Dr. Bob Wachter and Dr. Michael Chernew on Bolstering Primary Care and Making U.S. Healthcare Spending More Sustainable

This interview has been edited for length and clarity. For more information, read Dr. Chernew’s article.

Robert Wachter, MD, spoke with healthcare economist Michael Chernew, PhD, to discuss the economic and political forces impacting healthcare costs. Dr. Wachter, a renowned expert on healthcare quality and safety, is Professor and Chair of the Department of Medicine at the University of California, San Francisco, and a member of the Board of Governors of The Doctors Company, part of TDC Group. Dr. Chernew serves as Chair of the Medicare Payment Advisory Commission (MedPAC) and is the Leonard D. Schaeffer Professor of Health Care Policy and Director of the Healthcare Markets and Regulation Lab in the Department of Health Care Policy at Harvard Medical School. This discussion was part of the 2023 Executive Advisory Board Meeting, hosted by TDC Group.

Dr. Wachter: Let’s consider primary care and how to bolster that system, which I think we all feel is failing. The Washington Post just published what the average doctor makes—primary care physicians make $230,000 to $250,000 per year, while neurosurgeons make $900,000. An obvious solution would be to just level that a little bit—but that's harder to do than it sounds. 

Dr. Chernew: That's what CMS did in the new payment updates for evaluation and management services: They put more money into the E&M codes to balance things. But because of budget neutrality requirements, it lowers fees for providers whose jobs do not involve E&M, like radiologists. It wasn’t the kind of transformation that was hoped for. Because non-PCP specialists provide E&M services, it’s not fully targeted to primary care, but it does help primary care providers.

Still, there remains a real desire to tilt more toward primary care. You see this in the MedPAC recommendations. If we're going to put more money into the physician fee schedule, the argument is, let's target that money to primary care. Whether that makes a difference or not, I'm not sure, but we will see. There is also a lot of support for safety net healthcare.

We're losing primary care doctors; everyone wants to be a specialist. Medicine is still a very attractive profession for many reasons, but to increase our supply of primary care physicians, we’re going to need to make payment levels more even. Yet any attempts along those lines might create unintended consequences and face significant opposition.

Dr. Wachter: You’ve said that the cost of healthcare is unsustainable, but hasn’t the cost of healthcare been a large chunk of our gross domestic product for a long time? 

Dr. Chernew: In 2021, healthcare spending accounted for 18.3 percent of our GDP. Between 2022 and 2031, the anticipated average growth of national health expenditures, 5.4 percent, is expected to exceed the average GDP growth of 4.6 percent. So the fraction of GDP attributable to healthcare will continue to grow. Healthcare costs are not currently unsustainable, but they are on a path that is unsustainable. In that context, we have shifted more of the cost to people with commercial coverage. Medicare spending has slowed through price controls and other efforts. Medicaid spending has slowed by keeping prices low, limiting networks, and maintaining internal management. But prices in the commercial sector are high and rising. The system hasn’t completely collapsed, and we will muddle through. But the word “unsustainable” signals that some payers and practitioners are asking: When do we need to take somewhat drastic action?

Dr. Wachter: One wise observer once commented that saying that we may need to ration healthcare is like saying that we’ll need to respect the laws of gravity. We are always going to need to make choices. Do you agree that, in some ways, the effort here is to get somebody else to make those choices, and not yourself.

Dr. Chernew: Agreed. In alternative payment models, the choices reside with the provider systems, rather than the insurer. The trick is to convert savings in volume into savings in money. And that's what Accountable Care Organizations, ACOs, allow providers to do. Even if the ACO faces low revenue growth, if it can keep volume growth flatter, the gap between total revenue and the expense of delivering care becomes profit and effectively functions as a price increase. For example, if independent physician groups can keep patients away from expensive post-acute settings or out of the hospital (and they do that better than hospital-based ACOs), they can keep some of the savings. This will lead to a more efficient, financially sustainable healthcare system.