In my new column for Bloomberg View, I argue that the pause in health care costs was not a result of “bending the curve,” but was a byproduct of the weak economy.
[Input costs for healthcare] are dominated by salaries, in particular physician salaries. To estimate how fast physician salaries are growing, the study looks at the growth in salaries for professionals in general.
It turns out that the wages for professionals have grown exceptionally slowly over the past few years. Before the 2009 recession, wage growth for professionals grew at nearly 4 percent a year. That growth collapsed to nearly zero and has not yet recovered to its pre-recession norms.
This is almost certainly a result of the slow U.S. economic recovery.
When I started working on the piece, I intended to talk about how bending the cost curve meant the CBO’s projections for rising costs were all wrong. The more I looked into, however, the more I came to agree with the CBO. Its methodology looked solid and the arguments were tight. So I had to changed the piece. That in part accounts for its slightly boring — the baseline projection is right — point-of-view.
What can be done then, you might ask?
So far the best set of answers I have come from Dean Baker:
One [idea] would be simply to fund more residency slots. Medicare could also limit the slots for many areas of specialization and instead insist that more of its funding go to train people as family practitioners.
A second route would be to end the requirement that foreign doctors complete a U.S. residency program in order to practice medicine in the United States….
Another approach is to not only change the rules around who can practice, but to change the rules around what doctors do. There are many procedures now performed by doctors that can be performed by nurse practitioners and other lower-paid health professionals….
Yet one more approach is being tested in Missouri, Kansas and Arkansas: While a doctor can’t practice independently without completing a U.S. residency program, those states recently passed laws allowing foreign-trained doctors to practice under the supervision of a U.S.-trained doctor….
The other major policy tool in reducing the amount we spend on doctors would be to reduce the use of medical specialists by changing the standards of care, the legal baseline that doctors and hospitals are expected to meet to avoid malpractice liability….
To get around this, it should be possible for doctors, hospitals insurers, and other providers to refer to the standards of care in other countries as a legal defense in malpractice cases. This would not be a protection against genuine malpractice; it would just mean that the use of generalists would not be evidence, by itself, of improper care.