Why SGR cut is a bad idea

As of 3/1/10, physician reimbursement by Medicare has been cut by 21%. Clearly, Medicare cannot afford to pay physicians this additional 21%. But what is the consequence of this?

1. The cuts can be passed on to physicians as decreased income. Most physicians are in the 35% tax bracket. This will reduce income tax by 35% of the 21%. City and State income taxes will also be reduced. Physicians are known big spenders. Unlike others who earn in the same category, physicians feel sorry for themselves (long hours, high stress, delayed gratification due to years of schooling). They buy cars and clothes, go out to dinner or shows or travel (yes, play golf). This pretty much accounts for the rest of that 21%. This will spread as a slump in the economy. In addition, it may cause some physicians to fall below the top limit for FICA, leading to more liability on other taxpayers to pay for Social Security for the very physicians whose pay they are cutting.

2. The doctors keep their income up by cutting corners and firing personnel. This will lead to unemployment in the health care sector and support sectors (ie, people who dispense bottled water to doctor's offices).

Even if you believe that physicians "don't deserve the money" can we afford to not give it to them?

Unintended consequences can be expensive.