One big problem with the U.S. economy is that sectors that should exist to facilitate the productivity and success of American society have been turned into profit centers that do the opposite, funneling resources in the wrong direction. Finance is the leading example, of course: Wall Street should be a boring place that mobilizes capital to serve the real economy, kind of like a utility. Instead, it's become a place to get rich by inventing fancy financial products and services -- which mainly benefit the middlemen peddling them as opposed to creating more national wealth.
Healthcare is another leading example. In most other advanced countries, being a doctor or running a hospital is a nice job, but it's not a way to become a multimillionaire. The healthcare system exists in those countries to ensure a healthy and productive populace -- and is typically run for under 10 percent of GDP. Here things are different: Healthcare is a not a utility that operates efficiently in the background. It's a splashy industry where a fair number of ambitious people are jockeying to make a fortune.
That includes doctors, some of whom are pulling in shocking amounts of money from Medicare billing alone according to new data released by the federal government. As the New York Times reported
In 2012, 100 doctors received a total of $610 million, ranging from a Florida ophthalmologist who was paid $21 million by Medicare to dozens of doctors, eye and cancer specialists chief among them, who received more than $4 million each that year.
Go ahead and read that sentence again, my fellow taxpayer: You and I helped pay an ophthalmologist in Florida $21 million in 2012. Yes, that's an extreme example, but the data identified over 3,000 ophthalmologists who were paid more than $472,000 in 2012 by Medicare. Presumably many of these same doctors did a lot business with non-Medicare patients, too, so we're talking some big compensation.
I know that becoming a medical specialist takes many years and saddles doctors with huge debts. Not to mention malpractice costs and the overhead of running a practice. But something is seriously off when being an eye doctor is a path to riches. And a key problem, as I see it, is that this just isn't a productive form of economic activity. If I make a new kind of eye patch, and I sell a few million of these to China, I've gotten rich and increased our nation's wealth in a useful way. If I charge exorbitant rates to Medicare to remove cataracts, I've gotten rich by taking transferring other people's tax dollars into my bank account.
This leads back to a point I make often in this space: Obamacare only started the job of reforming our health system by imposing some controls on the insurance industry. The next big challenge is to regulate what prices providers can charge, and start pushing those prices down to free up national wealth for other purposes.
Yes, doctors will take a big hit. But judging by this week's Medicare data dump, many easily can easily afford it.