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Increase the Supply

There's one criticism that nobody from either party is making of the Obama/Pelosi health care plan, not the Republicans, and not the Blue Dog corporate Democrats, either, and it would, ironically, be a fair complaint. You see a teensy little hint of it in the oft-heard argument about whether or not there's anything in the plan that would actually reduce costs. That's important, because if we increase the customer base by increasing eligibility, but we don't reduce the cost, then the total cost of healthcare just plain has to go up. Period. But so far, that argument has taken the form of arguing about whether or not preventative medicine saves lifetime costs (and contrary to what Obama and Pelosi would have you believe, experiments in this area have not been conclusive), arguing about just how many dollars can be saved by upgrading and standardizing billing and patient records systems. What's missing from that argument is the single most obvious question: why does it cost so much in the first place?

And, frankly, if there weren't a massive political taboo about answering that question, if the answer to that question weren't deeply Forbidden Lore and completely off-limits in polite company, the answer would be quite obvious, because it's the same answer as every other time you ask the question about why any other fill-in-the-blank is so expensive: demand is high, supply is low. Well, then, you ask whenever demand is high and supply is low, why is the supply so low? Here's what nobody, from either political party, has the guts to say to you: because the dominant cost in the health care industry is set by two of the most untouchable, politically powerful price-fixing cartels, the two most corrupt unions in the entire country: the American Medical Association and the American Dental Association. Even the similarly collusive and equally greedy price-fixing cartel that is made up of the tiny number of CEOs of pharmaceutical companies lives in awe of the clout, and the brazenness, of the AMA and the ADA.

Here is what nobody has the guts to tell you, for fear of what would happen to them if they did. Back in the 1970s, the ADA and the AMA decided that there was something morally wrong about having doctors and dentists earn a middle class salary. And, they concluded quite rightly, there was a reason why attempts to price-fix the salaries of doctors and dentists weren't working: there were just too many doctors, and far too many dentists. The barriers to entry to the field were too low. So what they did about it was adopt a political position of absolute and total opposition to any expansion of medical schools or dental schools. In 1970, the US population was 203 million. Now, the US population is 309 million, slightly more than 1.5 times as high ... but thanks to the unceasing efforts of the ADA and the AMA, we graduate the same number of doctors and dentists per year that we did back in 1970.

They say that if they didn't restrict the number of classroom openings in medical school, too many unqualified people would become doctors. But the number of medical scandals hasn't declined as admissions standards have climbed, as medical schools mobbed with 50% more applicants per seat than they had in 1970 get to be more picky. No, on the contrary, even with the tougher admissions standards we have today, you can be entirely qualified to enter medical school, you can demonstrate through your grades and your test scores in pre-med that you are entirely capable of becoming a doctor ... and get turned away, in favor of someone more qualified. But saying it that way doesn't change the fact that you were still perfectly qualified to be a doctor, and would have made a perfectly good doctor, as good as any doctor that's graduating today, and maybe even better than some, but you won't be; at best, you'll be a nurse practitioner, or a medical technician.

Confronted with this ... which they almost never are ... the medical associations would argue that we must restrict the supply of doctors per capita, of dentists per capita, because if neurosurgeons couldn't look forward to a salary of $950,000 per year or more, nobody would want to become a neurosurgeon, because if dentists couldn't look forward to a salary of $175,000 per year or more, nobody would be willing to become a dentist. (And yes, those numbers are after operating expenses, including malpractice insurance, and long after the medical school loans are paid off.) They insist, contrary to all evidence, that there is nobody who'd be perfectly willing to save lives for, say, $500,000 per year, that nobody would be willing to repair teeth for a measly $90,000 per year. Which is deranged, or else they wouldn't have to be stopping people from trying to do so, so they can support those salaries! Nor can they erase the historical evidence that, back when medical schools and dental schools were expanding as the US population expanded, there were in fact no shortage of perfectly happy, perfectly comfortable middle-class dentists and upper-middle-class surgeons; indeed, the great advances in heart repair and transplant surgery were made by surgeons who made a great deal less than today's doctors do.

Greg Mankiw, the tireless (and tiresome) supply side economist, recently blogged that all the proof he needed of how the superior American health care system is the best in the world can be found in two readily available facts. First of all, he pointed out, American doctors must be the best in the world, or else they wouldn't be getting paid twice as much! And secondly, if American doctors weren't the best in the world, we wouldn't be able to deliver the quality of health care we do with half as many doctors per capita as every other industrialized nation! This tells you all you need to know about the intellectual rigor behind supply-side economics: the man who literally wrote the standard textbook on Chicago-School economics (a) thinks that American health outcomes are as good as the rest of the industrialized world, when our actual statistical outcomes are closer to third-world levels, and (b) he isn't enough of an economist to realize that the reason doctors doubled their salaries, relative to inflation, isn't because they became twice as good, but because (as he himself knows) they became twice as scarce.

When I was a kid in the 1970s, as (arguably) one of the very last of the Baby Boomers, I was told that part of the promise of America was that no matter what color you are, what gender you are, what neighborhood you were born in, or what your parent(s) did for a living, if you did the work, if you learned the material, if you proved that you were good enough, there was nothing you couldn't do. And maybe, in the 1970s, that was almost sort of true, or at least more so if you were white and male. But in the intervening time, we allowed powerful price-fixing cartels to set quotas for just how many people, regardless of whether or not they did the work, regardless of whether or not they learned the material, no matter how good they proved they were, would be allowed to become doctors or dentists. Once those quotas are filled, ideally with privileged children of the upper-middle class, everybody else who was capable of being a doctor gets shunted back down to become a nurse practitioner, a physician's aide, a medical technician. Once those quotas are filled, ideally with the somewhat privileged children of the middle class, everybody else who was capable of becoming a dentist gets shunted back down to become a dental assistant, a dental technician, a dental hygienist. In other words, only half of our qualified people are allowed the artificially scarce privilege of being real doctors or real dentists, so that the person working on the $15,000 a year telemarketer's teeth can be guaranteed a salary ten times as high, so that the person stitching the replacement veins onto a $90,000 a year computer programmer's heart can be guaranteed a salary ten times as high. All of the missing doctors and missing dentists who might have done it for half as much (and still lived quite comfortable lives!) must, instead, serve as the barely-working-class, chronically emotionally abused servant class of the doctors and dentists.

I don't care if we import enough doctors and dentists from overseas to double their numbers. (I had the good fortune to have my dentist before-last be a Russian Cold-War refugee, and don't let anybody tell you that there are no med schools as good as ours; she was a better dentist than almost any other dentist I've ever had work on my teeth.) I don't care if we do it the more reliable, and maybe safer, and certainly less internationally politically explosive way by doubling the number of medical and dental school classrooms, even if we have to temporarily import doctors and dentists to teach in them. All I know is this: whenever anybody, any politician or spokesman or journalist or think-tank intellectual or author, from either party, either pro-reform or anti-reform, talks about health care, the question you ought to be asking them the first is: "what do you plan to do to increase the amount of health care available in the United States?" Because you can't solve even the tiniest of the problems with health care costs, let alone the main problem, if you don't increase the supply. That's just basic economics.


( 93 comments — Leave a comment )
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(Deleted comment)
Jul. 24th, 2009 09:13 am (UTC)
Socialized medicine solidarity, icon solidarity!
Jul. 24th, 2009 07:21 am (UTC)
Good god thank you for bringing this up. People look at me like I have nine heads whenever healthcare debate is brought up, and after I let the crazy's speak about big pharma, or the anti-corporatist speak about insurance premiums, or the right wing lunatics blame trial lawyers, I always try to add in "You know, health care couldn't help but become cheaper if the AMA didn't keep medical school acceptance rates artificially low.

Medicine is one of the easiest scientific fields to begin thinking magically about, maybe because the practitioners of medical science are so intimately involved in communicating with each of us, and healing us in ways we would not be able to do. They seem like wizards, but it is not a strange gene, or an alignment of the stars that makes a doctor, it is an education, and that education is denied every year to thousands of qualified students.

If you've ever sought mental health care? The problem there is at such a critical stage that if you attempt to contact a psychiatrist or psychologist in private practice anywhere in the US you will be told that they are not accepting new patients because they are booked months in advance. The only way to get mental health treatment is to literally convince a secretary to go as far into the future as it takes to find a free appointment date, often in excess of seven or eight months. And god help you if you are not insured for mental health. Many psychologists and psychiatrists, socially minded as they tend to be, have sliding pay scales for patients of different means. But if you are not insured, you can bet that you are not going to be the first one they call within those seven or eight months if there is ever an appointment cancellation and suddenly the doctor can see you.

My last several primary care physicians have all been Indian, because India has excellent education, and Indians of means, like doctors, know a lucrative shortage of service when they see one. I wonder what the AMA does about foreign trained doctors setting up practice.
Jul. 24th, 2009 09:05 am (UTC)
The AMA is a member of the ACGME, which certifies foreign-trained doctors through the ECFMG (fear the acronyms!).

In short: it sets standards for foreign-trained doctors, too. Expect those to be very high.
(no subject) - discogravy - Jul. 24th, 2009 12:33 pm (UTC) - Expand
(no subject) - kimchalister - Jul. 24th, 2009 09:19 pm (UTC) - Expand
(no subject) - dnwq - Jul. 24th, 2009 09:16 am (UTC) - Expand
(no subject) - dd_b - Jul. 24th, 2009 12:27 pm (UTC) - Expand
(no subject) - monkeyd - Jul. 25th, 2009 12:31 pm (UTC) - Expand
(no subject) - interactiveleaf - Jul. 26th, 2009 09:50 am (UTC) - Expand
Jul. 24th, 2009 07:40 am (UTC)
I'm always kinda surprised at the entry requirements to medicine. I'm not sure how it works there, but here, you get into "medicine". Now, no one can tell me that it takes the same skills to be a GP as it does a surgeon, so why should we be restricting entry to becoming a GP to just people who can potentially become surgeons.

Now, I'm not a doctor, but I really can't see how being a GP is any harder than being say, a motor mechanic.
Jul. 24th, 2009 12:21 pm (UTC)
Um, the human body-and-mind is immensely more complicated than an automobile?
and fewer funerals - discogravy - Jul. 24th, 2009 12:36 pm (UTC) - Expand
(no subject) - anfalicious - Jul. 24th, 2009 11:23 pm (UTC) - Expand
(no subject) - dd_b - Jul. 25th, 2009 12:36 am (UTC) - Expand
(no subject) - monkeyd - Jul. 25th, 2009 12:35 pm (UTC) - Expand
Jul. 24th, 2009 07:57 am (UTC)
Libertarian moment of the day:

If the government didn't require licenses to practice medicine, this wouldn't have happened.

This ends your Libertarian moment of the day.

Less snarkily, I'll note an odd trend. As doctors have become more scarce, more and more doctoral functions are getting pressed onto non-doctors (nurses usually). The market gets what it wants, even as the AMA et al. try to hold back the tide.
Jul. 24th, 2009 08:36 am (UTC)
May I assume that you're just being funny? Surely you were aware of why we instituted licensing for physicians: we tried letting anybody who wanted to practice medicine without first demonstrating minimal competence, and the death toll was little short of Biblical.
(no subject) - dnwq - Jul. 24th, 2009 09:00 am (UTC) - Expand
(no subject) - booklegger - Jul. 24th, 2009 09:08 am (UTC) - Expand
(no subject) - minidoc - Jul. 24th, 2009 12:32 pm (UTC) - Expand
(no subject) - teflonspyder - Jul. 24th, 2009 01:40 pm (UTC) - Expand
(no subject) - kimchalister - Jul. 24th, 2009 09:33 pm (UTC) - Expand
(no subject) - minidoc - Jul. 24th, 2009 12:01 pm (UTC) - Expand
(no subject) - ff00ff - Jul. 24th, 2009 10:55 am (UTC) - Expand
(no subject) - ff00ff - Jul. 24th, 2009 10:59 am (UTC) - Expand
(no subject) - minidoc - Jul. 24th, 2009 12:14 pm (UTC) - Expand
(no subject) - hairyfigment - Jul. 24th, 2009 10:23 pm (UTC) - Expand
(no subject) - hairyfigment - Jul. 24th, 2009 10:25 pm (UTC) - Expand
Jul. 24th, 2009 08:00 am (UTC)
if neurosurgeons couldn't look forward to a salary of $950,000 per year or more

That's insane money. In the UK, neurosurgeon look forward to a salary of £100,000 and it's _still_ massively over subscribed.
Jul. 24th, 2009 11:07 am (UTC)
w0rd. No one deserves a million bucks a year. Period.
(no subject) - daveon - Jul. 24th, 2009 09:46 pm (UTC) - Expand
Jul. 24th, 2009 09:09 am (UTC)
Not only that, but doctors in America are encouraged to be entrepreneurial, which also pushes up costs. There is a good article from the New Yorker here:
Jul. 24th, 2009 11:33 am (UTC)
Hi. georgiaclaire, environmentalist/journalist/ writer/philosopher with many opinions, here via friendsfriends, friending you now.
Jul. 24th, 2009 12:10 pm (UTC)
As more and more functions have been pushed onto the "lower" classes of medical practitioner, there's now a nurse shortage in many parts of the country, too.

But no lack of applicants to nursing programs. Why is that? Well, nursing instructors don't make a living wage. So why not practice your craft and make money rather than teach and depend on others to keep you afloat?
Jul. 24th, 2009 12:26 pm (UTC)
Never mind nursing instructors, RNs don't make a wage that's competitive with other work. I know quite a few people who trained as RNs and then got out of the field. Pay is mediocre and hours and conditions are abysmal.
(no subject) - anitra - Jul. 24th, 2009 12:55 pm (UTC) - Expand
Jul. 24th, 2009 12:25 pm (UTC)
Yes, the cartel has done harm (and, like others, I've been aware of it since the 1970s; it's not THAT secret). Worth trying to take on, certainly.

But there's also pay-by-procedure policies with the medical insurance industry, which only reward doing things.

Oh, and the AMA is effective in limiting supply, but apparently not in setting rates -- insurance companies and Medicare set rates.
Jul. 24th, 2009 12:31 pm (UTC)
Canada has the same problem - far too short a supply. Ours, however, indicates one of the (few) really great failures of our system: the university medical schools are all public universities, and the quotas are set by the university administration and also by the government. Because access is subsidized, the government can indicate how many people they'll pay for and the university doesn't have much choice.

It becomes a vicious circle, too - too few practising doctors leads to not enough doctors who can take residents, either because they're too busy or because one doctor really can't supervise all that many people at the same time. So lowering the number of medical school spots affects how many spots you can offer ten and fifteen years later.

BTW, Canadian doctors can easily earn several hundred grand a year, and they're not hurting - they live in the nicest parts of town, drive the nicest cars, own the nicest vacation homes, and it doesn't take that long to pay off their med school bills.
Jul. 25th, 2009 04:31 pm (UTC)
Geeze, you'd think the best idea would be to open all positions possible in the schools, and then carefully manage supply and demand from there. Keep wages as low as possible so that only a certain amount (that quota) of doctors are willing to take that salary. Problem solved! I'll bet it would turn into $100,000/year or so. Meanwhile, the government might wise up and realize that they can suddenly afford more doctors.
(no subject) - velvetpage - Jul. 25th, 2009 07:21 pm (UTC) - Expand
Jul. 24th, 2009 12:40 pm (UTC)

for somewhat about how continuing education for doctors works.

Another direction is to find out what patients can do for themselves and let them do it. If diabetics can learn to give themselves injections, so can people in general. For that matter, junkies give themselves injections, and when they get into trouble, it seems to mostly be from the drugs or unclean needles, not from the injection as such.

One other perversity of the American system is the insistence on viciously long hours for interns. It's dangerous for them (car accidents) and for their patients.

More generally, the same questions you're asking about doctors applies to university education. Why aren't there more and/or larger universities when the price keeps going up?

I think the right question for the medical system isn't so much about it being cheaper in other countries-- it's how do you run a gigantic anti-corruption campaign.

Jul. 24th, 2009 01:23 pm (UTC)
Thanks for confirming something I've long suspected.

I used to teach physics lab to pre-meds, because we had to conform to a curve, many of them got Cs. The ones who I told their grades face-to-face certainly *acted* as though their plans for medical school had been destroyed, which led me to believe that admissions were extremely competitive. I suspected that this was why.
Jul. 24th, 2009 02:30 pm (UTC)
the competition is stiff and horiffic. The problem is that they use some of these classes perversely as "weed out" classes to limit the applicants. The problem is good grades alone don't guarantee a decent doctor. Many of the best an brightest in my med school class had the personality of cardboard and were not great at the bedside.
Jul. 24th, 2009 03:17 pm (UTC)
There are some pretty serious insurance cartel issues going on here, too.

More doctors would probably be nice - less greedy administrators would probably be better.
(Deleted comment)
Jul. 25th, 2009 04:21 pm (UTC)
So basically, he's saying that maintaining the American middle class requires a certain level of human sacrifice.
Jul. 24th, 2009 03:47 pm (UTC)
I completely
And 100% agree with this plan, and the fact that neither party is endorsing it pisses me off.
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