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Home Publications Blogs Beat the Press Protectionist Restrictions Threaten Health Care: Economists Don't Care

Protectionist Restrictions Threaten Health Care: Economists Don't Care

Friday, 16 April 2010 10:14

The Wall Street Journal told readers that the country will face a serious shortage of doctors in the next decade. It notes that in principle the country could bring in more foreign doctors, however, U.S. rules require foreign doctors to do a residency in the United States. Since U.S. residency slots are limited, the availability of foriegn-trained physicians will not help.

This article is remarkable because it does not include any quotes from economists about the enormous cost that the economy is being forced to bear as a result of the extreme protectionism used to maintain doctors' salaries. It would not be difficult to design residency programs in other countries that met U.S. standards. (Even a doctor should be smart enough to do that.) We can also include a subsidy to the countries of origin of foreign-trained physicians to ensure that they can train more than enough doctors to make up for those that come to practice in the United States.

This could hugely increase the supply of doctors in the United States. This would lower the wages of physicans and reduce the cost of health care. This article should have been reported as an example of protectionism by a powerful special interest group being carried to absurd levels (e.g. Buy American policies times 1000), but instead the issue was never even raised.


--Dean Baker

Comments (14)Add Comment
written by Christo, April 16, 2010 11:37
This is not unusual; while capital crosses borders, labor does not yet. In fact, the citizens of a country would not stand for it, at least beyond current amounts. Perhaps free-flowing capital causes more problems but it is the guy that you think is taking your job that is what stands out.
written by Jack, April 16, 2010 12:11
Glad to see you mention the subsidy to countries training the doctors that would come here since a shortage of doctors is a greater threat to social welfare in developing countries than it is here.
Train 21st century physicians in the U.S.
written by skeptonomist, April 16, 2010 12:51
The U.S. is near the bottom of the list of developed nations in number of physicians per capita. We are about average in number of nurses, who strangely enough earn much less. But there is no reason why more physicians could not be trained in the U.S. The whole system is obsolete, requiring rote memorization instead of using information technology.
written by Alosha, April 16, 2010 2:30
Which country/countries do you have in mind? In the 90s Britain scoured Africa for doctors and nurses leaving Africans bereft of much needed care. Also, over the years I have met many young Americans who wanted to be nurses but were unable to get into a training program. America is the wealthiest nation on earth; let them train their own doctors and nurses.
written by zinc, April 16, 2010 7:01
Hello newness; I don't like it (he said in a whiny way)

Dean, Dean, Dean:

We don't have to go overseas. In fsct, we shouldn't go overseas. We should fix the barriers to entry in this country.

For some reason, western economists (especially the US) have become disconnected with their roots, Adam Smith. He never promoted the type of self destructive tendencies that American economists exhibit, including you.

American economists are like John Lenin. In theory, it should work. In practice, it sucks.

Keep up the good work, but check your air bag every time you venture into "fwee twade".

Uncle Milty was a crack pot on the government dole.
written by zinc, April 16, 2010 7:21
I meant, Vladimir Ilyich Ulyanov, Lenin. Do !
written by Ron Alley, April 16, 2010 8:17
The limitation on MD training is quite similar to the limitation on lawyer training in the mid to late 60's. The voting rights act and the Warren Court decisions prompted the ABA to accredit additional law schools. Let's hope the health care reform legislation will have the same effect on medical schools and residency programs.

My impression is that the number of seats in medical schools has increased during the past 10 to 15 years. However, I think the expansion has not matched the population growth and would not have been sufficient to meet the demands of an the baby-boom population let alone the increased demand for medical services projected as the current health care reform kicks in.

Perhaps Health Care Administrator and other readers with actual experience in MD supply and demand might comment.
written by Thaler, April 17, 2010 10:32
The relationships between physician supply and the nation's physician bill is not straightforward. Firstly, CMS pays about half the bills and their rates are set, not negotiated. More physicians will not translate into lower CMS rates. Private insurers do negotiate but the CMS rate is their starting point. Secondly, supplier-induced demand is a real phenomenon. More physicians brought into the current health care model may result in more procedures, office visits and hospitalizations. In the end total health costs may be higher.

Increasing physician supply will only help as part of a comprehensive reform.
written by Ethan, April 17, 2010 11:21
Ron Alley and Thaler:
Both right, but it wouldn't hurt to subsidize medical schools and residency programs so we could graduate more MDs and MDs who didn't need huge fees to pay off huge student loans.
Further, we should encourage clinics with salaried physicians on the model of Cleveland Clinic and Mayo Clinic where care is excellent -- MDs are able to devote time to patients not to billing requirements -- and costs are modest.
written by skeptonomist, April 18, 2010 10:03
The U.S. is also near the bottom of the list of developed countries in hospital beds, which of course is one reason why there are limited residencies.
Well said Dean
written by Floccina, April 19, 2010 4:06
Apollo Healthcare here we come. There was even some discussion by Apollo Healthcare of medical cruse ships.

Why health care costs are soaring
written by AndyfromTucson, April 20, 2010 10:28
The elephant in the room in the health care debate is the fact that almost 100% of health care cost increases are due to ever increasing compensation for health care professionals.

My grandmother on one side was a surgeon, and my grandfather on the other side was a physician. They lived comfortable middle class lives but were by no means rich or even close to it. These days specialists pull down income in the quarter million plus range.

I don't begrudge people doing well, but does it make sense for US public policy to be dedicated to the economic elevation of one profession at the expense of all others?
written by gordon, April 20, 2010 6:34
I'm with Ethan and I'll go further; it's time the US Govt. (or State or municipal Govts.) started up salaried-doctor clinics without subsidising the middle-man. And medical schools too. Why subsidise a medical school when you can run your own? Such a subsidy just looks like a formula for corruption to me.
written by TomThumb'sBlues, April 21, 2010 9:43
Jee, all we need is more imported workers! And to pay the native countries as well? Clearly, the need is for more opportunities for US kids to get into med school and more residency slots. Shouldn't be rocket science. Speaking of which, we import nearly half our scientists, mathematicians and engineers. And we import about one-third of our new doctors already.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.