On Monday, the Bush administration set a pay cut for physicians who have not yet adopted electronic record-keeping beginning with the 1st of January 2008. They face a 10 percent pay cut from Medicare next year, when treating their elderly and disabled patients.

Health analysts believe that electronic record-keeping will reduce medical errors and could have a beneficial effect on health care expenses. But the number of doctors who are already using electronic records is only about 10 percent of the total and the costs for putting in place such computer systems can range between $20,000 and $40,000.

This new measure is expected to make physicians implement health information technology to meet official standards in order to be eligible for higher payments from Medicare. Another measure to pay doctors more has already been voted by the House. Payments for private insurers were trimmed and Senators are looking for more modest cuts for the insurers. It is believed that payments to the insurers are too generous and it forces beneficiaries in traditional Medicare to pay higher premiums.

Insurers serve more than 8 million people enrolled in the Medicare Advantage program. They take on the risk of Medicare providing benefits to elderly people in return for a government subsidy.