Why are doctors willing to display 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 is bullsh*t because 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 contributing to America’s high medical expenditures. It is both true and so irrelevant that it is 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. And the quantity of doctors/capita has been steadily getting better according to World Bank Data showing a rising number of doctors per 1000 people:

Despite the slowly increasing number of doctors, the US is one of the worst countries at producing doctors of any rich nation and we end up importing a lot of our doctors from other nations. Here is the most recent data comparing the US number of doctors per 1,000 with the other nations in the OECD:

Xu suggests that the reason America has too few doctors is that regulations on doctors are causing them to quit working as doctors 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 shows because she is ignoring the baseline rate of leaving professions in the general public. 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, most are retiring earlier than that, but this illustrates the opposite problem that some 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 healthier for their work-life balance if the average doctor worked fewer hours.

The real reason why the US has too few doctors in the US is not that they are quitting early, but that the US is extremely bad a producing doctors in the first place. 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. Doctors lobbying groups, particularly the American Medical Association and we get the number of doctors that the AMA 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 our supply of doctors 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 American doctors get the highest pay 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 given that Cuba is communist, their government undoubtedly imposes even more regulations on doctors than in America.  Cuba produces a lot more doctors/capita than the US because Cuba doesn’t have a powerful doctor lobby to limit the supply of doctors in order to drive up prices and status for the doctors who are already in the club.

Ironically, Cuban doctors probably have fewer overall regulations to deal than American doctors because most regulations come from the power of the purse.  Any large buyer of services can demand all sorts of regulations because ‘the customer is always right’ and American doctors have a lot more customers than in Cuba which just has one.  American doctors who get paid by government insurance must deal with regulations from the government and they also deal with regulations from each of their various insurers. The US government only has two major insurance programs, Medicare and Medicaid, 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. Sure salaries are somewhat lower there, but Canadian doctors are still very highly compensated and they can focus more on just practicing medicine rather than on paperwork.  My friend likes practicing medicine under their universal health insurance system too, because he never has to deal with the awkward problem of having to withhold care from patients just because they cannot afford it.

Posted in Health

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