Saturday, June 22, 2013

Should we increase the supply of medical care?

Tyler Cowen recently endorsed some comments about the need to increase the supply of doctors in the U.S., an opinion which seems at odds with everything we know about supplier induced demand:
1. Ramp up drastically the training output of new doctors and nurses: More med schools, larger intakes per school, elimination of 4 years of pre-med university etc. More med school student scholarships and subsidies?  
2.Massively expand other lower tiers of the medical system: Physicians assistants, Nurse Practitioners etc. 
4. Fully recognize all medical degrees from similarly developed nations (e.g. Canada / UK / Japan / Australia etc.) to the point that doctors from these nations can register and practice almost instantly in the US. Provide an almost limitless immigration quota for doctors from western nations. Even better, aggressively recruit doctors from abroad. Mostly ignore APA’s opinions in this context.
As such, I was intrigued by seeing the DMCB's notes on a recent trip to Germany, where healthy system leaders  were conscious of the need to reduce the supply of medical care: 
In it's conversations with some of Germany's health system leaders, there appeared to be a consensus that there were "too many" hospitals and that some had to close.  This belief in supplier-induced demand, however, was tempered by the recognition that hospitals are not only important employers but have significant political power.  It remains to be seen if Berlin can pull that off.
The ACA is likely to increase the supply of medical care in the U.S., and this is one of the biggest reasons for pessimism on long-term health care spending.  And I'm pessimistic about the ability of government to reduce supply.  As long as prominent economists and policy wonks believe that greater supply will reduce prices, I will be skeptical that countries can pull off reductions in the supply of medical care.  


  1. Hi, interesting post. I have been wondering about this topic, so thanks for posting.