors and hospitals, but also Americans’ access to high quality medical care.

Congress must secure the best and most authoritative estimates of the impact of the House and Senate bills. Silly political promises won’t cut it. American doctors and patients — that is, all of us — deserve an honest prognosis.

Robert E. Moffit, Ph.D., is a senior fellow in the Center for Health Policy Studies at The Heritage Foundation (heritage.org).

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