Medicare Underpayment Intensifies U.S. Physician Shortage, Impacting Care Access
The Pacific Research Institute's Center for Medical Economics and Innovation released a brief highlighting the impact of Medicare's underpayment on the U.S. physician workforce. The brief argues that Medicare reimbursement rates have not kept pace with inflation and the rising costs of healthcare practices, leading to a worsening physician shortage and reduced access to care. This undercompensation is causing doctors to leave clinical practice and deterring new medical professionals from entering the field, ultimately resulting in longer wait times for patients and a decline in care quality.
The issue brief, authored by Dr. Wayne Winegarden, emphasizes that Medicare's current payment system imposes income constraints on physicians, negatively affecting the viability of private medical practices. This situation is described as a key factor exacerbating the shortage of doctors in the United States. The brief calls for reforms to modernize Medicare payment models to better reflect economic realities and support value-based care.
Proposed reforms include both short-term and long-term measures. Near-term recommendations focus on indexing physician payments to the operational costs of running a practice, addressing discrepancies in site-based reimbursement, and expanding experiments with value-based care models. Long-term proposals advocate transitioning Medicare towards a direct payment framework that would allow beneficiaries greater choice through health savings accounts and enable provider competition based on value, potentially allotting beneficiaries about $15,151 annually to cover healthcare costs and insurance.
The brief stresses that failure to adjust Medicare payment rates appropriately will likely worsen the physician shortage and further restrict patient access to high-quality healthcare services. The report situates these payment challenges within broader healthcare market dynamics and calls for policy realignment to maintain the sustainability of independent medical practices.
The Pacific Research Institute, a California-based think tank promoting free-market healthcare solutions, advances this research to inform market-driven reforms aimed at improving healthcare outcome and innovation. This analysis contributes to ongoing discussions around healthcare regulatory compliance, provider reimbursement policies, and the economic sustainability of medical practices under public insurance programs such as Medicare.