How Will Physicians Be Affected by Health Care Reform?

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Document date: July 15, 2010
Released online: July 19, 2010


Although physicians understandably have focused on the sustainable growth rate policy and its potential for large Medicare fee cuts, many may benefit from the key provisions of health care reform. Expansions in insurance coverage and increases in fees for primary care services will have direct benefits on practice revenues for large numbers of physicians. The likely effects of efforts to bend the cost curve are less clear. But, if they succeed in producing a more efficient health care system, physicians could gain relative to other providers and, among physicians, primary care physicians could gain relative to specialists.

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The coverage expansions that are at the center of health care reform will likely boost practice revenues for many physicians. In addition, provisions that require an increase in fees paid for primary care in Medicaid and Medicare will also benefit some physicians. However, those aspects of health reform that are included as part of the effort to make the system more efficient and less costly could have financial consequences that would not be welcomed by many physicians. These include accountable care organizations (ACOs), bundling Medicare payments, creating an Independent Payment Advisory Board (IPAB), and sponsoring comparative effectiveness research.

Coverage Expansions

Although there are a number of specific provisions related to physician payment and practice organization in the health reform law (discussed below), the biggest impact of the reforms will likely come from the substantial reduction in the number of people without health insurance. As a result of adding more than 30 million insured people to the population, it is likely that the demand for free or reduced-cost care will go down and this should have a positive impact on physician practice revenues and incomes. Survey data show that the share of physicians providing free or reduced-cost care has been declining since the 1990s, but from 2004 to 2005, almost 70 percent of physicians provided some of this care. These physicians will clearly benefit from a reduction in the numbers of uninsured.

However, even physicians who never provided free or reduced-fee care could benefit from the coverage expansion. There will be more people who will be able to make an appointment with a physician and present an insurance card as evidence that care will be compensated. Some physicians may be happy with their current caseloads and will not accept additional patients. However, many other physicians—primary care physicians as well as specialists—will see their practices grow and their incomes rise. As the coverage expansion affects patient demand, it is likely that some physicians will benefit financially and some will be unaffected, but virtually none will be disadvantaged.
One way that the number of uninsured Americans will be reduced will be by a major expansion in Medicaid coverage. The bulk of the people who will be covered by Medicaid are those who would otherwise have been uninsured. Therefore, even though Medicaid has the lowest fees in most areas, physicians choosing to treat these patients do so knowing that they will be paid something as opposed to running the risk of not getting paid anything from a low-income uninsured patient. The only real way that a physician would be adversely affected by reform would be if a substantial share of a physician’s patients shifted from private coverage to Medicaid, resulting in a major reduction in the average fees the physician receives.

(End of excerpt. The full brief is available in PDF format.)

Topics/Tags: | Health/Healthcare

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