The Spend We Don’t Have

Public Policy Contributor Brad Flansbaum writes…

If there is one issue that unites physicians of virtually every stripe, it is the ongoing difficulties in resolving the SGR pay fix.  While not to appear too disingenuous, as I like my salary as much as the next physician, there is a disconnect in our midst that also speaks to the unrest on display nationwide, beyond the healthcare sphere.  As we demand our $250B, the cost of the shortfall, it is instructive to see how precarious the finances of our country are now and where that money will come from.   Below is an illustration of the projected 2011 Federal budget:

By reviewing the receipts and the outlays, you will notice a deficit spend of over a trillion dollars.  Mind you, that deficit spending will continue yearly for almost the next decade.  What is most eye popping is the ratio of entitlement spending, dark red, which BY LAW, CANT BE TOUCHED, and the interest on our debt, in gray, which goes overseas to Asia (yes, China and Japan) to the remainder of our outlays.

Ergo, to balance the ledger, defense and nondefense spending are the sole provinces available for cutting, if the nation agrees that is the optimal strategy to achieve fiscal equilibrium.  As the ax has fallen on defense expenditures for the past 30-40 years, and the need for funds to bolster the environment, education, science, infrastructure, etc., are in shorter and shorter supply, congress will focus on SSI and health payments.

To view it another way, in a more international context, view below from the CBO that compares our debt vs. GDP ratio to other OECD nations if we do not alter our course over the next decade:

They conclude:

  • The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services.
  • Therefore, putting U.S. fiscal policy on a safe path would require significant changes in spending, revenues, or both.

OK, so getting back to doctor pay and away from the Econ 101 lesson:  essentially, if we want the SGR shortfall repaired, under PAYGO rules, either Congress finds offsetting cuts worth a quarter of a trillion dollars, or WE BORROW IT.  From the vantage point of Joe Q. public—struggling, in debt–are doctors now benevolent victims or “special interest” feeders at the till “like pharma, MCOs, labor, and hospitals.”  Putting our medical school debt and hours worked aside, this is not an easy query to answer.  Congress feels the same way.

The dot-com boom in 1997 and the real estate bubble in 2006 bear similarities to 2010+ health care spending (and some doctor pay) of today.  The medical industrial complex will eventually spring a big leak and I fear our specialty societies are advocating untenable positions that in some cases are neither realistic nor sustainable.  In hindsight, that will become clearer unfortunately, and many professional groups are taking the penny wise, dollar poor approach in order to maintain their membership.

In my next post, I will address what is appropriate doctor salary, primary vs subspecialty care pay, and projected doctor workforce needs (hint : 125K additional doctors x average doctor wage + Medicare baseline spend = a lot more money we don’t have).  Trust me, employers and beneficiaries on the commercial side will not make up the difference either—their screams concerning yearly premium increases are getting louder and their pushback stronger.  IMHO, the oft-heard AMA refrain addressed to seniors in their press releases: “the SGR cuts will affect your access, call your legislator now” sound a lot more like, “physicians, you will be making less money, the good time days of the last forty years are coming to a close.”   What is waste, what we can afford, who will take the hit…they are all up for debate, and it is going to get ugly.

Brad Flansbaum

Bradley Flansbaum, DO, MPH, MHM works for Geisinger Health System in Danville, PA in both the divisions of hospital medicine and population health. He began working as a hospitalist in 1996, at the inception of the hospital medicine movement. He is a founding member of the Society of Hospital Medicine and served as a board member and officer. He speaks nationally in promoting hospital medicine and has presented at many statewide meetings and conferences. He is also actively involved in house staff education.

Currently, he serves on the SHM Public Policy Committee and has an interest in payment policy, healthcare market competition, health disparities, cost-effectiveness analysis, and pain and palliative care. He is SHM’s delegate for the AMA House of Delegates.

Dr. Flansbaum received his undergraduate degree from Union College in Schenectady, NY and attended medical school at the New York College of Osteopathic Medicine. He completed his residency and chief residency in Internal Medicine at Long Island Jewish Medical Center in New York. He received his M.P.H. in Health Policy and Management at Columbia University.

He is a political junky, and loves to cook, stay fit, read non-fiction, listen to many genres of music, and is a resident of Danville, PA.

3 Comments

  1. Jack Percelay on May 21, 2010 at 5:13 pm

    Brad,
    Your blog should be required reading. Interested to hear what you say in the next column. I’m frightened when reasonable pragmatic centrists such as Arland Spectre get drowned out by extremes on either side. See David Brooks NYT column from today, 5/21.

  2. […] it so hard to devise a fix to Medicare’s Sustainable Growth Rate formula for physician pay? The Hospitalist Leader has some bad news for us: the US doesn’t have the money to remedy the problem. But the blog […]

  3. […] discussing the budgetary unease of our country in my last post, I wish to pick up with a brief overview concerning physician salary and workforce issues.  […]

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