Does Reducing Healthcare Costs Require Cuts to Physician Income?

Last week, in “Rising Medical Costs, But No Solution in Sight,” I asked what the Patient Protection and Affordable Care Act (PPACA) or ObamaCare was going to do about the rising cost of healthcare in this country and the ever-increasing strain this is creating on the finances of the typical American family of four (as measured by the Milliman Medical Index).

This week, I have another question (what I refer to as a “Goldilocks Question”): Do doctors cost too little, too much, or just right?

A physician colleague of mine framed the issue in an e-mail:

Jeffrey:If the amount of money spent on automobiles, TV sets, or movies increased, no one would be complaining. They'd be calling it "healthy economic growth."Why is money spent on healthcare different? Because much of it is paid for by the government? But the money spent by government ultimately comes from the same place as that spent for movies -- the pockets of taxpayers.The difference is psychological. We resent money spent on healthcare because we didn't choose to become sick, and it's not fun.However it is far more essential than the "fun" things we prefer to spend money on. We should be adults and spend money on essentials uncomplainingly.Sure, we should do everything possible to assess the relative values of different treatment modalities, but not appoint HMO "death panels" designed to limit care while allowing the politicians reasonable deniability for the inevitable consequences.And if we want clues about how to use money effectively, perhaps we should look at Cuba, which in spite of the embargo and a GDP/person that is a tiny fraction of ours, manages to have the same life expectancy as the US, quite different from the other nations in the same region.However, American doctors would never accept the kinds of incomes that the equally effective Cuban doctors receive.Our problem is that we want to cut medical expenses without cutting the incomes of medical providers. That simply cannot be done, but we won't admit it. Instead we set up these Rube Goldberg schemes like PPACA to hide the real problems.

Is my colleague correct? Is reducing physician income an essential and inevitable component of meaningful cost control and healthcare reform?