Critical Condition

The AMA Is More a Monopoly in Crisis Than a Professional Association

The government’s media collaborators went hog-wild when the American Medical Association and AARP endorsed the House’s health-reform bill(s). The media continue to insist that these organizations lobby for doctors and seniors, which is not the case. Grace-Marie Turner notes that AARP earns a significant fraction of its revenues by endorsing private-health insurance policies that supplement Medicare. Called Medigap policies, they will likely benefit if the government rolls back another line of business, called Medicare Advantage.

As for the AMA, even the Wall Street Journal labels the AMA the “doctors lobby” (sic), while noting that 20 other physicians’ organizations are highly critical of the proposed legislation. Actually, state, county, and specialized medical societies are the real voices of the profession. The AMA is a business that earns the bulk of its revenue from a government-sanctioned monopoly.

The AMA’s latest annual report records revenues of $282 million in 2008 — a drop of almost 3 percent from 2007. Operating profits have collapsed from about $40 million in 2004 to less than $3 million last year. Only $44 million of its revenue was membership dues. $218 million was “business operations,” of which $64 million was from publications (including the flagship Journal of the American Medical Association), and $35 million from insurance agency.

The lion’s share of the AMA’s revenues, $118 million, comes from selling books and database products. These largely derive from the CPT© (Current Procedural Terminology), which defines the codes that government requires doctors to use in Medicare and Medicaid billing. So, the AMA is a monopolistic supplier of intellectual property that physicians’ offices need to bill government health plans.

Furthermore, the U.S. is about to migrate from ICD-9 (International Classification of Diseases) to ICD-10. The ICD system is a building bock for the CPT codes. Clearly, the AMA is looking forward to an opportunity to rebuild its declining business.

It’s unfortunate, but not surprising, that it is interested in a government-centered health system, rather than one centered on physicians or patients.

— John R. Graham is director of Health Care Studies at the Pacific Research Institute.