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Single-Payer’s Impact on Physician Income

“No boy should have to depend either for his leg or his life upon the ability of his parents to raise enough money to bring a first-class surgeon to his bedside.” 

Tommy Douglas, the father of Canadian medicare

This study follows the trends of Canadian physician incomes before, during, and after the implementation of Canadian Medicare over a 150-year period.  It also compares the income of Canadian physicians to that of American physicians since the 1930s.

Canadian medical income actually experienced a peak shortly after the implementation of the single-payer system, owing to federal coverage of expenditures and, hence, higher profit margins. A similar peak in income was also noted shortly after the United States implemented it’s own Medicare program in 1966.  When each country’s GDP was compared to their respective medical incomes, Canadian medical income equaled or surpassed that of US physicians during the early years of Canadian Medicare.

Based upon self-reported Canadian Census data and objective sources of taxation collected from 1946 to 1992, physicians (and others) often underestimated their income by 15 to 60 percent.  The ratio comparing Canadian against US physician incomes ranged from 0.4 to 1.1. Canadian physicians fared as well or better than US physicians between 1962 -1970.  However, after the establishment of Canadian Medicare, adjustments for inflation and currency conversion demonstrated that Canadian physician incomes dropped below that of US physicians.  Because much of the data after the mid-1990s was obtained from the Canadian Census, Canadian income could be falsely lowered.

The study concluded that both Canadian and US physicians have always made well above their respective GDPs by a factor of 3 to 10 times.  In 2005, US doctors working in a partially privatized system earned about five and a half times the US  per capita GDP.  Under its single-payer system, even Canadian doctors earned  four times their country’s per capita GDP.

Despite lower physician incomes and lesser overall expenditures, Canada’s health care system results in a longer lifespan and lower infant mortality rates than the United States. A similar trend of lower physician incomes coupled with better health outcomes exists in some developing nations, such as Cuba, which also has a single-payer system. The author cites a 1990 article which concludes that Canadians pay less for health care but receive more in services than Americans, suggesting that higher expenditures in the United States may be due to administrative costs of the private insurance industry rather than higher physician incomes.

Commentary by Reneé Volny Darko

Does the United States health care system reward gains for public and private health or does it reward capital gains?

Although society believes that physicians should be well compensated for their significant investments in training, knowledge, and skill, the question of whether the traditional incentive-driven, supply and demand, fee-for-service business model is optimal for the health care industry? This business model might work for elective products and services, but good health is hardly elective. A physician’s oath binds him or her to do only what is best for the patient devoid of financial consideration. This is extremely difficult in an industry increasingly subject to financial incentives.

Canada’s motive for a single-payer health care system was from a sense of obligation to provide a public service for its citizens. Compared to the US health care system, single-payer systems have proven to cost less and produce better health outcomes.

From medical education to the insurance industry, the US health care system is driven largely by capitalist instinct. The single-payer option – flung from the table during health care reform negotiations – is not an option in today’s political environment in the United States. Many physicians have already restricted the number of Medicare and Medicaid patients they accept because of those programs’ lower reimbursement rates relative to private insurance. One can anticipate that as efforts to preserve physician income continues, disadvantaged patients (especially those on Medicaid) will find it harder to find real access to care.

Duffin, J. “The Impact of Single-Payer Health Care on Physician Income in Canada, 1850–2005.” Am J Public Health. 2011; 101: 1198–1208.

Renée Volny Darko, DO, MBA
About Renée Volny Darko, DO, MBA

Dr. Darko is a board-certified OB/GYN who currently practices in Pennsylvania. She has contributed to Policy Prescriptions since 2009. Contact: Facebook | Twitter | More Posts

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