Fixing Medical Prices: How Physicians Are Paid

Once upon a time American physicians had it all. Overcoming modest beginnings, internal divisions, and myriad rivals, during the 20th century doctors in the United States achieved “professional sovereignty” (Starr 1982). They secured extraordinary levels of clinical and financial autonomy, as well as social prestige and public deference, and through the American Medical Association (AMA) exerted substantial political influence over health policy making. Organized medicine had a crucial role in shaping the major institutions of American health care, including private insurance and payment policies that reimbursed doctors on a fee-for-service basis with scant oversight or concern for costs. Such policies gave physicians “maximum control over their incomes,” while “free choice of doctor by the patient” liberated physicians from restricted networks and limited insurers' bargaining power (Enthoven 1993: 25). The AMA fiercely protected these prerogatives, fighting against national health insurance and any initiative (from federally funded maternal and child...