The RVS (relative value scale) is employed by the health care industry to provide a rational basis for setting appropriate fees forphysicians (though this remains a matter of contention). If as an xercise, RVS standards were applied to American society, would compensation for other professions and crucial occupations appear reasonable?
The ‘resource based relative value scale’ (RBRVS) is used by Medicare and insurance companies to determine how much they will pay physicians for services and procedures. The RVS is calculated using four parameters to decide the value of physicians’ activities and how much those are worth monetarily.
–These include the time necessary to complete the service or procedure,
–the cognitive or mental effort required,
–the amount of technical skill needed,
–and possible stress related to the service.
The years of training for the specialty that provides each service is considered when figuring technical skill and cognitive ability.
The final fee is adjusted by practice expenses, such as malpractice and overhead, and the geographical area where the service is taking place to account for cost of living.
Thus, a cardiologist performing a catheterization study may receive thousands of dollars for this procedure which takes less than an hour, as does an orthopedist for setting a broken bone.
Yet an internist who provides a consultation that takes the same amount of time will receive a few hundred dollars at most for his effort. While cardiologists, or orthopedists, may have an extra year or two of training compared to an internist, the former may be paid an hourly rate ten times higher for his or her services. This is generally true for all procedure oriented or surgical subspecialties and is reflected in the overall income for these physicians.
The average internist earns $205-210,000 annually,
while cardiologists make $420-530,000 yearly,
and orthopedists $550-800,000.
Is an orthopedist who performs a hip replacement using technical skills doing something of much greater value than an internist whose consultation using cognitive ability may save the life of a patient with pneumonia? Should he or she have an income three to four times greater?
Of course capitalism does not consider social value in allotting income or payment for services to physicians or in professions or occupations outside of medicine.
And as the disparity in remuneration has been growing among different medical specialties over the years, this has been true as well in non-medical professions and businesses.
For example, in 1970, an attorney starting at a top firm and a beginning public school teacher had a difference in salary of about $2000. By the turn of the century, that lawyer earned more than three and a half times as much as the teacher- $145,000 versus about $40,000. And this differential increases the longer the lawyer practices and the teacher teaches. Yet very few Americans would claim that lawyers play a more important role in society than teachers. In fact, most Americans would say that teachers are of much greater value.
The disparity in incomes within corporations between workers and top executives has also been soaring over the last several decades. A CEO in one of the top one hundred corporations in America in 1977 was paid about fifty times the salary of its average worker. Thirty years later, these chief executives made about eleven hundred times the pay of the company’s average worker. Yet the roles of the CEOs and the workers have remained the same during this period. Are there any metrics that show that these executives became twenty-two times more valuable to their corporations and society as a whole than their workers over these three decades? Similar disparities in incomes have become the norm in virtually every large business. (Coincidentally, the CEOs of most companies are involved in choosing the Boards of Directors and Compensation Committees that decide on executive pay. And weakening of the unions has made collective bargaining with many companies more difficult, resulting in stagnant wages for most workers.) Interestingly, the rise in executive pay and perks by corporations is usually not linked to performance by the compensation committees.
The disconnect between social value and incomes are even more prominent in the financial industry. Individuals who move money among ifferent financial instruments may provide profits for their companies (or themselves) and are rewarded with huge salaries and bonuses even though their work does not benefit society. In fact, the recent financial meltdown has shown that the activities of these individuals can cause tremendous social disruptions and suffering without affecting those responsible for precipitating the damage. The financial upheavals in many instances necessitated government bailouts of the malefactor’s firms, but there was little cost to many of those who caused the problems. A number of these financiers have remained in their positions continuing to enjoy lavish salaries and bonuses while performing the same tasks that resulted in the social chaos and distress. Or they retired with huge payouts.
Physicians’ incomes and relative value have not been linked to scarcity or need for the particular type of practitioner. If this were the case, specialists in internal medicine would be among the highest paid, as there is a dearth of internists nationally that will only increase in the years ahead. In addition, there is an over-abundance of many well paid specialists. Similarly, incomes of non-physician professionals, executives, and financial workers, are not related to scarcity, and often are independent of performance.
In 2009, the top 1% of earners made 17.2% of all income and, according to one estimate, controlled about 40% of the nation’s wealth. Many of these people were in the financial industry, company executives, or had inherited their money. Aside from high-tech and other entrepreneurs, who have created wealth and employment with their ideas and labor, on the relative value scale to society, most of the remaining 1% did not merit all of their wealth and income.
Should adjustments be made by government that better align the social value of people’s jobs with the remuneration they receive, at least to some degree? Is this the function of government when the market does not act in this fashion? Funds generated by higher estate and income taxes on the most affluent could be employed to subsidize education for those entering fields that benefit society. In addition, lowering the tax rates of those individuals whose jobs are of social value such as teachers, scientists, policemen, firemen, internists, and so forth, would also be worthwhile. But the overriding question remains whether government should play an active role in providing financial help to those who choose occupations of social value. There are arguments that can be made for both sides.
Resurrecting Democracy
em>A VietNam vet and a Columbia history major who became a medical doctor, Bob Levine has watched the evolution of American politics over the past 40 years with increasing alarm. He knows he’s not alone. Partisan grid-lock, massive cash contributions and even more massive expenditures on lobbyists have undermined real democracy, and there is more than just a whiff of corruption emanating from Washington. If the nation is to overcome lockstep partisanship, restore growth to the economy and bring its debt under control, Levine argues that it will require a strong centrist third party to bring about the necessary reforms. Levine’s previous book, Shock Therapy For the American Health Care System took a realist approach to health care from a physician’s informed point of view; Resurrecting Democracy takes a similar pragmatic approach, putting aside ideology and taking a hard look at facts on the ground. In his latest book, Levine shines a light that cuts through the miasma of party propaganda and reactionary thinking, and reveals a new path for American politics. This post is cross posted from his blog.
Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020