Obamacare Will Worsen the Physician Shortage

Much has been written about the impact of the Affordable Care Act ("Obamacare") on the American health-care system and the economy. Commentators have examined, for example, how much the law will cost, how many people will receive insurance coverage, and whether states should expand their Medicaid programs as encouraged in the law. Certainly, these all represent important considerations for anyone attempting to evaluate Obamacare, which affects the American health-care system in so many ways.

What many evaluations of the law miss, however, is the distinction between health insurance and health care. Close to 30 million people will receive the former under the law -- but the health care that these 30 million will receive can't be measured quite so easily. Health-system researchers have long noted that the nation faces a growing shortage of physicians across all specialties -- around 130,000 by 2025. Adding 30 million Americans to the insurance rolls will exacerbate access-to-care challenges; those with newly minted Obamacare insurance policies will likely struggle to find doctors willing to see them in a timely manner.

In our new report for the Manhattan Institute, The Obamacare Evaluation Project: Access to Care and the Physician Shortage, my colleague Paul Howard and I find that roughly a quarter of the doctor shortage -- about 30,000 doctors -- will be among primary-care physicians. This is particularly worrisome, given that these doctors are envisioned as the "entry point" for millions of currently uninsured people into the health-care system.

Our analysis indicates that, while the majority of this shortage will be propelled by population growth and demographic changes (an aging population, for instance), Obamacare will also have a measurable impact. The law will contribute up to 16.5 percent of the shortage by 2025, requiring about 5,000 more primary-care physicians .

Serious as this is, we consider it a "lower-bound" estimate, because we don't address physician productivity changes. As Accountable Care Organizations (integrated hospital systems envisioned by Obamacare as a means for improving coordination of care among Medicare patients) gobble up individual physician practices, the number of doctors around the country will likely decrease. Moreover, when operating as "salaried employees," as they do in large hospital systems like ACOs, physicians tend to become less "productive--" -- seeing fewer patients and providing fewer services.

Obamacare makes some attempts to remedy the problem -- increased funding for the National Health Services Corps, higher reimbursements for primary care under Medicaid, and expanded funding for nursing education, for instance -- but these are minor steps where a leap is needed. In the rush for "universal coverage," Obamacare's architects seem to have underestimated the problem of inadequate physician supply. The law, for the most part, failed to address head-on the regulatory and reimbursement policies exacerbating this problem.

Real health-care reform would address the roots of the physician shortage. For instance, scope-of-practice guidelines (which vary by state) prevent non-physicians -- such as nurse practitioners -- from being fully independent, even as their training qualifies them to provide primary care. Allowing NPs to practice more independently and equalizing their reimbursement with physicians would be a quick and simple (though likely temporary) solution to the shortage, as fewer physicians would be required over the next decade to meet demand.

Other reforms would address Medicare's flawed reimbursement system, which favors specialists over primary-care physicians. Specifically, the core-payment calculations under Medicare should be updated to improve payments for "evaluation and management services" -- i.e., services provided by primary-care doctors. Making the work of primary-care physicians more valuable would, over the medium-to-long term, make primary-care specialties more attractive to debt-saddled medical-school graduates. Fixes are also needed for Medicare's "sustainable growth rate," which governs annual payment updates. (To the president's credit, a fix for the latter was included in his 2014 budget proposal.)

These are only a few entries in the long list of reforms that would improve the supply of physicians. More long-term reforms should seek to make medical education and the required residency period less burdensome for medical students.

Going forward, policymakers will need to find ways of managing the logjam of new patients that Obamacare will produce. To do so, they need to fix the underlying mismatch between health-care demand and supply through wide-ranging reforms of everything from to Medicare reimbursements to anticompetitive state regulations. Obamacare's unintended consequence may be to forge bipartisan agreement on expanding access to care -- which now becomes a necessity.

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