Why the AMA Will Likely Support Health-Care Reform

Obama's plan might lower specialists' pay, but it would help primary-care doctors, save the industry billions, and please voters

On June 15, President Barack Obama went before the American Medical Assn. seeking support for his health-care reform initiatives and appealed to the assembled doctors' sense of professional idealism. He observed that medicine in the U.S. has been turned "from a profession—a calling—to a business. And that's not why you became doctors."

It was a nice sentiment but ineffective with the tough-minded interest group. For decades the AMA has fended off reforms that threatened the financial interests of its 245,000 members, about one-quarter of the nation's doctors. So Obama and his advisers also are pursuing a tougher, divide-and-conquer strategy. The idea is to take advantage of the expanding economic rift between primary-care physicians—a group generally open to reform—and highly paid specialists who thrive in the current fee-for-service culture of U.S. medicine.

Winning over the AMA is a tall order for Obama. Any comprehensive health-care overhaul will dramatically change the way doctors get paid, almost certainly lowering the incomes of some physicians. That's especially true for the kind of specialists that dominate the AMA. Obama, meanwhile, wants to win the group's support, or at least grudging acceptance, of his proposal to create a government-funded program to cover some 46 million uninsured Americans.

Obama does have plenty of support for his proposals among non-AMA doctors. A survey of U.S. physicians last year found that 59% support federal legislation to establish national health insurance. Especially supportive are the primary-care doctors, who make $148,000 a year on average. AMA members, on the other hand, skew toward surgeons who pull in $261,000-plus and cardiologists who rake in well over $300,000 a year.

This crowd remains skeptical but is aware of the public anger over runaway costs. The U.S. spent $2.4 trillion on medical care last year. Doctors took home 31% of those dollars.

Obama and White House Budget Director Peter R. Orszag keep pounding away at the idea that the country faces financial ruin if medical-cost inflation, now running some 6% a year, isn't brought under control. And most economists lay the bulk of the blame for rising costs on America's fee-for-service payment system, which reimburses doctors for every service and office visit. Pay doctors for volume instead of value, and you run into trouble: As several studies have documented, some one-third of medical interventions in the U.S. are unnecessary, redundant, or incorrect.

A Team Approach

To change all that, Obama wants to place primary-care physicians at the center of a new delivery system in which they play the point person for a team approach to patient care. The President aims to reward quality over quantity, end overtreatment, and boost payments to general practitioners.

Trouble is, few medical students choose primary care, which is at the bottom of the physician pay scale. There simply aren't enough family practitioners to go around. To fix that, the Medicare Payment Advisory Commission (MedPac), an independent federal oversight panel, has recommended raising payments to family doctors by up to 10%. But the shift almost certainly would come out of the pockets of specialists, setting the stage for a medical house divided against itself.

Obama is trying to soften the blow by promising to limit malpractice lawsuits, which are most often filed against specialists. Ultimately, though, it boils down to this: Will the AMA and its members realize it is in their best economic interest to work with the Obama Administration rather than to go into attack mode?

They just might this time, because of a rare division of interests within the medical profession and a popular President relentlessly pursuing an overhaul of health care.

Arnst is a senior writer for BusinessWeek based in New York.