The Razor

According to my wife, who is a 3rd year resident physician in family practice, there are three shocks a new doctor experiences at the beginning of her career. The first is when he finishes medical school and is presented with the debt that he is expected to pay off timely and in full after internship and residency. The second is when she receives her first paycheck as an intern and realizes that she is getting paid to do what she loves. The third is when he lands his first job after residency and sees the amount of taxes he has to pay – including the taxes on his debt.

My wife just experienced the last shock. “What will I pay in taxes?” she asked. I said it was impossible to tell at this point. Much would depend on the timing of her salary, her deductions, etc. “How much do you pay?” she demanded. I told her I didn’t know exactly.

This made her suspicious. “What do you mean you don’t know?” As the guy who did our taxes every year, I should be the one to know. But the truth is that our finances have been in flux recently, and would be for the near future. I run my own business, and I really don’t know what my profits are until after taxes are done; I still haven’t closed the books on 2008 yet. We have been paying down debt and attempting to live more reasonably in preparations for our move. Things will change afterward with a reversal of roles being one of them; she will become the primary breadwinner in our family. Therefore I didn’t really know what she would be paying in taxes.

She pushed me further and I finally snapped, “Well your tax rate at that salary is 27%.” She didn’t believe me. ”You have a tendency to assume the worst when it comes to money,” she said with a knowing smirk on her face - which is true; I do tend to round down when it comes to windfalls and round up when it comes to money I have to pay. She looked up the rate on the Internet.

It was 28%.

She was furious. “Where’s the incentive to work hard?” she shouted. She had found her inner-Reagan hidden beneath that New Age exterior. She stomped around the rest of the afternoon fuming, and it wasn’t until the Eagles pulled ahead of the Giants that she cooled down.

Where is the incentive to work hard when the government pinches a quarter or a third of your salary? Good question, and one I’ve been considering since writing my post about primary care physicians last week. In that post I argued that in essence the market was failing to provide better working conditions and pay for primary care physicians. As a result doctors have voted with their feet, moving to better paying specialties or cash businesses like cosmetic procedures or worse, “alternative therapies” like aromatherapy, homeopathy and supplements. This completely ignores those who may have the work ethic and ethics it takes to be a physician, but avoid the profession for more lucrative and less stressful careers in business or academia.

Much of the discussion so far about America’s health care system has revolved around paring costs while increasing coverage to the 45 million uninsured. Little has been said about declining reimbursements which make taking on new patients uneconomic.  Some health care advocates support expanding medicare to cover the uninsured and thereby decrease the number of uninsured. However just because you insure someone doesn’t mean that a physician in private practice have to see them. Physicians have been cutting back on accepting new medicare patients since 1999.

Why? Because medicare reimbursements have been declining since that time. The rates – set by Congress – have not kept place with inflation (CPI) since 1995 ahd have been flat since 2001 .
Source: Vital Signs

Meanwhile malpractice insurance premiums have skyrocketed. Congress is full of lawyers, yet it sets how much doctors can be paid for treating of the poor and elderly. Perhaps for fairness’ sake the AMA should set malpractice award caps.

Some challenge the connection between rising malpractice premiums and medical care costs and justify the rise of litigation by citing the continued occurrence of medical errors. This assumes that until no errors are made the only solution is litigation.

Doctors are human and while based in science, medicine is still an art. Until we develop non-human doctors capable of performing perfectly, human doctors will make mistakes. That does not mean that every mistake made by a doctor requires litigation, does it? Do we sue lawyers when they lose our cases? Perhaps we should.

But to blame lawyers for the trouble with the American medical system isn’t fair. The problems are so deeply rooted that there is plenty of blame to go around. My wife has received a fine – but costly – American medical education. I have only begun my education on the American medical system.