The Source of Provider Compensation

Brett W. Sparks, June 2, 2026

Paul Krugman recently shared, “Curing U.S. Health Care, Part II” (https://paulkrugman.substack.com/p/unlocked-repost-curing-us-health-0b3), which, among other factors, looks at the source of healthcare costs, stating “…the US system looks less private and more public if we look at the dollars spent rather than enrollment.” Krugman concludes that “…private health insurance is regulated and subsidized by the federal government to a greater extent than is generally realized.”

Krugman goes on to explain how we got here, but I want to take a moment to consider what this means for physician compensation, especially since I often hear conventional doctors complain about how concierge, DPC, and other hybrid practice model physicians are “exploiting” patients for their revenue. The thought process is that since these physicians are outside of the traditional model, they are 1) failing the public by not supporting the traditional model, and 2) racking up major revenue by being all cash.

A cursory review shows that healthcare costs are paid by patients, health insurance companies, employers, and the government. Krugman’s point, though, is that even when it looks like health insurance is paying for a service, the government is often the payer. Medicare Advantage, for example, may look like health insurance, but the big Medicare Advantage insurers are all getting government payments to cover these services.         

Even when health insurance is paying for a service, some percentage of that payment should reflect the premiums paid by its members (the patient). It’s no secret who has benefited from the past two decades of premium increases. Independent physician reimbursement has remained relatively flat while health insurance revenue—and corporate physician salaries—have increased. And yet, I often see online comments bemoaning the “injustice” of cash-pay clinics that are seemingly oblivious to the source of corporate physician compensation.

So, spoiler alert: In any corporate practice with a Medicare Advantage plan, the government is most likely subsidizing provider salaries. In any corporate practice with a pharmacy benefit manager, the PBM is most likely subsidizing provider salaries. In any corporate practice owned by a health insurance company, the low reimbursement to independent practices is most likely subsidizing provider salaries.

Going past the immediate source of payment, the primary payer is almost always the patient, either through taxes or insurance premiums, so let’s be honest: Every provider making money is making money from patients.