Medicare is contributing to a potential shortage of 90,000 doctors by 2025.
Two Medicare issues, if left unresolved, would limit the future supply of doctors and reduce the ability to find a doctor during retirement: Physician payments under the Sustainable Growth Rate (SGR) and financing of Graduate Medical Education (GME).
Medicare is the main source of health insurance for those 65 and older and Congress is focused on preventing an automatic 21% cut in Medicare physician payments due to occur March 31. The Sustainable Growth Rate, or SGR, was established in the 1997 Balanced Budget Act to curtail the rise in health-care costs by linking physician payments under Medicare to an arbitrary target of economic growth.
Under SGR, doctors received annual pay increases until 2002, at which point Medicare spending started to outpace economic growth. As a result, doctors were set to receive a 4.8 % payment cut. Not surprisingly, doctors successfully lobbied Congress for a change. Ever since, Congress has routinely passed a “doc fix” that puts off the scheduled cuts. Just like the movie Groundhog Day, if Congress fails to permanently fix the SGR, it will have to vote year after year on this contentious issue.
These “fixes” have done nothing to solve the underlying problem and have only deferred and compounded the necessary cuts, resulting in more costly fixes each year. The Congressional Budget Office (CBO) estimates that a 10-year fix would cost between $137 billion and $175 billion, while the Committee for a Responsible Federal Budget estimates a permanent fix would cost up to $215 billion over 10 years.
A 21% cut in doctor payments would have a significant impact on physicians’ willingness to see Medicare patients and limit the ability of many retirees to see a doctor. Further, legislating temporary SGR “fixes” year after year only creates uncertainty among physicians and leads to further erosion of faith in our political system and the government’s ability to deal with health care reform issues efficiently and effectively.
Adding to the problem, and yet less noticed, is how the financing of graduate medical education is restricting the supply of doctors. This will be a surprise to many readers — Medicare funds GME and residency programs. To be a licensed physician, a person must attend medical school and then pass board certification (both at great expense). What a lot of people outside the field of medicine don’t realize is that to be a licensed physician, a doctor must also complete additional graduate medical education in a residency program. Finding a proper “match” for a residency relies in part on an algorithm that appears more complicated than astrophysics.
A Wall Street Journal article addressed the problem of a residency program shortage back in 2013, but the financing problem has only increased since. According to the Institute of Medicine, taxpayers provide $15 billion in GME support; Medicare provides $9.7 billion, Medicaid $3.9 billion, and the Veterans Health Administration an additional $1.4 billion. These funding levels have essentially been capped since 1997.
From a public policy perspective, it is questionable whether the federal government should finance GME, or whether hospitals that benefit from the cheap labor of residents should be picking up the cost of training doctors. Either way, without additional resources to fund residency programs, the nation may end up with a shortage of physicians and limit the availability of retirees to see and choose a doctor.
A properly functioning health-care system requires a sufficient number of doctors to meet demand. Unless we adequately train and compensate physicians, we’ll eventually end up with limited choices and worse health care overall. The sustainable growth rate and financing of graduate medical education serve as a reminder that Medicare has enormous influence on health care delivery in the U.S. The Institute of Medicine report on GME provides options for reform that continues government funding of GME and expands the number of residency programs. Providing market-based ideas for reform, a Heritage Foundation report suggests an increase role for private funding of GME, as well as allocating federal funding directly to the states instead of to teaching hospitals so states can tailor GME to their own regional needs.
Finally, fixing the SGR, and the way we as a nation finance GME, must not distract us from reforming the overall health-care system and curtailing the public cost of providing health care. According to the Congressional Budget Office, federal spending on government health care programs will total $1.87 trillion by 2025, or 31 % of all federal spending and almost 7 % of U.S. gross domestic product (GDP).
Congress will never find the willpower necessary to tackle the larger problems associated with the U.S. health-care system if it first can’t address the urgent need to permanently fix SGR or reform GME.
[by Jason J. Fichtner, writing for MARKETWATCH]
As always, posted for your edification and enlightenment by
NORM ‘n’ AL, Minneapolis