Categories
Epidemiology Inpatient Practice

The Next Surge In COVID-19 Hospitalizations

Just when we thought it was safe to go back to the movie theater, to church, and to the grocery store… it looks like we are in for COVID, the sequel. The CDC reported that an outbreak of COVID infections in a town on Cape Cod earlier this month resulted in 469 people becoming infected, of whom 74% had previously been vaccinated. Of these vaccinated persons who developed infection, 79% had symptoms and 4 of them required hospitalization. Disturbingly, vaccinated people who developed COVID-19 had the same viral load detected in their noses as unvaccinated people who developed COVID-19.

This change in the epidemiology of the pandemic is attributed to the Delta variant, a much more contagious strain of the coronavirus that causes COVID-19. Coupling Delta with recent evidence that the SARS-CoV-2 virus is not simply transmitted by droplet spread as originally believed but can also be spread by aerosolization is a warning that we will likely see a resurgence in COVID hospitalizations in the near future. In anticipation of this, the CDC yesterday published recommendations to resume indoor masking for all people (regardless of vaccination status) in areas of the country where there is “substantial or high transmission” of COVID-19. In July 2021, there was a dramatic increase in U.S. counties with high transmission. The three figures below show the change in transmission rates over the past 4 weeks (red is high transmission and orange is substantial transmission):

This data indicates that most U.S. counties are now experiencing high transmission rates. To determine what these trends will mean in the upcoming weeks for U.S. hospitals, we can look at COVID-19 hospitalization trends. The figure below shows the number of new hospitalizations for the entire United States from August 1, 2020 through July 28, 2021. This indicates that the hospitalizations are going up but are not as high as the nationwide peak in January 2021.

Florida was one of the first states to convert from moderate to high transmission over the past month. As such, Florida may be a bellwether for the rest of the country. The figure below shows the same hospitalization data but just for Florida. Hospitalizations in Florida now exceed those of January 2021, when the rest of the country was at peak numbers.

So, if hospitalizations are about to go up, what demographic of patients are likely to be hospitalized? Intuitively, one might think that hospitalizations will be mainly younger people since older Americans are considerably more likely to be vaccinated. The figure below is data from the CDC that shows that in Florida (graph on the right), more younger people are being hospitalized now than in January (yellow line). However, older people still comprise the majority of hospitalizations.

So, what should hospitals do now?

From the Massachusetts outbreak and the Florida data, we can draw several conclusions: (1) the Delta variant is more contagious than earlier variants, (2) vaccinated persons can still get infected and when they do, they have just as high of a viral load as unvaccinated persons, (3) the Delta variant is more likely to be spread by aerosolization rather than simply by droplets, (4) adult hospitalizations are increasing. With those conclusions in mind, here are some tactics that hospitals can take now:

  1. Ensure that all front-line healthcare workers are vaccinated. During the January 2021 surge, many hospitals found that healthcare workers were more likely to get infected by another healthcare worker than by an infected patient. Furthermore, if a hospitalized patient becomes infected from an unvaccinated infected healthcare worker, the hospital could face litigation vulnerability in the future.
  2. Re-institute routine admission SARS-Co-2 testing. Given that more Americans are vaccinated, it is likely that we will begin to see more asymptomatic infections in patients being admitted to the hospital for non-COVID-19 related medical/surgical conditions. These asymptomatic patients can serve as vectors to infect other patients and hospital staff.
  3. Re-institute universal masking. Last winter, nearly all hospitals in the U.S. required patients, visitors, and healthcare workers to wear face masks while in patient care areas and public areas of the hospital. Because of “anti-masking” political pressure, some hospitals have loosened masking requirements in the past few months. These hospitals need to resume universal masking.
  4. Buy more N-95 masks. Given that the Delta variant is so contagious and given that it appears to be more likely to be spread by aerosols than simply by droplets, N-95 masks are likely to be more protective than simple face masks to prevent acquisition of Delta. It is likely that frontline healthcare workers will increasingly demand access to N-95 masks.
  5. Update the surge plan. Last December, hospitals made plans for expanding ICU bed capacity and for increasing the number of non-ICU beds for the January COVID surge of inpatients. It is time to revisit those plans, both for intra-hospital care as well as inter-hospital care.

17 years ago, my family was stuck on an island in the outer banks when Hurricane Alex hit. The night before, the main road became covered by a shifting sand dune and the bridge to Hatteras Island had to be closed. A few hours before impact, the local radio announcer said “Hope for the best but prepare for the worst“. That was sound advice in 2004 and it is sound advice again in 2021.

July 31, 2021

Categories
Outpatient Practice

Should you hire an RN or an LPN for your office practice?

LPNs (licensed practical nurses) and RNs (registered nurses) have very different training and scopes of practice.  Understanding these differences will help you decide which one is best for specific outpatient office practices.

Differences In Training

It takes more training to become an RN than an LPN. Although the duration of  LPN programs can vary, one year is about average. LPNs typically train at community colleges or technical schools. On the other hand, to become an RN, the minimum training (associate degree) takes two years and most RNs will complete a bachelor of science in nursing degree (BSN) that takes about four years. Associate degree programs are generally found at community colleges and bachelor degrees are generally found at universities or 4-year colleges.

Many hospitals preferentially hire RNs who have a bachelor degree due to their more extensive education. Also, hospitals seeking “nursing magnet status” are required to have mostly RNs with bachelor degrees as opposed to those with associate degrees. In the outpatient physician office setting, the differences between RNs with associate degrees versus those with BSN degrees are less important since their scope of practice is similar and nursing magnet status is not relevant.

Differences In Scope Of Practice

Each state regulates what LPNs and RNs can and cannot do. In general, RNs are permitted to function independently and perform a higher level of assessment than LPNs. RNs are considered to be able to practice nursing independently whereas LPNs are considered to have a “dependent” practice, meaning that the LPN must work under the supervision of a physician, an RN, a podiatrist, a physician assistant, a dentist, etc. In most states, RNs, but not LPNs, can administer intravenous medications. For these reasons, hospitals have moved away from employing LPNs and now primarily employ RNs for inpatient care. However, in an outpatient office practice, there are more similarities rather than differences in the LPN and RN scopes of practice.

Either an LPN or an RN can perform the majority of nursing tasks in the outpatient office practice. For example, checking vital signs, teaching patients, taking phone messages, taking basic history information for the electronic medical record, scheduling tests, and administering vaccinations. Similarly, both types of nurses can perform common office procedures such as EKGs, spirometry, and influenza tests.

There are situations when an RN is preferable. For example, if intravenous medications are given in the physician office and RN is required. Also, when a higher level of assessment is required, such as answering sick calls to independently make recommendations to patients and RN is needed.

Where Do RNs And LPNs Work?

According to the U.S. Bureau of Labor Statistics, there were 721,700 LPNs working in 2019 (the most recent year data is available). The following is a breakdown of where they work:

  • 38% nursing homes and residential care facilities
  • 15% hospitals
  • 13% physician offices
  • 13% home health care
  • 6% government

In 2019, there were 3.1 million RNs working, four times the number of LPNs. The breakdown of RN job locations is:

  • 60% hospitals
  • 18% ambulatory care (including physicians’ offices, home healthcare, and outpatient care centers)
  • 7% nursing homes and residential care facilities
  • 5% government
  • 3% education

Salary Differences

In general, an RN will command a higher salary than an LPN due to the longer amount of training required and the greater scope of practice permitted by state nursing boards. According to the Bureau of Labor Statistics, the overall median annual income for an LPN in 2019 was $48,820 and the median annual income for an RN was $75,330. However, different locations of employment command different salaries. For example, hospital employment requires working weekends, nights, and holidays whereas physician offices are generally open only on during daytime on weekdays; thus nurses working in hospitals command higher salaries than those working in physician offices.

So, Do You Need An RN Or An LPN?

One of the central tenets of operational efficiency in healthcare is to allow employees to work at the top of their license. An implication of this is that you should not hire an RN to do an LPN’s job. When both salary and benefits are considered, an RN will cost $30,000 more per year; in other words, you can hire 3 LPNs for the cost of 2 RNs. Because of the lower cost of LPNs plus the fact that most nursing duties in the ambulatory office practice fall within the LPN scope of practice, LPNs are the right choice for most nursing positions in physician offices. Some physicians may not even need any RNs in the office. However, there are situations when an RN will be preferable to an LPN such as when intravenous medications are administered in the office and when the practice gets a lot of walk-in visits or ill calls from patients that require a higher degree of independent nursing assessment.

In multi-physician practices, some physicians will inevitably view having an RN (as opposed to an LPN) as a measure of prestige or of the physician’s self importance. I’ve often heard physicians say that they need to have an RN rooming their patients because: “…my patients are sicker”, “…I’m more senior”, or “…I see more patients”. However, vital signs taken by an RN are not any better than vital signs taken by an LPN. So, when those physicians are faced with taking a $30,000 reduction in salary in order to have an RN do the job of an LPN, they generally have second thoughts. A large multi-physician medical office will be most efficient with LPNs managing most of the day-to-day duties and then a smaller number of RNs for phone triaging, complex patient management, and supervisory roles.

RNs will continue to be the predominant type of nurses in our nation’s hospitals. In physician outpatient office practices, LPNs and RNs both have important roles. However, LPNs are considerably more cost-efficient for the majority of nursing roles in the office.

June 28, 2021

Categories
Epidemiology

Is COVID-19 A Rural Disease In Ohio?

Over the past year, I heard repeatedly from patients, politicians, and the press about how COVID-19 was an urban disease and not a rural disease. There was a perception that small towns and farm country were not as affected as cities. Many of my patients who lived in small communities did not want to travel to Columbus for office visits because of fear of getting infected during a visit to the city. There were complaints from rural residents that they were being unnecessarily subject to social distancing penalties for what was a “big city problem” that were not relevant to them. After all, COVID-19 spreads by close contact with other people and it seemed logical that in densely populated urban areas, COVID-19 would be more prevalent. However, in analyzing data from the Ohio Department of Health, it appears that just the opposite is true.

At the core of this misperception is how epidemiological data are reported. Early on in the pandemic, we heard about total numbers of infection (“1,000 people in Columbus have been infected”). And by total numbers, it is true that cities in the United States had more cases than rural areas. But total numbers do not tell you anything about the chance you have of getting infected. Instead, the rate of infection is more important than the total number of cases.

Consider this analogy: If 100,000 lottery tickets are sold and there were 5 winning lottery tickets, the total number of winners is 5 and the rate of winning is 5 per 100,000 tickets. On the other hand if 500,000 lottery tickets are sold and there are 10 winning lottery tickets, the total number of winners is higher (10 versus 5) but the chance of winning is considerably lower (2 per 100,000 versus 5 per 100,000).

So, what is important is not the total number of infections in the city versus in the country but what the chances of getting infected are if a person lives in a city versus living in the country. The Ohio Department of Health regularly releases data on the incidence of COVID-19 infection for each zip code in Ohio. And it turns out that the zip codes where a person is most likely to become infected are in rural areas, not urban areas. In the figure below, the darkest areas are those zip codes with the highest incidence of COVID-19 since the pandemic began and the lighter areas have the lowest incidence of infection.

The next figure below shows the population density in Ohio with the dark red areas having the highest population per square mile. The dark green areas have the lowest population density with yellow and light green having a middle population density.

By superimposing these two figures, we can see where the 8 major urban areas are on the map (Cleveland, Cincinnati, Columbus, Dayton, Toledo, Akron, Canton, and Youngstown). As it turns out, the darkest zip codes are in the least populated areas of the state. In other words, you are statistically more likely to get infected with COVID-19 at a restaurant, church, or grocery store in rural Ohio than in urban Ohio.

As of June 24, 2021, there had been 1,110,000 cases of COVID-19 in Ohio. With Ohio’s total population of 11.69 million people, that makes the average rate of infection 9,495 per 100,000 population in Ohio. That is almost exactly the incidence for zip code 43203 (location of OSU East Hospital, an urban area and my practice location prior to retirement) at 9,548 per 100,000. So, where are the locations where the chances of getting infected were the highest?

It turns out that of the 15 highest incidence zip codes in Ohio, all but one are in rural communities and only 44702 (Canton) is in a medium or large city. Most of these locations are small villages of a few dozen to a few hundred people. Therefore, the concept that rural areas are “safer” from COVID-19 is not true.

The rural versus urban differences in COVID-19 infection rates are likely to be amplified in the coming months as urban communities outpace rural communities with respect to vaccinations. For example, in Cuyahoga County (location of Cleveland), 52.6% of the total population has received at least one dose of the COVID-19 vaccine. On the other hand, in Holmes County (location of Walnut Creek, the highest incidence zip code in the state), only 15.2% of the population has received a COVID-19 vaccine. In the figure below, the darker counties have the highest percentage of the population receiving at least one dose of vaccine whereas the lighter colored counties have the lowest percentage of the population vaccinated. Ohio’s largest cities are in the darker counties indicating that our urban communities are more fully vaccinated than our rural communities.

Epidemiologists will be analyzing the COVID-19 pandemic for years to come and much of what we believe to be true today will turn out to be wrong.  But at the present, no place appears to be safe from COVID. Measures to prevent infection, such as vaccination, are just as important, if not more important, in rural communities than in urban communities.

June 25, 2021

Categories
Physician Retirement Planning

Why Everyone Should Have A Roth IRA

Traditional wisdom holds that you should only contribute to a Roth IRA if your income tax rate in retirement will be higher than your current income tax rate. I would argue that everyone should have a Roth IRA as part of a diversified retirement portfolio.

What is a Roth IRA?

With a Roth IRA, you pay income taxes on money you earn today and then put that money in the Roth IRA. That money then grows without you having to pay interest, dividend, or capital gains taxes each year. When you retire, you take that money out to spend in retirement and you do not pay any taxes on the withdrawals. If your taxable income in 2021 is less than $125,000 (filing single) or less than $198,000 (filing jointly), you can contribute money you earned directly to a Roth IRA after paying 2021 taxes on that income. If your taxable income is higher than those limits, you can still contribute to a Roth IRA but you cannot do it directly. Instead, you have to do a “conversion” where you first contribute to a traditional IRA and then convert the money in that traditional IRA into a Roth IRA. This is sometimes called a backdoor Roth IRA. There is a limit to the amount that you can contribute each year: $6,000 if you are under age 50 years old or $7,000 if you are over 50.

Roth IRAs have one additional advantage for retirees – there are no required minimum distributions. For traditional IRAs and other deferred compensations investments, when you reach age 72, you are required to withdraw a certain amount of money from your deferred compensation plan accounts. The percentage of the total of all of your deferred compensation plan accounts that you are required to withdraw will be based on your life expectancy. As an example, a 72-year-old retired married couple with $500,000 in their combined deferred compensation plan accounts would be required to withdraw 4.0% of the value of these accounts ($20,000) in 2021.  On the other hand, an 82-year-old married couple would be required to withdraw 4.3% ($21,500) in 2021. Roth IRAs are exempt from required minimum distributions so those funds can be left alone each year if desired. This can be an advantage if you: (1) want to leave money to your heirs, (2) are saving for a planned large expense in a future year, or (3) believe that you are going to live longer than the IRA life expectancy tables would predict.

The four retirement income buckets

OK, in reality there are a lot more than 4 sources of money that most retirees can draw from, but for most people, retirement income can be divided into four general categories:

  1. Fixed income. This includes annual Social Security benefits, pension income, and annuity income. This is a predictable amount that does not change from one year to the next (although it may increase slightly for annual cost-of-living adjustments). This income will be taxed at your ordinary income tax rate.
  2. Deferred compensation. This includes a long list of retirement savings options including 401(k)s, 403(b)s, 457s, SEPs, RCPs, and 415(m)s. A traditional IRA can also be included in this group if you are able to contribute pre-tax income directly to the IRA – this is the case if you are not covered by another retirement plan at work. You can also contribute to a traditional IRA with pre-tax income if you are covered by another retirement plan at work and your income is < $66,000 (filing single) or < $105,000 (filing jointly). Deferred compensation grows tax-free, so you do not pay any taxes on interest, dividends, or capital gains. When you withdraw money in retirement, the withdrawals will be taxed at your ordinary income tax rate.
  3. Post-tax investments. Although this can include everything from investment real estate properties to investment artwork, for most people, this will be stocks, bonds, and mutual funds. These are investments that you buy with your disposable income after you have paid income tax that year. Each year, you will pay taxes on interest and dividends from these investments (at your ordinary income tax rate that year) and when you sell these investments, you will pay taxes on the difference between the purchase price and the selling price (at your capital gains tax rate).
  4. Roth accounts. Although the most common of these is the Roth IRA, there are also Roth 401(k)s, Roth 403(b)s, and Roth 457s. All of these Roth accounts are similar in that you pay regular income tax on the money the year that you contribute to the account and then pay no taxes on the withdrawals.

Why you need a Roth IRA

There are two ways that a Roth IRA can save you money on taxes. First, if you have disposable income after paying this year’s income tax and you want to invest for retirement, you can either put it in a post-tax investment (for example, by buying shares of a mutual fund) or you can put it in a Roth IRA (either directly or by doing a Roth IRA conversion, depending on your taxable income). If you put it in a post-tax investment, then you are going to be taxed every year on the interest and dividends and then when you withdraw the money in retirement, you are going to be taxed on the capital gains – over the years, that will add up to a lot of taxes. On the other hand, if you put that same money in a Roth IRA, you will never pay any taxes on interest, dividends, or capital gains. Therefore, everyone should maximize contributions to a Roth IRA before putting money in a post-tax investment for retirement purposes.

The second way a Roth IRA can save you money on taxes is by taking advantage of periodic changes in federal income tax rates. As I described in a previous post, income tax brackets are one of the most misunderstood parts of the American tax system. What is important is your effective income tax rate and not your tax bracket. The effective income tax rate will vary widely depending on how the U.S. Congress sets taxes. It is a certainty that tax rates will change every few years, largely depending on which political party is in power. Having a Roth IRA allows you to maintain a consistent annual disposable income in retirement while weathering the ups and downs of income tax rates. To demonstrate this, let’s look at the effective tax rates in 2016 versus 2020.

 

In 2016, the effective federal income tax rate on an a taxable income of $250,000 was 21% or $53,500. In 2020, the same income of $250,000 was taxed at 16% or $40,000. In other words, you would have $13,500 more in disposable income after taxes in 2020 than you did in 2016. In fact, in 2020, you would have to have a disposable income of $430,000 to be taxed at 21% which was the effective tax rate on $250,000 in 2016. Similarly, if your taxable income was $160,000 in 2016, your federal income tax would be 17.5% ($28,000) but in 2020 your federal income tax would be 13% ($20,800), a $7,200 difference in disposable income.

In retirement, during years when the effective income tax rate goes up, you want to draw relatively more money from a Roth IRA and in years when the effective income tax rate goes down, you want to leave the Roth IRA alone and draw more money from your deferred income accounts. By using this strategy, you can maintain a constant disposable income while minimizing income taxes.

It is inevitable that federal income tax rates will go up in some years and down in others during a person’s retirement years. American taxpayers want low taxes but they also want federal services such as Social Security, Medicare, a strong military, investment in transportation & infrastructure, and perhaps in the future even national healthcare. Our political party system results in a see saw effect every few years with pressure to decrease taxes followed several years later by pressure to increase federal services. I would argue that for most people, it is impossible to predict whether their federal income tax rate will be higher or lower in any given year during retirement than it is during the years that they are working. The reality is that over the duration of their retirement years, it will likely be both. Having a Roth IRA allows you to take advantage of these inescapable swings in the effective income tax rate in order to maximize your disposable income.

April 18, 2021

Categories
Epidemiology

An Unintended Casualty Of COVID: Tuberculosis

Currently, 2 billion people are infected with tuberculosis, about one-quarter of the world’s population. It lies dormant in most people but every year, it causes active disease in 10 million people and 1.6 million die of it. It is the number one cause of infectious disease-related death in the world. In the United States, healthcare providers are required by law to report cases of TB to health departments and the health departments in turn do contact tracing to identify and test others who could potentially have been infected. Because of this reporting requirement, we have very good epidemiological data about tuberculosis in the U.S.

Tuberculosis control in the United States has generally been a success. The number of new cases of TB per year has dropped from 84,304 in 1953 to 8,916 in 2019, a nearly 10-fold drop in cases. Because the United States total population has grown during this time period, the reduction in new cases per 100,000 population has dropped even more dramatically from 52.6 in 1953 to only 2.7 in 2019, a nearly 20-fold drop in case rates. This is a testament to the effectiveness of public health measures. Indeed, quarantining and the wearing of masks is nothing new – they have been our primary tool for controlling the spread of TB for more than a century.

The reduction in TB cases has not been linear. There was a spike in cases in 1975 that was largely related to a different surveillance case definition instituted that year and not due to an actual increase in TB in the United States. There was also an increase in cases in 1989-1992 that was primarily due to a surge in the number of people with AIDS in the U.S. But for the past decade, there has been a steady reduction in cases of TB in the U.S. by about 2-3% per year between 2010-2019. But then an unexpected thing happened in 2020. There was a 20% reduction in tuberculosis.

 

It turns out that COVID-19 has been our most powerful weapon yet in combating tuberculosis. The COVID-19 pandemic brought with it mandates of social distancing and face mask-wearing in public. These are reasonably effective means of controlling the spread of the coronavirus but they are even more effective in controlling the spread of other respiratory infections, including tuberculosis. Prior to 2020, the main indication for healthcare workers wearing N-95 masks was when caring for patients with known or suspected tuberculosis. Hospitals throughout the U.S. maintained a small number of “negative airflow” patient rooms, primarily to house patients suspected of having TB. But TB had become relatively rare to the point that most medical students do not encounter a patient with tuberculosis during their training; in 2019, there were only 150 cases of TB in the entire state of Ohio.

Most cases of tuberculosis in the U.S. occur in people who immigrated to the United States. For the past decade, foreign-born people have accounted for about 71% of the cases of TB in the United States whereas U.S.-born people have accounted for about 29% of cases. These percentages did not change in 2020 and therefore, the drop in new cases of TB cannot be attributed to reduced immigration to the United States related to COVID-19 travel bans. Furthermore, 90% of foreign-born people do not develop active TB until they have been in the United States for > 1 year, meaning they enter the U.S. with dormant (latent) TB and only go on to develop active disease years later.

Not only have the infection control measures used to slow the spread of COVID-19 been effective in reducing tuberculosis, these measures have been even more effective in reducing influenza. The graph above is from the Centers for Disease Control showing that the incidence of influenza this season (red triangles) is by far the lowest of any year in the past decade.

With 2 billion people infected, tuberculosis will not be eliminated in our lifetime. But it appears that COVID-19 has given us an unexpected step forward in our efforts to reduce TB in the United States. Tuberculosis data reporting in the rest of the world is not as robust and in the United States so it will likely be a few years until we see if the same phenomenon seen in the U.S. in 2020 will also be seen in other countries.

Hopefully, another benefit of the COVID-19 pandemic will be the accelerated study of mRNA vaccine technology that could offer hope of future vaccines effective in preventing tuberculosis. Regardless, the reduction in TB last year has been a very thin silver lining in a very large dark cloud of COVID-19.

April 17, 2021

Categories
Medical Economics

Anti-Vaxx Is Anti-Business

In the summer of 2020, unemployment in the United States soared. People stayed home and businesses shuttered. Over the course of the COVID-19 pandemic, some businesses were affected more than others. Airlines, hotels, arts & entertainment, restaurants, oil & gas, auto parts & service, and recreational facilities were among the hardest hit.

Some people blamed business closures not the pandemic but instead on their governor’s or mayor’s public health orders. As a consequence, many politicians lobbied to pass laws restricting their governor’s or public health authority’s ability to impose these public health orders. Their argument is that if people did not have to wear masks and practice social distancing, that businesses will open back up and quickly return to normal capacity. But it is not the public health orders that are hurting businesses, it is the pandemic itself.

To get those businesses back open, customers’ fear of acquiring COVID-19 has to be eased. A person who goes out to eat at a restaurant, gets on an airplane, or spends a couple of hours in a movie theater wants to be sure that it won’t cost them their life. Customers want to feel safe and workers want to feel safe. The best way to create that perception of safety is to get everyone vaccinated against COVID-19.

Some U.S. demographic groups are suspicious of vaccination and many within those groups have stated that they will not get vaccinated. As vaccine availability increases, these vaccine hold-outs will likely find themselves at a competitive disadvantage in business. How many people would go to a restaurant if their waiter is wearing a button that says “I’m proud to be a COVID anti-vaxxer”? As a larger percentage of Americans get vaccinated, those people who refuse to get vaccinated will increasingly be viewed as the ones holding back economic recovery.

If a customer gets salmonella or hepatitis A from contaminated food at a restaurant, there is the potential for liability of that restaurant. At the least, customers will avoid it and at worst, there can be civil litigation for damages from the sick customer. So far in the COVID-19 pandemic, businesses really have not faced liability because the infection is literally everywhere. Once the pandemic is better controlled in the United States, outbreaks of COVID-19 will be able to be traced to source locations, similar to outbreaks of salmonella and hepatitis A. Civil litigation may be more likely in that situation, particularly if a business owner went on record as being opposed to vaccination. At that point, it will become very expensive to be an anti-vaxxer.

The fastest way to get business such as restaurants, hotels, movie theaters, and gyms back up to full occupancy is to end the pandemic. We cannot make the pandemic end simply by passing legislation declaring that it to be over – the fastest way to make it end is to vaccinate all eligible people as quickly as possible.

Pro-vaccination = pro-business

April 7, 2021

Categories
Epidemiology

COVID-19 Vaccine Side Effects (and how to prevent them)

I’ve been working at our medical center’s COVID-19 vaccine clinics for the past couple of months. We vaccinate about 3,500 people per day at our OSU Schottenstein Center site (the basketball arena) and about 275 people per day at our hospital-based vaccine clinic. Because of the potential for allergic reactions, we have either an emergency medicine physician or a critical care physician on site to manage any reactions. After supervising thousands of vaccinations, I’ve learned a lot about the vaccine reactions that people can get.

Younger people have more side effects

COVID-19 infection is much more severe the older we get. For people over age 80, the mortality rate of the infection is about 25% but for people under age 18, the mortality rate is negligible. It is just the opposite for side effects from the COVID-19 vaccines: older people are less likely to have side effect than younger people. I’m always relieved when I look over the list of the day’s vaccination schedule and see mostly people over age 60 because I know that I’m going to have an easy day.

Sore arms

Most people (about 75%) get a sore arm after the vaccination. It doesn’t typically occur for several hours after the injection and goes away within 2 days. I liken it to a bit more soreness than flu shot but less soreness than a tetanus shot. As with most other vaccines, the COVID-19 vaccines are given intramuscularly, into the deltoid muscle in the upper arm. One simple way of minimizing arm discomfort after the vaccination is to be sure that the arm is relaxed as much as possible when the needle goes in. If the deltoid muscle is tense when you get your vaccination, you are more likely to have pain later on. If there is swelling and redness at the injection site, a cold compress can help. If there is significant pain, it is OK to take acetaminophen (Tylenol) or whatever non-steroidal anti-inflammatory drug (eg, ibuprofen or naproxen) you normally take. Do not take any medications preventively and only take them if symptoms develop. Avoid taking corticosteroid medications (eg, prednisone) to treat arm pain or swelling since steroids can reduce the body’s immune response to the vaccine. If you anticipate needing to do a lot of writing or some other activity that involves your dominant hand, then get the vaccine in the non-dominant arm.

Aches, fever, and chills

It is difficult to predict who will get muscle aches, headaches, chills, or fever after the COVID-19 vaccine. The good news is that most people do not get these side effects. In general, younger people are more likely to get them than older people and people are more likely to get them after the second dose than the first dose. People who have had COVID infection in the past are also more likely to get more vaccine side effects, especially with the first dose of a vaccine. Although the timing can vary, it is typically about 18 hours after the vaccination. It is a good idea to have acetaminophen on hand and then take it at the early signs of fever or body aches in order to prevent experiencing more severe symptoms. For most people, these side effects resolve by 36-48 hours after the injection. The important thing to know is that these symptoms are NOT an indication of an infection and are instead an expected reaction of the body’s immune system to the vaccine.

Fatigue

Many people will be tired the day of and after their vaccine. For some, this can be severe enough to stay home from work. Because of this, we tried to stagger the vaccinations for our operating room nurses and the nurses on individual nursing units since we knew that a percentage of them were likely going to call off work the next day. Similarly, if you operate a restaurant or store, try to keep all of your employees from getting vaccinated on the same day or you might find yourself having to close shop the next day. To minimize fatigue, keep hydrated and plan on an extra 1-2 hours of sleep the night after your vaccine. An afternoon nap may be in order, also.

Anaphylaxis

This is the most serious side effect of the COVID-19 vaccines and it is fortunately vary rare. This is a severe allergic reaction that can cause difficulty breathing and shock. It occurs shortly after the vaccination, within the first 30 minutes. It responds very well to epinephrine injection and we keep epinephrine on hand, just in case of anaphylaxis. In my own experience, many of the people who were initially thought to have anaphylaxis didn’t actually have it – vocal cord dysfunction and vagal reaction are common masqueraders of anaphylaxis (and far less serious). The main component of the Pfizer and Moderna vaccines that can cause severe allergy is polyethylene glycol. This is the same ingredient in the laxative, MiraLAX, and the prep used for colonoscopy, Go=lytely. If a person has not had an allergy to these ingredients in the past, then they usually do not have any problem with the COVID-19 vaccine.

Rash

Less life-threatening allergic reactions can show up with a rash or itching, rather than anaphylaxis. These reactions are also quite uncommon but can be fairly easily treated with antihistamines (eg, Benadryl). Isolated rash does not warrant a trip to the emergency department but these patients should be watched a little longer than other patients to be completely sure that they do not progress to anaphylaxis.

Avoidable side effects

By far, the most common symptoms we see at the time of vaccination are avoidable:

  • Vagal reactions. This is what happens when a person faints and a lot of people faint at the sight of needles, regardless of what is inside of that needle. If a person is going to develop a vagal reaction, then they will develop it even if there was nothing in the syringe. The symptoms are feeling light-headed, clammy, nauseas, and sweaty. One of the best ways to prevent a person from having a vagal reaction to a COVID-19 vaccination is to distract them by talking to them while the nurse is giving the vaccine in order to take their mind off of the vaccine. When someone does develop a vagal reaction, have them lay down, preferably with their feet elevated. If a person tells you that they faint or get dizzy every time they get a vaccine, then put them in a reclining chair before you give them the COVID-19 vaccination. Ensuring that the person is adequately hydrated is important. The most common treatments that I give out in the vaccine clinics are bottle of water.
  • Hyperventilation. Many people are afraid of vaccinations and doubly afraid of the COVID-19 vaccine. Maybe they read something written by an anti-vaxxer or maybe they heard a horror story from their neighbor about how awful the neighbor felt after their vaccination. These patients are prone to panic attacks. The symptoms are dizziness, shortness of breath, and tingling in the fingers and hands. From a physiologic standpoint, these symptoms are caused by an acute respiratory alkalosis causing the pH of the blood to rapidly rise – this is due to breathing too rapidly and too deeply. Patients who get hyperventilation after their COVID-19 vaccination need to be talked down from it – focus on slower and shallower respirations. This can be hard to do since the rapid, deep breathing is being caused by anxiety. Reassurance and having the person breath through their nose (rather than mouth) is usually all it takes. Once patients realize that the symptoms are from hyperventilation, they usually calm down. In the past, this would have been treated by breathing into a paper bag to re-circulate carbon dioxide and prevent the blood carbon dioxide from dropping too low.
  • Hypoglycemia and dehydration. This is by far and away the most common problem that I encounter at our vaccine clinic. It is also a risk factor for vagal reactions. Many people get up in the morning and go straight to the clinic to get their COVID-19 vaccine before they have breakfast. Couple an empty stomach with the fear and excitement of a vaccine and you get a bunch of queazy, dizzy vaccine recipients. Encourage people to have breakfast before their vaccine and keep up with their fluids. This can be an especially big problem when we are vaccinating college students on the weekends who stayed up late the night before drinking beer. Being dehydrated and having an empty stomach is a set-up for getting a vagal reaction
  • Grouchiness. This is another very common symptom we see in the vaccine clinic and is usually caused by hypocaffeination. Just like skipping breakfast before your vaccine is a bad idea, skipping your morning coffee can result in having a headache, feeling tired out, and having a generally bad attitude. If you are a coffee or tea drinker, have a cup before you go to the vaccine clinic.
  • Vocal cord dysfunction. In the pulmonary clinic, vocal cord dysfunction (VCD) is a common mimic of asthma. It occurs when the muscles that control the vocal cords are under excessive tension resulting in the space between the vocal cords being constricted and too narrow. This causes shortness of breath, particularly when trying to breath in (as opposed to breathing out). Some patients will say that they they feel like air is getting stuck at the top of their neck. Anxiety can precipitate vocal cord dysfunction. One of the problems with VCD is that it can not only mimic asthma but can also mimic anaphylaxis and the treatment for anaphylaxis (epinephrine) can often make the VCD worse. In our vaccine clinic, I saw a person who was their for their second dose of the COVID-19 vaccine. With the first dose, she had developed what was thought at the time to be anaphylaxis and was given epinephrine that did not help and in fact seemed to make her breathing worse. The EMS squad was called and took her to the emergency department where a particularly bright physician obtained a blood tryptase level. Anaphylaxis causes the tryptase level to be elevated and hers was normal. For her second dose, we had a nurse sit with her and provided lots of reassurance and distracting conversation. We told her to breath through her nose (which can help reduce the tension on the vocal cords). In the end, she had no problems at all after her second dose. With all that being said, VCD is never a life-threatening problem but anaphylaxis is – when in doubt about whether it is VCD or anaphylaxis, treat the persons as if it is anaphylaxis.
  • Boredom. You can always pick out the people who are in the vaccine clinic for their second dose (as opposed to their first dose). They bring a book, newspaper, or crossword puzzle. Sitting in the clinic for 15 minutes with nothing to do except look at the other people getting vaccinated can be pretty boring and that boredom can be double the amount if you have to wait 30 minutes because of a past history of severe allergies.

The COVID-19 vaccines are safe. Period. Yes, they can sometimes have annoying side effects but no one dies from the COVID vaccine whereas more than a half of a million Americans have died of COVD-19. By getting a COVID-19 vaccination, you are saving a life – if not yours, then one of your family members or someone in your community. A sore arm or fatigue for a day is a small price to pay.

April 3, 2021

Categories
Physician Retirement Planning

The Ways Physicians Retire

Recently, an older primary care physician in solo practice called me to ask if our hospital would buy his practice when he retires. I’ve seen a lot of physicians retire over the decades and there are several different ways that physicians do it. This post is all about the retirement paths that physicians can take.

First, I did not offer to purchase the physician’s practice. In the past, retiring physicians often sold their practice which meant selling their patient’s paper charts. But, nobody does that anymore. With the availability of electronic medical records, those paper charts are essentially valueless – the medical information is already on-line. There are situations when a physician will purchase office space and equipment from a retiring physician but since most physicians lease office space, this is also becoming quite rare. Also in the past, junior physicians would have to buy into a practice to become a senior partner with the proceeds often becoming severance pay to the senior physicians at retirement. This practice has also nearly disappeared with a industry wide move to hospital-based employment and large multispecialty practice group employment. As a consequence of these changes, physicians no longer have the option of cashing out at retirement. However, this has also opened the door for many other ways for physicians to retire.

Going Cold Turkey

Some physicians one day just stop practicing altogether. This can be a pretty abrupt change in lifestyle for a doctor who has been working 60 hours a week plus taking call. It is like driving your car all day at 70 miles an hour on the highway and then pulling off onto a 15 mile per hour side road. Many doctors who spent years dreaming of a life of nothing but golf or fishing find themselves suddenly unfulfilled and untethered from a time when their skills were valued and needed. This can result in a sudden identity crisis. Some physicians unexpectedly find that what they miss most when no longer in the hospital or the office is the human contact with other doctors, the other healthcare staff, and the patients. Loneliness and isolation can be unanticipated consequences of sudden and complete retirement. Nevertheless, making a complete break from medicine can avoid the day to day reminders of a past life when the physician was valued and needed as can occur when one  gradually slows down medical practice. For many physicians, going cold-turkey in retirement allows one’s legacy to be remembered for being the doctor that they were when they were still at their best rather than for being remembered for the doctor that they used to be.

The Fade Away

Another retirement option for physicians is to slowly cut back, making retirement a more gradual process. The hospitalist or emergency medicine physician can just take fewer and fewer shifts. The family physician can stop taking new patients and reduce the number of days in the office per week. This results in a much less abrupt lifestyle change than retiring cold turkey and allows the physician to remain socially engaged with patients and other healthcare workers. A downside of dialing back is that the physician can become less relevant than those other physicians who are working fulltime – the physician can feel tolerated but less valued than in the past. You are no longer asked to be on key committees or included in key decision-making. Also, the practice of medicine takes practice, just like it takes practice to be a high-performing athlete or musician. There is a risk of losing one’s skills as one becomes increasingly part-time.

Shedding Unwanted Career Baggage

Over time, every physician builds up career baggage. You are put on a committee that you never get off. You pick up an administrative task that never goes away. Toward the end of a doctor’s career, all of that baggage can really weigh you down. For some physicians, retirement means stopping doing these non-patient care duties that they may not really enjoy doing but continuing to see patients. But with continued patient care comes continued patient phone calls, electronic medical record “inbasket” management, paperwork, etc. that will still require daily physician involvement. Nevertheless, this form of retirement can allow the physician to continue to do what he or she really enjoys while shedding unwanted administrative tasks.

Move To The VA

Columbus, Ohio is one of the largest cities in the U.S. without a Veterans Administration hospital. However, we have a very large outpatient VA clinic. Many physicians in Columbus are drawn to the VA clinic in retirement. It is 9-5 Monday through Friday work with no weekends and no call. The patients appreciate you and there are no pressures from insurance companies. You get a set salary and if you are there for at least 5 years, you are eligible for benefits through the Federal Employees Retirement System (FERS). For physicians who have been in a financially-strapped solo practice and unable to save much for retirement, FERS can be very attractive. An active, unrestricted state medical license allows you to practice at a VA anywhere. It may still be full-time work but full-time at a VA clinic is usually less time than full-time in a private practice. In addition to the Veterans Administration health system, there are many other, similar employment jobs available for physicians who still want to practice medicine but want to get rid of some of the headaches of private practice.

Emeritus Status

For physicians in academic medicine, emeritus status can be a great option. You can continue to attend conferences and grand rounds. You often get free parking at the University and access to the library system. You can continue to do research, write papers, and teach. You may even get to have an office somewhere on campus. Typically, emeritus faculty have a considerably lower salary than regular faculty (or no salary at all) but also have the freedom to “just say no” to pretty much anything they don’t want to do. In many universities, emeritus status physicians can still see patients, but often for a time-limited number of years after retirement. Emeritus programs can be a win-win for both the physician and the university. The physician can remain engaged with teaching, research, mentoring, or clinical care in a part-time basis. The university gets an experienced faculty member to contribute the university’s mission at little or no cost.

Volunteer Medicine

For physicians who retire financially secure, volunteering can allow the physician to continue to utilize their skills for the benefit of society. An advantage of volunteering is that the physician can decide what to volunteer for, when to volunteer, and how much to volunteer. Locally, this can be at various free clinics or on health department boards. It can be on medical missions abroad or at a Red Cross blood center. However, just because you are not getting paid does not mean that you cannot be sued so be sure that you check into medical licensure requirements and the need for medical malpractice insurance.

Locum Tenens

As a locum tenens physician, you agree to provide temporary coverage of a practice for a defined amount of time. This often happens when a physician has to leave the practice for a period due to pregnancy, illness, military reserve requirements, etc. Sometimes it is because someone left the practice and that physician’s replacement will not finish residency for several more months. Or for whatever reason, there are more patients than doctors at a location. Locum tenens jobs often come with a per diem allowance for housing and food. They may also pay for your transportation to/from the practice location as well as your malpractice insurance. The downside is that the physician may have to apply for a medical license in a new state and travel may require absence from family and friends at home. It can also be difficult to get oriented to a new electronic medical record, practice model, and medication formulary. However, locum tenens is often a good option for the physician who wants to work for a few weeks or months a year and doesn’t mind having to travel to do it.

Consulting

This is a pretty broad area and can include working as an advisor to businesses or governments, providing expert opinion to attorneys or insurance companies, surveying hospitals for accreditation organizations, and providing editing or reviewing services for media. The physician can utilize the knowledge and analytic skills that she or he has garnered over the years. It can provide at least a modest stream of income with part-time work and that work can often be done from one’s own home. Even a relatively small amount of consulting income can provide an opportunity for schedule C income tax deduction for expenses such as medical licenses and subscriptions.

Do Something Completely Different

Many physicians sent most of their career dreaming about how they would like to start a winery, or open a restaurant, or create a bed and breakfast. Physicians who have saved well during their medical careers may have a substantial sum saved up that can form the capital investment necessary to start their own business. But many of these ventures can end up being another full-time job with long hours and the pressures of employee management, sales, marketing, and accounting. The harsh realities of being a boutique entrepreneur can turn those dreams into a small business nightmare.

For some financially secure physicians, a carefully planned second career after medicine can provide a way to stay engaged with other people and work days that are free of the weighty demands of managing chronic disease, nights on call, and mountains of paperwork. But the old adage “The grass is always greener on the other side of the fence” can often hold true for physicians starting a second career.

Social Media

Currently, there are 689 million TicTok users, 600 million blogs (including this one!), 340 million Twitter users, and 1.75 million podcasts. Add in webcasts and YouTube accounts and the number of social media users exceeds 1 billion. Launching a social media site can be attractive to the retired physician because content can be recorded whenever there is some free time in the week with no worries about deadlines. And the material can be about anything from medicine to public policy to hobbies.

On average, physicians plan to retire about 5 years later than the average American, at age 68 versus age 63. There are several reasons for this later retirement age, perhaps most importantly that physicians have a long training period and most do not actually enter the medical workforce until after age 30, many years later than the typical American. The retirement choice that each physician makes will depend on one’s physical health and financial health as well as one’s individual wants and needs. But the possibilities can be endless…

March 28, 2021

Categories
Medical Education

Lessons From The 2021 Residency Match

The annual residency match is an event like nothing else in the United States. Each year, 4th year medical students spend the fall and winter applying to and interviewing with residency programs. In February, they submit their ranked list of the programs that they would like to attend next year to the National Resident Matching Program. Simultaneously, all of the residency programs submit their ranked list of the medical students they would like to hire next year. The National Resident Matching Program then pairs the medical students with the residency programs using an algorithm that assigns the students to residency programs by matching the two rank lists. Although it sounds a bit impersonal, it actually is the fairest way to ensure that students get into the residency programs that they want while simultaneously ensuring that the residency programs get the students that they want.

The results of the match were released on Match Day, March 19th, and all across the country, 4th year medical students found out which hospital in which city they will be spending the next 3-5 years at starting in late June. If you drill into the Advance Data Table from this year’s match results, there are some interesting take-away points.

Some specialties are more competitive than others

There are 4 groups of students applying to residency: MD students, DO students, U.S. students attending foreign medical schools, and foreign students attending foreign medical schools. The most competitive specialties are those that fill most of their positions with U.S. medical graduates, and in particular, those graduating with MD degrees.

From this graph, it is apparent that surgical subspecialties are the most competitive residencies. Thoracic surgery, plastic surgery, otolaryngology, and neurosurgery all filled greater than 85% of their available positions with graduates from U.S. medical schools (MD). On the other hand, specialties that filled fewer than 50% of their positions with graduates from U.S. medical schools included radiation oncology, internal medicine, family medicine, and pathology.

The number of osteopathic graduates is growing

The number of applicants from U.S. allopathic (MD) medical schools has been rising slowly over the past 5 years. Combining the number of 4th year medical students applying for residency plus the number of applicants applying who previously graduated from allopathic medical schools, the total number has increased from 18,639 in 2017 to 21,538 in 2021, a 16% increase over 5 years. However, the number of applicants from U.S. osteopathic (DO) schools has increased from 3,590 to 7,710 over the same 5-year period, a 115% increase. Applicants from U.S. medical schools (MD) still have the best chance of getting into a residency with 92.8% of senior MD medical students matching. Seniors from osteopathic (DO) schools were a close second with 89.1% matching. U.S. citizens attending foreign medical schools fair less well with only 59.5% matching into a residency program. Foreign citizens attending foreign medical schools continued to be the least successful in getting a residency with only 54.8% matching. Over the past 5 years, despite the significant increase in numbers of senior students from osteopathic schools applying to residency, osteopathic students have been also been increasingly successful in obtaining residency with their match rate increasing from 85% in 2017 to 89.1% in 2021.

Competitive residencies require lots of ranks

In order to get into a residency program, a 4th year medical student must first apply to that program, then get accepted to interview at that program, then travel to the city where that residency is located to interview, then list that residency program on student’s rank list. In order to increase the chances of getting into a residency somewhere, you need to interview at and then rank several programs. In the past, that meant a lot of expensive travel across the country and a lot of time away from medical school to do those on-site interviews. This year, interviewing became a bit easier and less expensive since COVID-19 resulted in all interviews being done virtually, by video. Overall, the average senior student at an allopathic (MD) medical school ranked 9.4 residency programs. However, that number varied considerably. Not surprisingly, the average number of programs ranked per student correlated with how competitive the specialty is.Vascular surgery led with 20.5 programs ranked per applicant, followed by neurosurgery with 18.2, thoracic surgery with 18.1, and otolaryngology with 15.3. At the other end of the spectrum, students applying to pathology residencies ranked the fewest residency programs per student at 4.4, followed by family medicine at 4.9, and internal medicine at 5.7.

More students go into internal medicine

As in the past, the largest number of positions available is in internal medicine. Medical subspecialties such as cardiology, gastroenterology, pulmonary, and oncology first require an internal medicine residency so many of the students applying to internal medicine have long-term aspirations of subspecializing. Nonetheless, there are twice as many residency positions available for internal medicine (3,523) than are available for the next closest specialty, emergency medicine (1,765). Not included in these numbers are students seeking a preliminary or transitional year of internal medicine which is a pre-requisite before specialties such as neurology, dermatology, and ophthalmology. Of note, ophthalmology is unique in that the ophthalmology match occurs earlier in the year and does not participate in the regular residency match.

Your future doctor is less likely to be an MD

In the past, most U.S. physicians were graduates of U.S. allopathic medical schools and had an “M.D.” after their name. That is changing and with the current trends, this may be the last year that U.S. MD graduates comprise the majority of future physicians.

For the past 5 years, the number of available residency positions in the United States has been increasing. In 2017, there were 27,688 residency positions and this grew to 33,353 in 2021. Although the absolute numbers of applicants from each of the four types of students applying to residency has increased, the numbers of students from osteopathic schools, U.S. students attending foreign medical schools, and foreign students attending foreign medical schools has increased faster than the number of students from U.S. medical schools (MD). As a result, the percentage of students matching to residency from U.S. medical schools has fallen from 65.6% in 2017 to 50.7% in 2021. At this rate, the percentage will likely be < 50% next year. A total of 31% of students who matched this year trained at a foreign medical school, either as a U.S. citizen abroad or as a foreign citizen. That is up from 24% in 2017 and at this rate, in the near future, more U.S. physicians will have trained at a foreign medical school than at a U.S. medical school.

What happens to the students who don’t match?

Unmatched applicants included 1,431 U.S. medical school seniors, 866 U.S. medical school previous graduates, 774 osteopathic seniors, 339, osteopathic previous graduates, 2,143 U.S. citizens attending foreign medical schools, and 3,587 foreign citizens attending foreign medical schools. Combined, this is a total of 9,140 students who did not get into a residency. This is a mixed bag of students. Some will land a residency position in the “scramble” when unmatched students call program directors of residency programs that did not fill in hopes of getting a residency position after the match. Some will take a year or two off to get an MBA or other masters degree. Some will decide not to pursue medicine altogether and switch to another career. Some will take a year off to do research or work in another field and then try again next year.

Those unmatched students who apply to the match a second time face lower chances of obtaining a residency position. Of senior medical students applying to residency for the first time, 92.8% matched; however, of graduates of medical schools applying later, only 48.2% matched. The same trend exists for osteopathic students: 89.1% of senior students applying for the first time matched but only 44.3% of graduates applying later matched.

The results of the National Resident Matching Program tell us a lot about which specialties are hot and which specialties are not. But by looking more closely at the results, we can also forecast who our doctors are going to be in the future.

March 23, 2021

Categories
Physician Finances

Marginal Income Tax Brackets Versus Effective Income Tax

Forget about everything that you think you know about income tax brackets… they are one of the most misunderstood parts of the American tax system. How many times have you heard someone say “More income might push me into a higher tax bracket”? Yes, it will but no, you shouldn’t care in the least. The reason is that Federal income tax brackets are marginal tax brackets. Because of this no American pays income taxes at the tax rate of the bracket that they are in. Instead, we pay the effective tax rate which is always lower than the marginal tax bracket. The following table shows the current Federal income tax brackets.

Many people mistakenly think that their income tax rate is the same as whatever the tax bracket that their taxable income falls into. But that is not exactly correct. The marginal tax system results in everyone paying the same tax rate (10%) on the first $19,751 that they make. Then everyone pays the same tax rate (12%) on the next $60,500 that they make and so on up each tax bracket. The graph below illustrates how this works:

The result is that for any given taxable income a person earns, their federal income is a blend of the individual tax rates for each of the brackets that comprise their total income. In addition, each taxpayer can take the standard deduction from their gross income: $12,400 if filing single and $24,800 if married and filing jointly. The standard deduction results in everyone’s taxable income being lower than their total gross income. As a result, even people in the lowest income tax bracket pay a smaller effective tax rate than the marginal tax rate of that bracket. The next graph shows the current marginal tax brackets for Federal income tax in the dotted line and the effective tax rate in the solid line.

From this graph, you can see that the effective tax rate (what you actually pay) is always less than the tax bracket that you are in. It also shows that the effective tax rate does not jump up when your income increases enough to put you into a higher marginal tax bracket. Instead, the effective tax rate goes steadily up at a relatively constant rate for every dollar more you earn. Periodically, congress will set new tax brackets. The graphs below compare the 2016 and 2020 brackets.

As you can see, trying to figure out what those tax bracket changes mean for any one person at any given income is difficult. So, let’s look at how the 2020 brackets affect people at different incomes:

The above graph shows the tax brackets at the end of the Obama administration (blue) versus the tax brackets at the end of the Trump administration. Just looking at a tax bracket table can be hard to interpret – what is important is your effective tax rate and not the marginal tax bracket. The table below shows the effective tax rates during the two administrations:

The effective tax rate that taxpayers of every income dropped during the Trump administration. The reduction in effective tax rates was fairly consistent across all incomes, ranging from a drop of 3.7 to 5.9 percentage points. Some people focus on the top tax bracket (currently $622,051 and 37%). But as was demonstrated earlier in this post, no one pays an effective tax rate as high as their marginal tax bracket. So even a person with an extremely high gross income of $700,000 per year only pays an effective tax rate of 26.7%.

Tax rates go up and down with different administrations. Tax cuts are an enormous crowd-pleaser for voters. However, eventually, deficits catch up with tax cuts – the government cannot spend money on services that voters demand and then tax raises ensue. In general, taxes go up when Democratic presidents are in office and go down when Republican presidents are in office. The graph below shows the marginal tax rate for the highest tax bracket over the past 36 years:

So, don’t fear being in a higher income tax bracket. Indeed, you should try to be in as high of an income tax bracket as you can. But it does make retirement planning complicated. Let’s say you have an option of putting retirement savings in a regular 401(k) or a Roth 401(k) this year. If you put money in the regular 401(k), the money will be invested pre-tax and then you will pay regular income tax on the withdrawals when you take the money out in retirement. If you instead put money in a Roth 401(k), then you will pay income tax on the money now and then you will pay no tax on the withdrawals when you are retired.  The strategy is to pay income taxes when you have the lowest effective tax rate. The problem is that you cannot predict today what the effective tax rates are going to be when you retire.

As an example, assume you are making a taxable income of $150,000/year today. Your effective tax rate in 2021 is 14.1%. Now assume you will have a taxable income of $100,000/year when you retire. If tax rates are the same in your retirement year as they are now, then your effective tax rate will be 11.7% in retirement and so you would be better off putting your money in a regular 401(k) today to minimize your overall tax burden since your retirement income tax rate will be lower than your current income tax rate. However, if whoever is president when you retire goes back to the same tax rates we had in 2016, then that taxable income of $100,000/year in retirement will result in an effective tax rate of 15.6%. This would be higher than your current tax rate on your taxable income of $150,000 today of 14.1%. So, in that situation, you’d be better off putting your retirement investment in the Roth 401(k) since your tax rate will be higher in your retirement year.

No one has a crystal ball to predict the tax rates of the future. More than likely, they will go up some years and go down other years. So, should you put your retirement investment in a regular 401(k) or a Roth 401(k)? The best option is to do both and split your investment with half in a regular 401(k) and half in a Roth 401(k). When you are retired, if the effective tax rates go up one year, then take money out of your Roth 401(k) that year. On the other hand, if the effective tax rates go down the next year of your retirement, then take money out of the regular 401(k) that year. Your best defense against variable tax rates in your retirement years is a diversified portfolio that includes both the regular 401(k) and the Roth 401(k). If you work for a non-profit company, then the same goes for a regular 403(b) and a Roth 403(b). If your company does not offer the Roth 401(k)/403(b), then put some money in the regular 401(k)/403(b) and some money in a Roth IRA (depending on your income level, you may need to initially put money in a traditional IRA and then do a Roth IRA conversion to avoid penalties).

In a letter to Jean-Baptiste Le Roy, Benjamin Franklin famously wrote: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.” I would add to that that the only thing certain about taxes is that the rates will be different in the future.

March 15, 2021