Medicare Costs and the Income Trap

Paying Doctors Less Is the Key to Better Coverage

Conservatives propose to control healthcare costs by bringing the discipline of the free market to bear upon the healthcare system. Some progressive groups advocate controlling costs with a more interventionist plan. But neither approach, as far as I have seen, adequately confronts one of the biggest barriers to controlling healthcare costs—the strong psychological desire physicians like me have to maintain our often phenomenally high incomes.
To help you understand this psychological phenomenon, I want you to imagine that you have ten years left in your career, and can choose between the following two income streams over those ten years: In the rising salary stream, you would start at salary X, and then receive a steady raise in your salary over the next ten years till you finish at salary X+Y. In the falling salary stream, you’d start right now at an salary of X+Y, and your salary would steadily decline across the ten years to end at salary X. Both choices would leave you with the exact same amount of salary over these ten years, only differing on whether your salary grows over time or declines.
declining salary graph with more to invest now, increasing salary graph with less to invest now
What would you choose? Continue reading “Medicare Costs and the Income Trap”

Report from Last Week's World Economic Forum

Last week, I had the pleasure of participating in what the World Economic Forum founder, Klaus Schwab, described as the planet’s largest brainstorming session. Approximately 700 leading thinkers (and me, too) converged upon Dubai to discuss the greatest economic challenges facing the world, from the current economic crisis to future crises. People from 6 continents came together, people from government, academia and business, to discuss these events. And yet one man dominated the event, a man who wasn’t even there.
That man was Barack Obama.
Obama did not address the convention. And while several prominent Obama advisers were in attendance, most were not (being busy working on the transition) and no one there attended in any official Obamoid capacity.
Yet, Obama was omnipresent, mentioned explicitly in almost every official conference presentation. When the leader of Dubai addressed the convention, his first words were directed to Obama. Obama was explicitly discussed in thousands of casual conversations. Indeed, every non-American I spoke with wanted to talk about Obama, often congratulating me for his recent election victory.
But it was Obama’s implicit presence that I found most remarkable. On the final day of the meeting, you see, all of us met in a general session and listened to seven people who had been asked to summarize the ideas generated over the previous two days. These summaries were often distressing. We conference participants had been charged, after all, with outlining the biggest problems facing the world, and we had no problem finding some major problems to discuss.
Foremost on many people’s minds, of course, was the current economic crisis, which most agreed could be the worst crisis in decades. But as serious as this crisis is, it was viewed by most attendees as a temporary problem, overshadowed in the long run by some much more serious and potentially permanent threats — threats of water shortages, soil destruction, food deprivation, global warming, over population…all of these problems causing serious political unrest. Pretty distressing stuff.
To make matters worse, we all recognized that the solutions to our current economic crisis are the very kinds of things that will exacerbate our long-term problems. Most efforts to overcome the financial crisis are focused on getting the global economy growing again. When economies grow, so too do CO2 emissions and deforestation efforts and water usage.
While most of us at the World Economic Forum agreed that governments need to take strong measures to avert a global economic crash, we also felt that the world is in trouble if economic success continues to depend on unsustainable growth.
That is why Obama loomed so large over the meeting. Because the challenges facing the world need a leader prepared to tackle such vast problems. And over the last decade, the world hasn’t had such a leader. I don’t mean to denigrate the great leadership from people we’ve seen like Al Gore, in bringing attention to global warming, or even more recently to Gordon Brown, for designing some sensible first steps in responding to the economic crisis.
But let’s face it, the world still looks to the president of the United States for global leadership. And based on what I saw in Dubai, the world now awaits for Barack Obama to take office and lead the way. The economic crisis has provided further evidence of just how small our planet is, how interconnected we all are. We live in a time where neither the economy nor the environment are local, where the US can’t afford to put “Country First” without regard to global challenges.
When it meets in Davos, the World Economic Forum is famous for its celebrities, with Bono and Sharon Stone and Angelina Jolie, among others, putting their fame to work on behalf of important world causes. The recent World Economic Forum in Dubai, however, was devoid of such celebrities. It was attended, instead, primarily by academics like me. Ironic then, that a man mocked by John McCain for being a celebrity dominated the event anyway, without even having to leave his Chicago home.
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PeterUbel