Medicine, Economics and the Future

Economics matters.  And so do incentives.  When young people are thoughtful in choosing a course of study before or during college, they’ll consider some of the following:

  • What will I be good at?
  • What could I enjoy doing?
  • What careers will be easy to find jobs in?
  • What fields of study will lead to a career that pays well?j

Now consider this:

The United States faces a shortage of as many as 90,000 physicians by 2025, including a critical need for specialists to treat an aging population that will increasingly live with chronic disease, the association that represents medical schools and teaching hospitals reported Tuesday.

via U.S. faces 90,000 doctor shortage by 2025, medical school association warns – The Washington Post.

So what’s driving the expected shortage?  It’s obviously not young people deciding that medicine is a bad choice for finding work.  Health care demand will continue to rise for some time.  And as for people being good at it or enjoying it, I have a hard time imagining that the current generation of college students is any less intelligent than previous ones nor does seem likely to have a smaller subset who are attracted to careers serving and helping others.

So what’s left?  Two possibilities:  either 1) there are just fewer people seeking higher degrees or 2) those seeking higher degrees are concerned medicine won’t pay well enough to be worth the investment.

The first one is undeniably true.  We are facing a demographic winter, and the baby boomers and generation X did not have enough children to support the needs of our current societal expectations as the boomers retire.

But what of the second possibility?  How could it be true?  If there is a shortage of physicians coming, and the demand for health care is almost certainly increasing, how will those careers not be increasing in income potential?  If the laws of supply and demand work, less supply (fewer doctors) and more demand should increase the potential earning for a doctor very quickly.  And that should lead to it being a more attractive choice and over time the shortage would be a non-issue.

But sadly, supply and demand will not drive up the potential income in health care.  That’s because there are price controls set by the number one purchaser of health care goods:  Medicare.  Since doctors cannot negotiate prices with Medicare (either they take Medicare patients for the stated price or they don’t take Medicare patients at all) it makes the earning potential shrink drastically.  Medicare and Medicaid (also price controlled) account for almost half of all health care spending.  This gives the government the ability to keep prices controlled, which in turn makes the medical profession less attractive, especially considering it takes longer to finish the schooling.

If health care is truly to be a working industry long term, and we want young men and women to think practicing medicine for 30-40 years is an attractive profession, we have to allow the free market to work there.  And that’s precisely what we have continued to avoid doing with almost every reform for the last 60+ years.

Engaged patients + free markets in health care will bring an efficient, affordable, high quality industry to us, and that’s better for everyone old and young alike.

 

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