How exactly would doctors fund their own residency programs? They already graduate from medical school $500k in debt. There's no more room to squeeze them further. And teaching hospitals have no real incentive to fund more residency program slots. Their customers aren't willing to pay more for it. In game theory terms this is essentially a free rider problem: many entities in the healthcare system would benefit from a larger supply of physicians but they all want someone else to pay for education.
There have been some attempts to introduce market dynamics such as high-deductible health plans (HDHP) with HSAs. Those can work fairly well for a minority of engaged and intelligent consumers but overall aren't an effective solution to systemic problems.
Classical supply and demand economics don't function very well in healthcare. Demand is effectively infinite: sick people want all the healthcare they can get (even if it doesn't really help them much or causes iatrogenic harm) and they think someone else should pay for it. Thus the only way to constrain total system costs is by artificially limiting supply and imposing some sort of rationing. So the real argument ends up being about how we do the rationing.
It is a billing problem. Simple as that. Residents provide a vast amount of care, both under the supervision of an attending physician, that currently goes uncharged.
Federal residency payments to hospitals forbids charging for it, and insurance refuses to pay for it. It is enough to cover the salary and cost of the residents.
You are right that the current state is a free-rider problem. Free rider problems have tons of solutions, in both through markets and public policy. A free rider problem doesn't mean we must throw up our hands and give up. Instead, it suggests the type of solutions which are applicable.
I wasn't suggesting a solution. I was highlighting one of the current problems with residency funding. Hospitals need to be able to make money of residents, not lose money on residents.
If I were to suggest a solution, the first step would be allow all hospitals to bill for work done by residents. IF they can make money on residents the entire problem goes away.
If a resident fixes your broken arm with the same quality as regular doctor, I think the hospital should be charging the payer the same.
From the papers I have seen, unbilled procedures by residents is more than enough to cover their salary.
IF it doesnt get there, we could talk about contractual solutions, but the first step should always be figuring out the true value of their work.
PS, I don't pretend to understand the intricacies of the law you linked, but it does not seem to address the issue on first read. It seems that Medicare will pay an arbitrary premium set by Congress on healthcare services not performed by residents to compensate for the fact that neither Medicare nor private insurance pays for the healthcare services that are provided by residents.
You have misunderstood the problem and misinterpreted the papers you read. Hospitals bill for everything they do (although some bills are written off as bad debt or charity care). They don't fix broken arms for free. The bill might have an attending physician's name on it rather than the resident who actually performed the procedure but it still gets billed.
The problem is that employing a resident incurs a lot of overhead. Some of this is paying attendings for training and supervision. There's also a lot of other general overhead expense associated with having another clinician on staff. None of that overhead is directly billable to customers as a separate line item. So, who should pay?
What I said especially holds true if you are billing in the name of the attending. If you have residents doing real work and the attending checks it out, that shows up as $0 on the books for the resident, and potentially millions of billable services for the attending. When the hospital says, "we lose money on residents", of course they do! They way they bill ensures exactly that.
That's why I say that step 1 is determine and bill the actual value of resident work. Lots of papers claim teaching hospitals actually make money on residents before medical education payments (and that doesnt even include the unbilled work I mentioned earlier [1])
If after a true accounting of the value, it still comes up negative due to overhead, then bill the customer! they are the ones that should be paying overhead anyways. There are 101 ways to recoup overhead, especially capital investment.
You're just hand waving and haven't proposed any sort of viable specific solution. Customers aren't willing to pay higher bills for the sake of training residents. Those who have a choice will go to a cheaper, non-teaching hospital. Hence the free rider problem.
When the holiday rush comes around, does UPS pay to train new employees or do they just throw up their hands and say that it will now take a month to deliver a package? And how does UPS avoid its customers being not "willing to pay higher bills" for the sake of training new employees? And what stops Fedex from being a free rider that poaches the new UPS employees right after they're trained?
Your whole argument is just beating down criticism by taking the current broken incentives as if they're set in stone. Yes, we know the incentives of the current system are terrible. In fact that's exactly why the whole system needs to be overhauled with sweeping reforms, rather than waiting for it to get better on its own.
Why do you keep asking me for a solution, without agreeing with me on the problem at hand?
We dont even agree that residents drive up costs. I dont agree that is a given.
If we assume residents are a cost, the solution is still simple. you just attach the cost of training to the physicians salary. Then, whatever hospital they work at will have pay for the training.
Last, the residency program costs are tinny in comparison to overall physician costs. Back of the envelope math shows the 20 billion program is a few percent physician costs, which are themselves only a part of healthcare costs.
> How exactly would doctors fund their own residency programs?
I said hospitals. You'd do your residency and then have a commitment to keep working at the hospital for say 3 years (or otherwise repaying the training).
> In game theory terms this is essentially a free rider problem
Yes, this is exactly what I mean by founded on negative sum interactions. Every player is focused on avoiding costs rather than providing value. In a sane market, when a business can't find employees they offer higher wages, overtime, train new employees, etc. That's positive sum that grows the industry, rather than just throwing their hands up and letting the shortages build.
> There have been some attempts to introduce market dynamics such as high-deductible health plans (HDHP) with HSAs
I guess if you squint really hard, just subjecting patients to even more unknown charges is some kind of attempt? I'm talking about things like making providers beholden to the basic legal norms of commerce that apply everywhere else. End this nonsense where providers won't answer questions about how much anything costs, but then shake you down after the fact with a volley of fraudulent bills - that foundation is already askew from how every other industry works.
Imagine going to the grocery store, and then receiving bills over the next year from the cashier, shelf stocker, distributor, etc, all claiming that you're also responsible for paying them. Healthy industries work by consolidating costs and making prices legible. The healthcare industry is stuck in a state of doing the exact opposite, but yet has managed to entrench itself with the entitlement of still getting paid.
If providers want to be able to bill patients directly then they need to do the work of forming actual contracts based on fixed price services, estimated work, hourly rates, etc (once again like every other industry). Or if you've got a healthcare plan and go to providers they point you to, the only entity you should ever be receiving bills from is the plan itself.
> Thus the only way to constrain total system costs is by artificially limiting supply and imposing some sort of rationing. So the real argument ends up being about how we do the rationing.
So just scrap the entire concept of individual agency? Are you a doctor or something?
And lest people jump on me for not just toeing the party line of "single payer" - as I said this is orthogonal to who may be ultimately paying. Furthermore, if we're going to be paying for a base level of care with public funds (which we're already doing for a large part), then we want to be spending that money wisely and not squandering it on a system sick with organizational cancer.
There have been some attempts to introduce market dynamics such as high-deductible health plans (HDHP) with HSAs. Those can work fairly well for a minority of engaged and intelligent consumers but overall aren't an effective solution to systemic problems.
Classical supply and demand economics don't function very well in healthcare. Demand is effectively infinite: sick people want all the healthcare they can get (even if it doesn't really help them much or causes iatrogenic harm) and they think someone else should pay for it. Thus the only way to constrain total system costs is by artificially limiting supply and imposing some sort of rationing. So the real argument ends up being about how we do the rationing.