As the discussion about health care reform drones on, the current emphasis seems to be focused on how we pay doctors, and whether that pay structure is an incentive to our long term health care goals. Before you stop reading, by the way, this is NOT a discussion of health care. It is a discussion of payment for services, how we structure those payments, and whether that structure pays people to do what we value most.
It seems we pay surgeons an average of about $600,000 per year, and doctors who practice family medicine about $160,000 per year. In other words, we think the doctors who perform lap band surgery to shrink our stomachs after we're morbidly obese are more valuable than the ones who tell us to eat healthier diets.
I'm not in medicine, but that seems weird.
I do, however, have some experience in the world of money management, and can point to an interesting commonality with the medical field. We pay stock brokers a fee every time they buy or sell a security for us, yet countless studies - particulary those in the field of "value" investment (that philosophy practiced by Warren Buffett as a desciple of Benjamin Graham) - show that a "buy and hold" strategy is more appropriate for the investor than buying-and-selling-all-the-time.
Yet, if a broker practices the latter philosophy, she will be paid far less than those who are hopping in and out of stocks, racking up high commissions, and leaving clients with additional short term capital gain payments. That's higher taxes, in plain English.
Why are we paying higher fees to doctors who operate on us than those who keep us healthy, and higher commissions to brokers who buy and sell all the time rather than buy and hold, which, in the case of the vast, vast majority of clients, will result in a higher return on investments?
Hmmmmm. It seems we value people who give us short term solutions to our problems more than those who act in a way that address our long term goals.
We certainly pay them more.
Well, that's all for now. I'm going back to being angry with the current administration for not solving our problems in seven months. What's taking them so long? I want long term solutions -and I want them NOW. Who CARES how much it costs?
Oh, I see now. When I think that way, doctors fees and broker commissions make much more sense.