Posted by John Ager on 29 September 2011.

A huge portion of our population relies on Medicare to pay for their basic health care needs.  I read a recent editorial in the Arizona Republic by a physician who claims that a doctor loses about $13 for an office visit by a Medicare patient.  The Mayo Clinic no longer accepts Medicare patients for primary care visits because it says it can’t make money on what Medicare pays.

Other commentators have suggested that physicians can make a comfortable living on Medicare patients alone.  By some calculations, physicians seeing only Medicare patients for routine office visits  can earn $150,000 a year after paying 50% of their gross revenues for overhead.  Whether that amount can provide for a comfortable living, or justifies the considerable expense of the many years of education required to become a physician, may be up for debate.

Whatever the injustice to physicians may be, there is no doubt that Medicare pays considerably less than private insurance.  Medicaid, public health insurance for indigents, also known as AHCCCS in Arizona, pays even less – only about 60% of what Medicare pays on average.  

We have all heard about physicians who claim that they have been forced to move or close their practices because medical malpractice lawsuits have driven up the cost  insurance coverage for doctors.  As I discussed in a previous post, however, the physicians own literature has proven increasing insurance rates are not the result of litigation, and there is no evidence that physicians are fleeing any state. 

Will we now hear physicians claim they are closing shop or not seeing Medicare patients because Medicare pays too little?  Probably not very much.  Most physicians will have to grin and bear it because Mayo’s business model is not like theirs.  But, will continued reductions in Medicare coverage proposed by the government require physicians to increase their patient volume at the expense of good patient care in order to maintain their incomes?  No doubt, some will.  Inevitably, this will lead to more medical malpractice claims. 

Our system for delivering health care to our aging and at risk populations is broken for a variety of reasons, including the economics of practicing medicine.  Physician malpractice will continue to be one of the unfortunate consequences of that breakdown.