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Jul. 20 2009 - 5:31 pm | 609 views | 2 recommendations | 15 comments

Wondering why the AMA supports Obamacare? Here’s the answer.

President Barack Obama roundtable with health care providers at Children's Hospital, July 20, 2009 (White House/Pete Souza)

President Barack Obama roundtable with health care providers at Children's Hospital, July 20, 2009 (White House/Pete Souza)

After nearly a century of opposing health care reform of  any kind, the American Medical Association has shocked the nation by coming out in support of the House health care reform package introduced last week.

Wondering why?

You already know it must have something to do with money, but you may not know exactly how America’s docs will benefit under the proposed legislation.

The big win that brought the AMA to this historic moment is the proposed scrapping of an arcane piece of law entitled the Sustainable Growth Rate (SGR) Formula – the calculation that determines the rate of reimbursement physicians receive each year from Medicare.

The SGR was first put in place in 1997 as a means of lowering Medicare reimbursement rates to physicians until a sustainable level of payment could be reached. The thing is, the law has never really had much of an impact as physicians’ lobby groups have, year in and year out, managed to convince Congress to override the reductions.

However, with a reduction of 21% set to go into effect for calendar year 2010, to be followed by additional annual decreases of 6% for the two years following, the ability to avoid these earth shattering reductions was not something that could any longer be taken for granted by the AMA. After all, a 33% reduction in Medicare payments over three years is nothing to sneeze at.

The new House Bill solves that problem for the doctors by simply wiping the SGR off the books.

Not surprisingly, it is this very provision that has led some to question Obama’s commitment to reducing health costs while, for others, it is proving to be one of the few areas of bi-partisan agreement as Republicans have long stood up for the pain and suffering of AMA members.

We have yet to hear from the Senate Finance Committee, although they have previously indicated that while they may be prepared to bail out the doctors for the next few years, they are not necessarily ready to do away with the formula just yet. Speaking last month on the topic, Finance Committee Chairman Max Baucus said,

We’ll patch it up these first three years, but after that we’ll modify it and let some of the reduction in SGR match the curve, but then physicians will be compensated by the cost-sharing gains we’ll receive from some of these other reforms.

Of course, that was before the AMA decided to come on-board.

There are some additional benefits contained in the House bill that sweeten the pot for the AMA while addressing a serious national issue – the growing shortage of primary care physicians. As some of you who read this post may know, I have long advocated for such an improvement. Primary care physicians, while the backbone of the medical system, have been on the decrease in every region of this country for many years. Because they don’t make anywhere near the money the medical specialists earn, medical students have been staying away from this area of the medical profession in droves. The result is a dangerous shortage that only inflicts more difficulty on those in the greatest need of assistance.

The House bill provides incentives that could truly help turn the situation around. Here are the key elements;

- Increased Medicare payments to primary care physicians by 5%
- An additional 5% pay boost for primary care doctors in designated “health shortage” areas
- A restructured formula for calculating Medicare reimbursements each year
- Enlargement of the National Health Service Corps by “an amount sufficient to eliminate 40% of the estimated shortfall in primary care providers”
- New scholarships for medical students who choose primary care as a specialty

While the physicians stand to benefit greatly from the rescission of the SGR formula, the public stands to benefit from these incentives designed to increase the ranks of primary care doctors.

We should not minimize this contribution and must hope that the incentives for the development of primary care physicians survive whatever final legislation may emerge. Further, we need to push state governments to do more to bring incentives to primary care physicians willing to make a commitment to practice in those states willing to offer them a hand.

Here in California, I have been advocating for a state tax benefit for primary care physicians willing to provide services to those who are going to be losing their safety net coverage in the current California financial crisis. But even that is not enough. The states must follow the lead and the example set by the House legislation and do their part to solve this very serious problem.

There will be debate over whether or not the ending of the SGR formula is too much of a price to pay to gain AMA support for health care reform. Personally, I don’t think so. Yet, however it comes out, we cannot allow the incentives proposed to grow the ranks of primary care physicians to be lost in the final legislation.  It is far too important to our long-term health care needs.


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  1. collapse expand

    In my humble opinion if the health care bill passes we are going to have an immediate and difficult reality to deal with, namely a shortage of not only primary care doctors but doctors period.

    This city boy found out quickly the reality of rural medicine. In five years I saw four separate primary care doctors, maybe more, it was easy to lose count. In the last year was met with a surprise; my doctor wasn’t a doctor. Nurse Practitioner was the term, here they also have Urgent Care to take the load off of ER. Great idea no use wasting time at the ER with an extreme case of the flying mung or as the NP said was poison oak.

    Now if surgery was required it took about two to three months or more to schedule and some travel. Surgeons were in demand and were already getting some rural incentive tax break or subsidy. Abused by doctors in cities that didn’t quite qualify as rural.

    The heart of this current shortage of doctors can be laid at the feet of the AMA. In the 1980’s the AMA feared a surplus of doctors in the country and didn’t want the medical field to look like the legal profession with a lawyer under ever rock and ambulance.

    Now it would seem that in our market economy that the number of doctors graduating from medical schools would equal demand for their services. Well, not so, because of the AMA and their powerful lobbying efforts.

    To become a doctor in the United States one must spend time as a resident at a hospital. You know the scene, there is a comedy on TV about it, you spend time with low pay being yelled at by senior doctors who are teaching you to be…tah dah…a real doctor. Well Congress funds those lovely and funny stories. Limit the residences and limit the number of doctors in the country. AMA didn’t want too many doctors and got its wish.

    So lets figure this out…since 1980’s the AMA has lobbied for less doctors and now the value of doctors, given the proposed increase in demand, has, well, made them gold.

    The obvious solution is to immediately increase funding for residencies and for more teaching institutions so students don’t have to go to places like Granada or Mexico or the Caribbean to learn their profession then fight over spots in hospitals.

    It takes ten years to become a doctor. Hippies are retiring now. Will Congress change it’s attitude?

    Only the AMA knows for sure.

    • collapse expand

      The AMA does have something to do with this, but I don’t see a shortage of specialists in the country – except in rural areas. I’m more inclined to lay the problem at the pricing structure that allows dermatologists to pack in huge numbers of patients- given the nature of their services – while primary care doctors, who want to be conscientious, just can’t see so many during the course of a day.
      As for nurse practitioners, my experience with them has been terrific and I’m a big fan of using them more for non-remarkable, chronic illness treatment.

      In response to another comment. See in context »
      • collapse expand

        I hate to disagree with you because you are so knowledgeable in this area but I think there is shortage in primary care because there are too few doctors in the overall pool.

        Don’t get me wrong…I too think nurse practistioners are a valuable resource we need more of them. I support any creative initiative that would provide enough support for these types of initiatives to make this country more in line with the rest of the industrial world.

        However the idea that a lobbyist group, the American Medical Association could
        artificiality restrict the number the health professionals in this country, whether specialists or primary care is…at the heart of it…I’m trying at this point to be rational…is mad, crazy, unethical, and religiously a sin…consider it…what rational nation would to use the word of the moment…use rationing to determine number of doctors…and create a scarcity or at least the opportunity to chose a specialty instead of the generality of primary medicine?

        If Obamacare passes we can expect what is now the norm in American Health, more doctors from foreign lands just as we now import nurses. All because we consider medicine the occupation of the elite.

        In response to another comment. See in context »
        • collapse expand

          You are right about a lot more doctors from foreign lands.

          Let me do a little homework on this. I had not been under the impression that the med schools were turning out lower numbers of docs in total to keep up with the population, but you could well be right. I have been known to be wrong every now and then…but don’t tell anyone! :-)
          I’ll let you know what I find out.

          In response to another comment. See in context »
  2. collapse expand

    Looks like you are on the right track. I came across a good article on this (it’s old -2005- but still relevant.)
    The piece covers your point on physician shortages. It leaves room to believe that the AMA did not suggest reducing the number of physicians for purely selfish reasons as there was a fair amount of data around that indicated that we were going to have a glut of physicians ahead of us. However, there are also those who appear to believe as you do suggesting that the numbers were “cooked” to artificially hold down the number of medical school graduations. Either way, you’re point is correct and I have learned something tonight. Thanks.

  3. collapse expand

    Props on this post. Definitely answers some questions I’ve been wondering about. Cheers, sir!

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    I am an attorney in Southern California, and a frequent writer, speaker and consultant on health care policy and politics. To that end, I am active member of the Association of Health Care Journalists. Based in beautiful Santa Monica, California, I'm very pleased to have the opportunity to be a contributing editor to True/Slant. I've recently finished a book designed to make the health care debate understandable to the average reader, and expect it to be out in the next five months or earlier. In my 'spare time', I continue to write for television and, occasionally, for comic books.

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