Red, Blue and Purple Redux: Don't let them divide and conquer!

I wrote Red, Blue, and Purple: The Math of Health Care Spending back on Oct 20, 2009, and have referred to it several times since. It is important because not everyone is sick at the same time, so the percentage of sick people in any given year is relatively low.

I included these charts:

 

The colors represent more or less the same groups of people; in any given year 5% of the population accounts for 50% of the health care costs, while half the population accounts for only 3%. This means that, in any given year, a large percentage of our population (generally younger, and mainly healthier) does not have significant medical problems and thus does not incur significant medical expense. This is good for them, but it also can make them relatively happy with their health insurance. When you don’t need it, insurance of any kind is great, except that you continue to pay premiums. Ignorance is bliss. But when you get sick is when you find out how good your health insurance is – or is not. Does it cover the treatment that your doctor recommends? Does it say it will, but require prior authorization that, while not medically indicated, can delay your treatment. Maybe for too long ()? Does it cover your doctor? Does it cover the hospital they use? Does it cover the other doctors in the hospital you will be billed by (e.g., ER, radiology, laboratory, anesthesiology, etc.)? Does it require big co-payments? Or any?

It is also the basis for a lot of the decisions that health insurance companies make. In a recent post on the “Health Care Un-covered” substack, Ron Howrigon (Feb 3, 2026) demonstrates how insurance companies can use these numbers to their advantage (i.e, to not pay):

So, you have been named the new CEO of UnitedHealth, and you have this wonderful idea. Put policies in place to deny, delay or refuse to pay for care. These policies are going to upset 5% of your membership. The members impacted by these policies are expensive members with chronic diseases like MS, cardiac disease or cancer. Let’s say that half of those members get so upset that they leave UnitedHealth and join one of your competitors. That means you take a 2.5% reduction to your revenue but a 25% reduction to your medical expense. Profits go up and life is good. Well, unless you are one of those patients that didn’t get the medication or treatment that you needed that is.

You see? They don’t get screwed – you do. They don’t care if you leave their insurance company if you are costing them money. Ideally, insurance companies want to collect premiums from people (or their employers, or the government for programs like Medicare and Medicaid) who will never use them! Indeed, one tactic that Medicare “Advantage” (MA) plans use is urging people who get sick to consider leaving their program and going on to regular, traditional Medicare (TM). Those “free” glasses and hearing aids and gym memberships that the MA plans offer seemed great at the front end, but actually having them cover the cost of your being sick and in the hospital and needing procedures would be better.

It is too bad if people do not realize that, while they may be in the purple or even blue groups today, not needing too much health care and not costing that much, that could change tomorrow. Much of that “purple” group is made up of people with one or more chronic diseases, predominantly older, who go to the doctor a few times a year and maybe have a short hospitalization or two. But when those chronic diseases worsen, when you need surgery or other procedures, or need to be in an ICU, then you can quickly become “red”. The shifts can be even more dramatic for young, healthy people. One car accident and a teenager can need multiple surgeries and become a very high-cost patient. One premature baby who needs to be cared for in the neonatal ICU and your young family skyrockets into the high-cost group. Or cancer – a new and unexpected diagnosis can change anyone of any age into a high-cost high utilizer.

Since I wrote the original piece in 2009, many more people have cottoned to the truth of the situation, because they, or their family members, or their friends have experienced movement into the high-need, high-cost group. It may be only 5% of people in any given year, but those years mount up, and they are not the same people year-to-year. For starters, a significant percentage of those who were in that 5% last year are no longer with us this year. It is commonly noted that end-of-life care accounts for a huge percentage of the cost associated with someone’s care in their lifetime, but when that lifetime is over, others move into the 5%. The fact is that we are all in this together (well, except for the insurance company executives and really wealthy folks) and policies that don’t hurt us individually this year can hurt us very much next year.

In the substack post cited above, Ron Howrigon raises the specter of a major economic event, “correction” or recession à la the housing bubble of 2008, except maybe worse because the health sector of the economy is three times as large. The problem identified above is only one of three major problems with the health insurance industry that he identifies, as he makes the case that it is built on flawed economic assumptions just as the housing industry was. Such economic implosions are not, in themselves, good for us, but continuing the way we are is also not. For many years, the “economy” has grown, but all that growth has gone to corporations and multi-billionaires and not to regular people (indeed possibly more than all the growth, since the imbalance is worse). While there may be some hard-working people who are fine with this even though they are struggling to pay the rent and buy food and gas – it takes all kinds – most of us are not. If the health care industry “fails” and then must be rebuilt to actually take care of Americans’ health, that would be a good thing. Although, judging by the response of the government to the financial crisis of 2008-09, that would be a dubious outcome; they’d probably bail out the health insurers. Unless we all can get together to stop them!

Divide and conquer has long been a strategy used by rulers and the powerful. It still happens and, so far, it still works. On Dec 30, 2025 I published on this blog Yes, Rep. Van Drew, there IS a solution!, which had appeared 3 days earlier as an Opinion piece in my local paper, the Arizona Star. I note that Medicare for All is a solution to a huge part of this problem, that there are bills in both the Senate and House (S. 1506 and HR. 3069) to create it, and that a large majority of the American people, in poll after poll, support it.

While the people are increasingly understanding how they are being screwed for the benefit of the rich and powerful, in this important case insurance companies, legislators seem to have not gotten the message. This could be in part the result of money being given to them and their campaigns for re-election by those same companies! This cannot be understood as anything but – graft! And, to overcome this, our voices – and our votes – need to be loud and clear so they can be heard by those legislators and policy makers. Pass laws and make policies that benefit the health and pocketbooks of the mass of the American people, and do not pay attention to the enrichment of health insurance companies, their executives, or their billionaire private equity owners. In the balance between the health of the people and the wealth of corporations, the latter should get NO weight!

Write to them, tell them, call them daily!

More residency slots: Good, but not going to solve the primary care shortage...

The Center for Medicare and Medicaid Services, CMS, recently announced that it will be funding an additional 440 residency positions in 135 hospitals in 37 states. This is a good thing, and a step in the direction of reducing the glaring shortage of physicians in the US. CMS already funds most of the residency positions, something which is probably not intuitively obvious to those not involved in post-graduate medical education, but it is so even if it is not clear why (as opposed to, say, Congress directly appropriating such funding). This is important because while you are a doctor (physician) on graduation from medical school, you can’t obtain a license to practice anywhere without residency training (e.g., family medicine, pediatrics, surgery, psychiatry, radiology, etc.). Thus, past efforts to increase the number of physicians by increasing the number of medical schools (or the class size in existing medical schools) fail, because the residency pipeline has been static. It has only, perhaps, decreased the number of international medical graduates filling those positions. 

CMS further states, per this piece in MedPage Today, that 2/3 of those slots will be in primary care and psychiatry, two areas in which the shortage of physicians and other clinicians is particularly acute. This is also good, but will continue to have limited impact, at least until we see exactly which specialties are getting those positions. “Primary care” is not a specialty in which there is a residency; usually the term is used to include family physicians, general pediatricians, and general internists (as well as those general practitioners who completed only one year of post-graduate training, ie., internship, when that was sufficient to receive a license). The problem is mostly with internal medicine. After completion of a 3-year internal medicine residency, the large majority (about 80%) of graduates go on to complete a fellowship in an internal medicine subspecialty (cardiology, nephrology, pulmonary medicine, endocrinology, etc.). They do not practice primary care. In addition, about half the remainder become hospitalists, caring for people in the hospital only, leaving only a small number of internal medicine residency graduates to practice primary care. While many pediatrics graduates also sub-specialize or become hospitalists, the percents are much lower. On the other hand, about 90% of family medicine graduates practice outpatient primary care. In addition, it likely includes OB/Gyn which is not primary care.*

It would be good if we could get an accurate accounting. There are “general medicine” or “primary care medicine” residency programs among the internal medicine programs which produce higher percentages of primary care outpatient practitioners -- but still not all, or even close to the 90% of family medicine. We need to know if the new CMS positions that are designated “primary care” include internal medicine; if they do, obviously the output, the number of new outpatient primary care doctors, will be significantly lower. Why should they be unclear about this? It is in the interests of many institutions to keep it fuzzy. Medical schools have long reported on the percent of their graduates entering primary care, and they have included all those entering internal medicine (and sometimes OB/Gyn or even Emergency Medicine) as well as pediatrics and family medicine, inflating the percent that is ostensibly primary care. This practice has been called “the Deans’ lie”. The Association of American Medical Colleges (AAMC), quoted in the MedPage Today piece, has a similar reason to obfuscate the truth; their members are those same medical schools (and the teaching hospitals associated with them) and their leaders, both in AAMC and in the individual schools, are overwhelmingly non-primary-care subspecialists.

One of the main reasons for the shortage of primary care physicians, and thus this purposely-inaccurate effort to paper over the dearth of them, is that, while physicians overall make much more than the average person, there is a great disparity in income between the specialties, often being 4-5 times as much for certain specialists as others. The shortage of primary care physicians and psychiatrists that this change is making a small effort to rectify is very likely because pediatricians, family physicians and psychiatrists are on the low end of the physician income scale. The table below, from “PhysiciansThrive.com”, is one example, although it may actually understate the income of the top specialties.

 

 

The lowest-paid physicians are doing well compared to most Americans, but they often come out of school with $250K + debt, which is, of course, owed with compound interest. The income gap between specialties has to be narrowed, and some studies suggest that if primary care physicians made 70% of what other specialists do, money would largely cease to be an issue in student specialty choice. But how could we do that? Isn’t it really complicated?

Well, not as much as you might think. A recent installment of the New York Times feature “The Ethicist” responds to the question from a reader “Should I Feel Bad About Joining a Concierge Medical Practice?”. This in itself is a complex, but separate, question. However, the Ethicist notes in their response that one of the reasons it is hard to find a primary care physician is that 

‘Medicare, which effectively anchors compensation levels throughout the health-care system, reimburses physicians according to “relative value units,” and those are largely determined by an advisory committee dominated by specialists. Procedures are valued more than conversations.’

I was surprised to see this addressed in this column; while it is absolutely true, it is rarely discussed. The comment makes 3 points which together drive the income disparity:

1.     CMS sets reimbursement rates for Medicare, but it essentially drives all reimbursement as insurance companies use Medicare rates (or multiples of them) to determine their own payments.

2.   These Medicare rates are set by “relative value units”, or RVUs, so that some sort of equivalence can be made. For example, how many comprehensive examinations by a primary care doctor or assessments by a psychiatrist or chest x-ray interpretations by a radiologist is worth one gall bladder removal by a surgeon or joint replacement by an orthopedist? This is essentially dividing up a pie of set size; when one “gains” another “loses”.

3.  While CMS sets these RVU ratios, they usually rely upon the recommendations of a little-known group called the “RUC”, appointed by the AMA. As the Ethicist notes, this committee is overwhelmingly specialists. And, so, not surprisingly, the distribution of the pieces of the pie tend to favor those specialists, and, indeed, procedures are valued more than conversations. And “conversations” kind of minimizes the communication between people (patients) and their primary care doctors, as people’s stories greatly inform both the diagnosis and the best treatment (and the one the patient is going to accept and follow through on), and are essential for the patients to know what is going on. And presumably interactions with psychiatrists are more than simple “conversations”. (I have written about the RUC several times, including Doctors' incomes and patient coverage: both need to be more equal, Jan 26, 2014 and Pay primary care more: Kennedy may be getting this one right!, July 23, 2025.) 

So there is a clear-cut way to fix these disparities: CMS simply needs to adjust the RVU basis, increasing the value of “conversations” and really thinking and assessment and decision making relative to procedures. Of course, this means the highest-paid subpspecialists would make less than they do now, and so they are going to fight it, as are their organizations and groups like the AAMC. But really, even if they take a significant cut, they are a long way from the Food Bank!

The question is: Will CMS do this? Pressure from you, the people who can’t get into a doctor, is definitely going to help!

 

*Primary care is comprehensive care of the needs of the patient, with referral to specialists when needed; internists and geriatricians and pediatricians limit the ages of their patients but they provide comprehensive care for them. While some women only see an OB/Gyn, they only provide care for a woman’s reproductive tract, not comprehensive care.