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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.

Comments

booklegger
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.
bradhicks
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.
dnwq
Jul. 24th, 2009 09:00 am (UTC)
Libertarians like Milton Friedman were criticising the limitation of supply of doctors by the AMA since the 70s, so it's not exactly an unheard argument. Almost all of them won't consider any third options besides "unrestricted medical unionisation" and "unrestricted medical market", though. A more recent example of such discussion.
booklegger
Jul. 24th, 2009 09:08 am (UTC)
More Ha-ha only serious.

I'll not pretend that we want to return to the golden era of quackery, but I note that the AMA only acquired the power to fleece the American public because of licensure.
There isn't a single licensure scheme in the US that isn't being run for the benefit of the licensees. For instance: licensing boards spend *very* little time kicking out bad doctors(or bad lawyers, or bad beauticians, or bad interior decorators), and instead spend almost all their time pursuing the unlicensed. Kicking out bad doctors benefits mostly the public, but prosecuting the unlicensed benefits mostly the licensees.

So, why is it my mother has to get a prescription for Levothyroxin? Her thyroid isn't going to spontaneously recover. Sure, someone needs to do a blood test to possibly up the dosage, but it damn sure wasn't a doctor who drew her blood, nor ran the equipment. But she had to pay the doctor their $100 fee to be told "yep, same dosage as last year". This is little more than bribe seeking.

And as I noted, the market is forcing their hand anyway, with the rise of Nurse Practitioners, and PAs, and the like.
minidoc
Jul. 24th, 2009 12:32 pm (UTC)
Synthroid can be very dangerous if misdosed. Underdosing is not necessarily a good thing but if overdosed, you get tremulousness, tachycardia, weight loss, anxiety, arrythmias and hypertension. It could also be fatal.

I understand that the dose might not change but perhaps the doctor is assessing if the dose is correct by labs but also by clinical critera. There is such a thing as subclinical hypothyroidism. I know that on the surface it may not look like we are doing anything but this is part of the problem we have in healthcare now. Those that use their minds but don't cut or do procedures are not rewarded for it. I understand the frustation felt by the large sums charged for what seems to be a short time. I did not understand how ugly the overhead is in most medical practices until I started to read about it. I'm not saying it alone accounts for the expense.

The FDA is the one who controls what is by prescription versus over the counter. So if you're upset about the Rx issue take it to them, doctors can't influence that or try to order it from another country if you don't think that monitoring the medications is important to you.

I don't have a problem with other licensed professionals but I will tell you that if you someone who is really compliated and sick, there is a difference between the NP, PAs and the doctors. What matters more may not necessarily be the degree but the experience of the practitioner. Remember that most NPs, and PA's do not do any residency and they get most of their training on the job. Some of that training is very good. Sometimes its spotty. Even newly minted doctors can be dangerous as I'm finding out more and more this week at work.

teflonspyder
Jul. 24th, 2009 01:40 pm (UTC)
It seems like the problem then is the self-interest of the licensing boards, something most directly changeable by increased specificity in regulatory practice. As far as Hands getting forced, how does that benefit us? "Things are shit but the shittiness is making people do things" isn't exactly a ringing endorsement of emergent markets on its own.
kimchalister
Jul. 24th, 2009 09:33 pm (UTC)
I work in dentistry, and there certainly is a peer review board: my boss is a member of it. At our office meeting yesterday he told us that our county took away licenses of three dentists last year, while Los Angeles county averaged 13 a month.
The other thing I know about this, is that I cannot complain if I think a dentist is incompetent, it has to come from a member of the public. Yet, I had a patient once who reported another dentist had cleaned her teeth with a sanding disc and I suggested that she report it, as I couldn't, but she declined. Too much trouble.... I guess that happens often.
minidoc
Jul. 24th, 2009 12:01 pm (UTC)
I know plenty of folks that are licenced and they still do kill people. I see it all the time when working. As far as the one with the comment about the GP not being any harder than being a mechanic. Well, technical school can get you ASE certified in a few years, I went to school for 20 years plus another 4 years for residency. However to be fair I am technically not a GP but double boarded. The legacy of the GP is fading as technically you used to only need to complete at least an intern year to be a GP. Now to get boarded in something this is no longer the trend. Family practice and internal medicine requrire 3 years.
ff00ff
Jul. 24th, 2009 10:55 am (UTC)
Capital idea, booklegger. I think it'd be dandy if the government didn't require licenses to practice medicine. Surely the private sector should be able to handle that. With an Oprah sanctioned doctor, for instance I could be assured of the highest quality astrology, chiropractic, homeopathy, and acupuncture cures! But then, maybe you aren't one of the millions of Americans who trust Oprah, and you'd rather be administered a Ted Haggard ministry approved faith healing enima.
ff00ff
Jul. 24th, 2009 10:59 am (UTC)
On a more fair and less sarcastic note, I think the real nut of the issue is that there does need to be quality control, and hence endorsement by a credible source via licensing, of medical practitioners. That the government has given this monopoly to a professional association of doctors is probably the least bad group of people to give it to, but that doesn't eliminate all problems. Can you think of a system that would control the quality of medicine without also giving the corrupt an opportunity to enrich themselves?
minidoc
Jul. 24th, 2009 12:14 pm (UTC)
you bring up an excellent point. The problem is partly how to define quality and how to select for it. The powers that be have been pushing for "board certification" but this is also subject to contentious debate. Folks who graduated 20 yrs ago were "lifetime certified". This has gone the way of the dodo and now we get to recertify. Now we an industry that charges us abou $1500-2000 just to sit for the exams and then to recerify every 7-10 years. Then to spend money on top of it for travel, review, books and classes. I know plenty of people who passed the boards and are useless at your bedside. I also know folks that had trouble passing the boards but eventually passed that I would allow to take care of family members.

Honestly to your last questions, I can't envision a system that would fit your critera as long as humans were involved.
hairyfigment
Jul. 24th, 2009 10:23 pm (UTC)
Find three qualified doctors from abroad (or any group of people we trust) and put them in charge of licensing or recognizing the licenses of immigrant doctors. Now the AMA suddenly has an incentive to behave like less of a dick.
hairyfigment
Jul. 24th, 2009 10:25 pm (UTC)
Oh yes, and create a strong public option that will pay doctors enough to attract qualified medical personnel from other countries and no more.