Reading some of Dean Baker’s work exposed me to an aspect of US health care coverage that I haven’t seen discussed much: protectionism for medical professionals and its impact on health care costs. According to this MNT article (http://www.medicalnewstoday.com/articles/77635.php), physicians are in short supply. This raises some interesting questions. How does the supply of medical service effect the cost of care and the salaries of medical professionals? Why is the supply short in the first place? And on the cautious side, could there be negative consequences of having a more saturated job market?
In recent history, trade agreements such as NAFTA have expanded the ability of US countries to invest in cheap imports produced by foreign workers. This has typically been referred to as “globalization”. While it has an impact on the market for manufactured goods, it has not applied to skilled professional services including medicine, law, academics and journalism where we in the United States seem to retain protectionist policies.
Medical licensing and citizenship restrictions make it difficult for foreign doctors to live and practice permanently in the US. A review of these restrictions can found in Freeman’s (2003) article:
http://www.cepr.net/documents/publications/professional_supplement.htm
Increasing our supply of physicians would presumably drive down their average salaries (currently around $180,000) and in doing so drive down the cost of medical care. According to economist Dean Baker in his book “The Conservative Nanny State”, if average physician salaries were reduced to European levels (80k/year?) the US would save $80 billion per year on medical costs.
Another question that is raised by the issue: why is acceptance to medical school so competitive? The implication is that demand for medical training significantly exceeds the number of openings available in medical schools. Could we be increasing the ranks of professional medicine without (or in addition to) loosening restrictions on foreign doctors? I can see the objection arising that this may result in lowering the general level of skill and expertise of our medical force. That is another aspect of the issue worth looking into, although I expect that those who cannot afford medical care at all would not be so picky regarding the strength of their doctors’ medical school applications.
