Why are doctors willing to publish displays of ignorance of basic health economics?

In the Atlantic magazine, Rena Xu recently published an essay arguing that “electronic medical records and demanding regulations [are] contributing to a historic doctor shortage.” Although there are some grains of truth in the article, it completely misses the main reasons why there is a doctor shortage in the US. It would be like writing an article to investigate whether the overuse of Band-Aids is causing a historic high medical expenditures. It is both true and so irrelevant as to be extremely misleading. Similarly, doctors often want to blame high healthcare costs on malpractice insurance which is only slightly less trivial than Band-Aids.

First of all, Xu doesn’t quantify the shortage of doctors in the US and if she did, she would see that it predated the regulations and electronic medical records that her anecdotes focus on. The US doctor shortage has been steadily getting better according to World Bank Data as the number of doctors per 1000 people has been rising:

Despite this slight improvement over time, the US is one of the worst countries at producing doctors of any rich nation. Here is the most recent data comparing the US with the OECD:

Xu suggests that the problem is that regulations are causing doctors to leave the profession and she cites a study published by the Mayo Clinic, which reported that one in 50 doctors planned to leave medicine altogether in the next two years. That statistic shows the opposite of what she thinks. It is a very low rate of quitting, not a sign of burnout. Most doctors do not quit until they reach retirement age and they retire at a later age than in most professions. if only one in 50 doctors are thinking about quitting, then the average doctor might not be retiring until they are nearly eighty years old! Fortunately, some are retiring earlier than that, but the bigger problem is probably that doctors are not retiring early enough and there is poor quality control over doctors who continue to practice despite deteriorated skills. Xu also claims that “one in five planned to reduce clinical hours over the next year,” but that isn’t surprising either. Physicians work a lot more hours than most professions and it would be healthy if the average doctor worked fewer hours.

The problem is that the US has been extremely bad a producing doctors, not that they are quitting. Mark J. Perry produced this graph of the number of new doctors per capita in the US:

Pathetic. The reason the US is so bad at producing doctors is because of interest-group politics. We get the number of doctors that the American Medical Association wants us to have. As Mark J. Perry says:

The “Council on Medical Education and Hospitals” of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA effectively limits the supply of physicians, which increases their wages, and raises the overall cost of medical care.

The doctor shortage isn’t caused by doctors quitting, it is caused by the doctor union (the AMA) which restricts the supply more severely than in any other rich nation. That is why doctor salaries are higher than in any other nation on earth. Doctors complain that their pay is too low, but it is a lot lower everywhere else in the world and there is an enormous surplus of smart American students who want to get into medical school but cannot because the AMA only approves very few seats in medical school. Even Cuba is MUCH better at producing doctors than the US is and Cuba is communist, so their government undoubtedly imposes more regulations on doctors than in America.

Despite this, Cuban doctors probably have fewer overall regulations to deal than American doctors because regulations come from the power of the purse and American doctors must deal with regulations from not only the government but also regulations from each of their various insurers. The US government has two major insurance programs, Medicare and Medicaid which impose the biggest bureaucratic work for doctors, but then every private insurer has their own paperwork requirements too, so doctors must manage vast office staff to help them with billing. American hospitals usually have more people working in billing than they have doctors! That isn’t true in countries like Canada where the government pays for everything. Billing is much less bureaucratic there because it is much simpler.

So if American doctors want to practice medicine in a place with fewer regulations, I’d suggest that rather than quitting as Xu claims they are doing, that they try what one of my doctor friends did and emigrate to Canada. Salaries may be a bit lower there, but Canadian doctors are still very highly compensated and they can focus more on just practicing medicine rather than on paperwork, and there is universal health insurance, so practicing medicine is much more pleasant because there isn’t the awkward problem of having to limit care to people just because they cannot afford it.

Posted in Health

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