Primary-Care Physicians and the Reform of Health Care—Posner

It’s become a cliché that the United States has long had a shortgage of primary-care physicians (general internists, pediatricians, family physicians, general practitioners) and that this is a factor in the disarray and expense of our health care system. Yet the very idea of a protracted shortage is an anomaly in a capitalist society. A temporary imbalance of demand and supply can produce a shortage, but the shortage should not persist: price will rise to ration the existing supply, and this will both dampen demand and stimulate supply, and the combination will erase the shortage. 

And this would be true of primary-care physicians in an unregulated market for health care. If there were a shortage of such physicians, their fees would rise, and this would reduce the demand for their services; at the same time, their incomes would be higher because of the higher fees, and this would induce more medical students to become primary-care physicians. So the shortage would end. 

There was bound to be a relative decline in primary-care physicians because advances in medical technology increased the value of specialized medicine and so the demand for specialists (surgeons, radiologists, oncologists, cardiologists, urologists, gastroenterologists, neurologists, etc.) relative to primary-care physicians, who are generalists. But those very advances, by increasing the number of possible treatments and and also increasing, in part through better treatments, longevity, increased the demand for primary-care physicians, who “specialize” in diagnosing and treating common ailments, which are the most frequent and become more common as people age. (So primary-care physicians are both substitutes for, and complements to, specialized physicians.) 

Yet instead there seems to be (though reliable statistics are hard to come by) a persisting shortage, now of long standing, of such physicians. A symptom of a shortage is queuing—it indicates that the market price is not clearing the market. There is a great deal of “involuntary” queuing in primary-care medicine, in the form of long unwanted delays in getting an appointment with a primary-care physician and refusals of these physicians to take on new patients. Of course if there is no felt urgency about seeing a doctor, there is no reason not to make appointments well in advance. But apparently difficulty in being able to be seen promptly by a primary-care physician drives many patients to hospital emergency rooms, which are very expensive. 

While the fees charged by primary-care physicians have increased, their income, as well as prestige, relative to specialists has declined (even after adjustment for the fact that the specialists have to undergo longer residencies before they begiin earning real money). As a result, medical students are increasingly attracted to specialties, especially ones such as dermatology, ophthalmology, and urology, which allow for a more comfortable life style because they do not involve frequent medical emergencies. The attraction of specialization is particularly great for male medical students, who tend to have higher earnings goals and a greater desire for prestige than women, so women are becoming an increasing percentage of family-care physicians—and many of them work part time because they want to have children, and time to spend with their children. This reduces the supply of primary medical care. 

The concern with the decline of primary-care medicine has become acute because of the recently enacted health care reform law. By a combination of requiring persons who do not have health insurance to buy it if they can afford to, subsidizing health insurance for people who can’t afford it, and expanding Medicaid eligibility (public health insurance for the poor), the reform is expected within a few years to increase the number of people who have public or private health insurance by more than 30 million, roughly a 20 percent increase in the number of insured. At the same time, a higher proportion of the population will be elderly. So the demand for health care will increase very substantially. Most of that increase could in principle be accommodated by expanding the number of primary-care physicians, especially because a large fraction (no one knows how large) of the currently uninsured population are young and healthy. Young and healthy people get sick, but mostly with ailments that do not require the care of specialists. What young and healthy people mainly need is diagnosis of conditions such as high blood pressure and obesity that are health time bombs, and preventive care and counseling, and both the diagnosis and the care and counseling are services that primary-care physicians provide. The need of children of poor families, and their parents, for pediatric counseling, and of the children themselves for pediatric care, is acute; and most pediatricians are primary-care physicians. Moreover, the extensive follow-up care that people with serious diseases often require can usually be provided by primary-care physicians. 

The health care reform legislation recognizes that the shortage of primary-care physicians will get worse, and that this will reduce the quality and increase the cost of medical care generally, but it doesn’t do much about it. The main thing it does is increase Medicare reimbursement for primary-physician care by 10 percent. The rest (so far as I can judge from the immensely complex legislation and its as yet incomplete regulatory implementation) is subsidizing gimmicks, such as the “medical home,” which is a euphemism for delegating some of the primary care now provided by doctors to nurses. 

The underlying causes of the shortage of primary-care physicians are licensure and third-party payment. I do not think it is a mistake to require that physicians be licensed, rather than allowing anyone to provide medical care, as we allow anyone to dig ditches, wait on tables, or for that matter start a new online business. Patients are in a poor position to evaluate the quality of medical care, and without licensure of physicians would doubtless be highly vulnerable to quacks. But licensure inevitably reduces supply. Primary-care physicians have to spend four years in medical school and then three years as a resident paid little more than a subsistence wage. The number of medical schools is limited, as is the number of residency programs; it has been argued (whether rightly or wrongly I don’t know) that specialists control the approval process for residency programs and use that control to throttle the expansion of primary-care medicine by limiting the number of new residency programs in primary-care medicine. Many U.S. physicians are foreigners trained abroad, which is fine, but we make them jump through loops to be licensed to practice medicine in the United States; the hoops may be justified to ensure that foreign-trained physicians are competent, but make it difficult to make up a physician shortage by recruiting foreign-trainmed physicians. 

Third-party payment is a pervasive feature of American medicine. Why anyone should want health insurance other than “major medical”—that is, insurance against catastrophic medical bills—is a great mystery, as is the fact that Medicare subsidizes routiine health care of upper-middle-class people. Since disease and injury tend to be unpredictable, health insurance smooths costs over time, which is efficient, but a person could achieve that smoothing simply by saving the money that he now pays in health-insurance premiums and investing it to create a fund out of which to pay future health expenses as they occur. 

But we are stuck with third-party payment, and it systematically favors specialists over primary-care physicians, because specialists tend to provide discrete procedures, which are easier for the insurers, whether they are private insurance companies or government, to cost. The care provided by primary-care physicians has, to an extent, an elastic and discretionary quality. If a hypochondriac constantly pesters his primary-care physician with imaginary symptoms, how much of the physician’s time dealing with the pest should be compensated by insurance and at what rate? How long should an annual physical exam take? How much time should the physician spend urging his patients to give up smoking? Wear car seatbelts? Avoid fast foods? 

I wish I had some answers, but I don’t, given the fundamental structure of the American health care system, which is unlikely to change in the foreseeable future. If the shortage of primary-care physicians persists, queues will lengthen, and perhaps care will be rationed in other ways as well.

Comments

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[Jack]

"Bringing it all back home........"

If........ H/C reform brings with it higher demand for GP's and other docs, assuming, still relatively high pay, and that we trust "the market" surely the problem is self-correcting. Especially so with what seems a long term surplus of labor in many other fields.

My guess? More women going into the GP arena and sensibly dealing with the "long hours and emergency" issues by job sharing and putting to work the same skills used to juggle raising several kids, maintaining a home and perhaps having a job as well.

Immigration is likely to continue to play a strong role as well..... it seems easier to legally get a green card when it's a case of "needed skills" and not displacing existing US employees.

Further? there may NOT be such a crush of new patients. The "right" is often fond of saying "Well, "they" get treatment anyway". True, although in the most costly and inefficient manner possible (so far!) by showing up half dead, or not, at an ER designed for crisis intervention 24/7. Just perhaps more rational care is aided by a much lesser load on the ER's and a much better utilization of the docs and skills we already have.

In any case....... we've LONG ago crossed the bridge of providing (some sort of) H/C to ALL who are sick or injured within our borders, now, it's well past time to do so efficiently and at lower costs; it's hard to chest thump "exceptional US!!" while spending 17% of our large GDP while other nations do cover all of their citizens in the 9-10% range.

And lastly; MUCH is being made of "Medicare being broke". But IF it's "broke" it....... being a more efficient system than the costly overhead of the "insurance" paper mill and its 30% or more overhead, it's "broke" due to the soaring costs of "fee for service" and what THAT means is that our ENTIRE medical system is just as broke. With 17% of GDP growing at rates double that of our base inflation it will get to be 20% or some other intolerable number FAST unless we find a means of curbing its nation tanking growth.

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A symptom of a shortage is queuing—it indicates that the market price is not clearing the market. There is a great deal of “involuntary” queuing in primary-care medicine, in the form of long unwanted delays in getting an appointment with a primary-care physician and refusals of these physicians to take on new patients.

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Dick,

Excellent as always.

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I really enjoyed reading your post. "Remove politics from the issue and view healthcare as a basic human right - then we can make some progress." agreed.

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Some GPs are rebelling by refusing insurance and lowering prices to get cash payments. Others are setting up "concierge" practices in which patients pay a flat fee for their routine medical care for a year. These practices reportedly fill up quickly. In addition, many physicians will give discounts for direct pay because it costs them less than the insurance paperwork and the administrative staff it requires. Clearly there is a desire on the part of doctors and patients to return to the practice of paying for our own routine medical care and carrying insurance for catastrophic events. Why isn't this on the table in the discussion of "reform."

[Alan Robinson]

As a person who has bought insurance on their own, with both $500 and $2,600 deductible policies, I can explain "Why anyone should want health insurance other than “major medical”—that is, insurance against catastrophic medical bills."
When I one buys health insuranc, three different products rolled into one are purchased. 1) The first product is the services of a third party to negotiate rates for services with doctors, hospitals, pharmacies, and medical equipment suppliers. 2) The second product is an income appropriate catastrophic medical insurance. 3) The third product is a savings product or pre-payment product.
The size of the deductible determines how much of the the third product one is buying. In my case, the difference in premium between the $500 and $2,600 deductible policy was more than the difference in the deductible.

Now there are two additional wrinkles in this process. First, the ability of an insurer to negotiate rates with medical professionals is somewhat tied to the size of the deductible of its policies. This is because individuals with high deductible policies only pay about 50% of their outstanding bills. (It is worse for the uninsured.) As hospitals have to cover their costs while either waiting for payments or writing off bils, then these costs go into higher prices for the ensured.

Second, individuals that are healthy who have high deductible policies tend to not save the difference in premiums as their perception of the risk of illness is much lower than it actually is. It is the same reason that disability insurance is so hard to sell and retirement savings levels are no where near the levels neccessary to cover retirement living. This then forces us back into the standard endemnity policies as those are the policies that are most likely to ensure that the medical service provider, and in particular the highly paid specialists get paid what they want.

[Jack]

LMF -- my guess is that of it being too silly.

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Inflation also reduces the real, as opposed to nominal, value of the US debt in the hands of the public.

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I had this entire post I wanted to write months ago about telling ourselves no, just like we tell our kids no. If I wouldn't let Kyle have three helpings of dessert, why let myself? I know what's best for him but I apparently don't know what's best for me? Crazy talk! I do know! Sometimes he does get chocolate milk for breakfast and sometimes so should I, but not for every breakfast, no sir, because that's kind of crazy irresponsible. (And expensive, I'd think.)

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Do you think that paying primary care physicians more will get better ones or do you agree with your recent WSJ article that paying judges more will not get better judges? After all, human nature is human nature.

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The problem with licensing is that it inhibits nurses, paramedics, etc., from performing tasks they are competent to perform.

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The problem with licensing is that it inhitbits nurses, paramedics, etc., from performing tatsks they are competent to perform. It's the medieval guilde in the modern era.

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Well the insurance agency has an interest in making sure you don't get really sick,so they essentially subsidize non-catastrophic insurance to keep you healthy...

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