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Home Publications Blogs Beat the Press Doctor Shortages at the Veterans Affairs Hospitals: Why Aren't People Talking About Immigration?

Doctor Shortages at the Veterans Affairs Hospitals: Why Aren't People Talking About Immigration?

Friday, 30 May 2014 05:06

The Silicon Valley folks and their allies in think tanks and academia are constantly touting the need to have more immigrants to work as engineers in their companies. This is in spite off the fact that the wages of the workers in the sector do not demonstrate evidence of a serious shortage (i.e. they are not rising rapidly).

Given the frequency with which more immigration comes up in the context of the tech sector, is striking that the issue is not mentioned once in a major NYT article on doctor shortages in the Veterans Affairs hospitals. Doctors in the United States make on average more than twice what their counterparts in other wealthy countries earn, which means that many would likely be willing to work in the United States for a period of time, given the opportunity. (The piece puts the median pay of primary care physicians in the private sector at $221,000 in 2012.) It is also easy to design a mechanism to compensate developing countries for any doctors who come to United States so that they can train 2 or 3 doctors for each one that comes to the United States.

Anyhow, given the evidence of a shortage of doctors in the United States, and the huge gap in pay between the U.S. and other countries, this would seem an obvious case for benefits from increased immigration. It is remarkable that this is not front and center on the national agenda.

Comments (30)Add Comment
Good For Us
written by Dave, May 30, 2014 5:36
Not only will the immigration of more doctors reduce doctors’ salaries and reduce costs of medical care in the United States, it will make more medical care available. Dean thinks it would be a good idea for doctors from Mexico, India and China to come to the United States to provide care for Americans. That would be good for America.

The only problem is that it won’t be so good for other countries.

And fyi it’s not “silly” to discuss how this will hurt the quality of health care in developing countries.

It brings up the issue of free trade. Most economists believe that free trade increases economic growth and raises living standards. Studies of economies over the years have almost unanimously confirmed this belief. Free trade and free markets are also the best way to allocate resources, theoretically. People in Brisbane are generally willing to pay more for surfboards than people in Nebraska. This is because surfboards are of more use in Brisbane. Therefore, surfboard manufacturers ship their product to sell them in Brisbane where they will get more money. The surfboards are used for their intended purpose in Brisbane instead of occupying a shelf in the garage in Nebraska. The free market system works so that the surfboards are put to their most beneficial use to society. There’s no debate.

The problem that I have is that free trade and free markets do not always allocate resources efficiently. If a doctor treating children for cholera in Haiti moves to Los Angeles and sets up a liposuction and bariatric surgery practice, this will benefit the doctor who will be able to earn more money, and his family will be able to live a better lifestyle. It will benefit those in Los Angeles seeking liposuction and bariatric surgery because they will have more options and probably lower cost service. But what about the kids in Haiti? Is this situation really the best allocation of resources? Is it best for society as a whole for a doctor to treat obesity in Los Angeles than to save the lives of children?

It's not silly to consider this.
We can compensate developing countries
written by Dean, May 30, 2014 5:46

Please note the sentence:
"It is also easy to design a mechanism to compensate developing countries for any doctors who come to United States so that they can train 2 or 3 doctors for each one that comes to the United States."
If we tax the earnings of foreign-trained doctors and repatriate the tax to the home country, it would be possible for them to get more doctors as a result of some number of their doctors emigrating to the United States. This is a very easy mechanism to implement in principle. This way we can save lives of kids in Haiti by giving them more access to health care. Why are you opposed to that?
How Sock Puppets Frame "Shortages" to Justify Monopoly Prices and Low Wages
written by Last Mover, May 30, 2014 6:45

By definition a shortage is unfulfilled supply and demand at a price too low for the market to clear in the short run.

One way doctors exploit shortages is with long wait times and a large backlog of customers, because they know other doctors cannot move in and take those patients.

This keeps pressure on prices from the demand side so doctors can charge more rather than supply more to alleviate the shortage. If more doctors were available prices could fall to alleviate the shortage rather than increase prices with less doctors.

Media sock puppets rarely report it this way. Instead, a "shortage" is routinely framed in simple supply and demand terms as "not enough available" from which the only solution strongly implied is prices are too low to attract enough doctors - never too high because the shortage is being exploited by a monopoly market in the first place.

The VA situation includes manipulation of wait times by supervisors to enhance performance reviews since most prices cannot be manipulated as easily as the private sector. A doctor shortage there would go to long term fixed salaries paid to doctors combined with long wait time.

A standard conservative criticism would be VA prices are too low and cause a moral hazard of overconsumption which cause the shortages and as usual, is wrong because of pervasive market failure in health care for prices to ration effectively much of anything.

In the tech sector the manipulation of a "shortage" condition is different, based on claims the skills needed are "uniquely" available only from the foreign sector and therefore require special lifting of entry restrictions that apply otherwise.

Note how conveniently the tech case does not require price to rise to correct the "shortage" - just more supplied from "unique" sources, in sharp contrast to doctors who are treated as substitutes for each other within artificial shortage conditions.

Sock puppets have been trained well by economic predators to frame "shortages" in ways that drive prices up for consumers of health care and drive wages down for labor in the tech sector.
written by Kat, May 30, 2014 6:53
Note how conveniently the tech case does not require price to rise to correct the "shortage" - just more supplied from "unique" sources, in sharp contrast to doctors who are treated as substitutes for each other within artificial shortage conditions.

good point.
"Why are you opposed to that?"
written by Dave, May 30, 2014 6:56
Who told you I was opposed to that?

I have not expressed opposition to any ideas that people have proposed. I do object to trying to deflect a discussion of the effects of proposed policy on other nations.
written by Alex, May 30, 2014 7:29
@dave: it's not a silly question to ask about the countries these people leave, it's just hard to believe that that's anyone's real concern. When STEM workers want to come to the US (engineers are overrepresented among immigrants with college degrees), does anyone think we should restrict an engineer's ability to immigrate because India may not have enough engineers one day?

And why is the Haitian doctor responsible for treating cholera if he would be happier in LA? Who are we to tell him and he has to work there but a US-born doctor has a choice, tough cookies that the Haitian doctor was born the wrong nationality at the wrong time? If the US is really concerned that there are not enough doctors treating cholera in Haiti - concerned enough to restrict immigration from that country - then why doesn't the US just pay to send its own doctors down to Haiti? I'm sure that if the government paid a decent salary (say, what it pays to security-sector contractors like Edward Snowden) that there'd be quite a few American doctors who'd find the good-will to work in Haiti.

It's easy to say "We have to do everything to solve problem X" if the solution is just to force someone else to deal with the problem.
What about lowering the cost burden of domestic education as well?
written by Shawn Wilkinson, May 30, 2014 7:39
Just a thought, but how many individuals exist who have the capacity and desire to become doctors but don't because they lack financial (or other, i.e. they have kids ) resources or do not think the risk of debt outweighs the benefits of education?

I agree with the immigration side of the argument, since many other sections of labor have to compete on a global scale unlike other professions. But increasing the supply of doctors by also making it (financially) easier to obtain the required degrees would work, too. Does the medical board still dictate how many vacancies medical schools are allowed for the institute's accreditation?
Not that easy, Low-rated comment [Show]
written by skeptonomist, May 30, 2014 8:35
It's easy for economists to design mechanisms to do all sorts of things, but they rarely work in the real world, even if actual authorities were inclined to adopt them. Is Congress going to pass a bill paying foreign countries to educate doctors or anybody else? Educational support from government at all levels is declining and it's not likely that more money would be found to send to other countries. Why would foreign government accept the export of their doctors, even if they are paid? How many countries have actual surpluses of doctors? Other countries are probably going to have the health of their own citizens as their primary objective, not trying to get payoffs from the US, which could be cut off at any time.

The fact is that there are already lots of foreign doctors in the US - hospitals and HMO's benefits from having them. If government is going to get involved - as it probably should - it should be in training more US citizens and reforming the process of training, which is partly designed to limit the number of practitioners. Many aspects of medicine could be automated, including diagnosis, so that not so much reliance is placed on the supposedly omniscient doctors.

And again, why propose hypothetical mechanisms when there are methods which are known to work? Other advanced countries keep physicians' compensation and total costs down without massive importation (as far as I know). The way Dean argues about physicians is similar to the way conservatives argue about health care in general - always talking about the hypothetical benefits of free markets, when these are irrelevant because other countries actually achieve savings by controlling markets.
The Point Is...
written by Larry Signor, May 30, 2014 9:44
It takes 12-16 years to train every new contingent of doctors. We have a problem now. Dean proposes immigration reform as one mechanism for addressing the immediate problem and suggests an efficient resupply plan via taxes. The comment section seems to have drifted off topic.
Nurses & Med Schools
written by Bill, May 30, 2014 11:28
We import many nurses and by doing so raid the healthcare sytems of developing countries. Importing more doctors would do the same thing, with the best coming here due to relatively higher pay.

Many, many high scoring US students are denied access to medical schools. It would seem that we could be doing a better job of training our own citizens.
written by Jay, May 30, 2014 11:58
I think I understand where Dean is coming from on this point that he has made before. Why are certain people protected from competition? Although, I don't have much faith in the cost savings with immigration in healthcare. Is technology or food really any cheaper with an influx of immigrants? I really think it lowers wages and the businesses reduce their operating expenses while pocketing the extra cash for executives. Look at how poorly paid people are in nursing homes and assisted living facilities. Most people still cannot afford to put family members in a good facility even though the workers get paid low wages. Same thing with daycares across the country.
We disagree on this
written by Dave, May 30, 2014 2:09
This is an area where we will probably always disagree.

There's no question that the AMA is protecting doctor's wages, but targeted immigration or using guest workers is not an acceptable answer in my view.

I've long tried to get across to people that the only proper immigration policy compatible with democracy is one that aims to let in people proportional to the existing job markets. Don't try to fix perceived market failure using immigration. Let markets function by avoiding distortion through immigration.
Let free markets affect not only the weak (workers) but also the strong (doctors)
written by Peter T, May 30, 2014 10:37
@Dave, You wrote:
"There's no question that the AMA is protecting doctor's wages, but targeted immigration or using guest workers is not an acceptable answer in my view."

Why not? Let doctors from other countries earn more in the US and put pressure on the US doctors to accept lower wages. That would serve the customers: the patients and, in the case of the VA, the government. The VA seems especially suited to employ foreign doctors: the VA can control the quality of medical care, the salaries and working conditions are regulated, and the federal government that makes the rules for immigrants could modify them to provide better service to the veterans.

Another alternative is sending veterans who need complicated surgeries to foreign contract hospitals that still cost only half of US hospitals, including airfare.

When foreign students see how the doctor's salaries increase (due to Us policy), more students will study medicine and their home countries will not be worse off.

written by watermelonpunch, May 30, 2014 10:42
Some peeps here really need to read the end of loser liberalism book so ya'll get on the same page with us. Just sayin.
What About What Patients Want?
written by jerseycityjoan, May 31, 2014 1:24
I have noted my disagreement on this issue before. One thing I discovered by looking things up about immigration and doctors is that 25% of our doctors already came from overseas.

Has it ever occurred to anyone to ask patients what they'd like? Does anybody really think they'd say "Please don't increase the number of American medical school graduates, I'd rather have a foreign doctor than an American doctor?"

If our elites continue to look for reasons not to employ Americans and to bring in people from overseas instead, exactly what American jobs are going to be held by American citizens in the future?

If our jobs don't belong to us, if our opinions don't count, then what does being an American citizen mean?
written by purple, May 31, 2014 2:56
There's no wage growth because Silicon Valley is colluding on driving down salaries.
Why aren't people talking about the shortage of doctors in general?
written by Rachel, May 31, 2014 12:29

There are, however, many factors making the VA's situation worse. There's the long-standing cap on medical residencies. Congress is to blame for that one, it seems. We also have restrictions on the supply of nurses at all levels. And many states, such as California, have serious restrictions on what advanced nurses can do. Of course in the SF Bay Area, nurses are so highly paid that a nurse who wants to become an NP has to take a pay cut. So that too is a factor reducing the supply of medical services.
@Peter T
written by Dave, June 01, 2014 9:35
Why not?

It sounds like a good idea given the way you frame it, but this kind of intervention always backfires.

The existing job markets are complex, and they depend upon other markets such as higher education. Who is to say what the proper wage is? Every time we try to fix perceived problems with immigration, it leads to a malfunctioning market.

Look at what happened to STEM jobs. The use of offshore labor and H1Bs have led to a complete breakdown of the market. Markets can only function properly if the participants can reasonably anticipate the outcome, and interventionist policies that are akin to price control always cause market malfunction.

My argument is that immigration should not be used as a tool for specific interventions but rather as a tool to increase our population proportional to existing job markets.
This is just too original, I think
written by Dave, June 01, 2014 12:59
As far as I know, I'm the only person that has ever made this argument about immigration. I didn't just pull it out of thin air, I actually put a lot of thought into this, and the conclusion I came to was this idea of 'Proportional Immigration'. I've never heard anyone suggest this before, so it doesn't surprise me that many people would immediately reject it.

The principles behind it are simple:
1) Labor markets are among the most complex of all markets. Intervention based upon a hunch about a certain shortage of workers is bound to create unexpected problems.
2) Labor markets shift constantly. It would be unfair to push down wages intentionally only to have new graduates who decided upon the field based upon high wages to be undermined.

Markets are quite good at fixing shortages when they are allowed to operate properly. Immigration can best serve the purpose of the nation and its workers by avoiding market distortions. The way to do that is to let people in in numbers that match the existing labor markets. No market distortion.

I'm going to keep pushing this idea until people understand it. This is important, I think.
Why can proportional immigration work?
written by Dave, June 01, 2014 1:16
Because it is simple, accurate, achievable, understandable and easily integrated into the thought process of all market participants.

Any other questions?
Top vs. bottom
written by Dave, June 01, 2014 3:58
The key to this is to understand which market distortions are from the top vs. the bottom.

Market distortions from the bottom (unions, etc…) lend themselves to understanding by the market participants.

Market distortions from the top, from immigration etc.. do not.

written by Dave, June 01, 2014 5:11
Is it becoming clear why this is true?

Most market participants are workers. If they themselves intervene in markets to push wages a different direction, they all can anticipate that change.

If the government changes immigration policy in a way that affects wages, it says to workers, "this is not a market we respect:" and they get the message quite clearly. Avoid this area of employment.

If immigration and guest worker and globalization forces respected the worker, workers would be in the fields we need them in. Markets do work.

Does this sound republican?
written by Dave, June 01, 2014 5:31
It isn't. I'm not a Republican. However, there are market forces that make sense. It just so happens that unions are a market force that works. Unions are not bad.

Government intervention isn't bad. It is only bad if it cannot be understood or anticipated. This sounds Republican, but it isn't. What Republican would be pro union?

The key is how easy it is for people to understand the forces at work. By people, I mean workers.
Econ education is off track.
written by Dave, June 01, 2014 5:47
Why is econ education off track?

It teaches too much math and not enough behavior. Trainees can't think for themselves because they use equations to think for them.

Where's the equation to describe this thing I'm talking about? I don't have one. I could create one that might be valid for a couple of years. I find that pointless.

No calculations necessary
written by Dave, June 01, 2014 5:54
Not even the best economist could accurately calculate the effect of foreign labor upon domestic labor. Nobody.

Do we expect workers to understand the market they face when nobody can make sense of it?

Proportional Immigration requires no calculations. None.

What to workers need to understand? Nothing.

Too hard to resist the urge
written by Dave, June 01, 2014 6:38
It is easy to see why economists like to intervene and suggest things that can shift market forces. However, people get angry when you shift market forces away from them. Every intervention shifts the market away from somebody.

So how can I be for a single payer health system but not driving down doctor's wages? Simple. If a doctor decides to be a doctor given the single payer system, they get what they expect. The market functions.

However, if we use this or that here or there to drive down wages, nobody can expect that. It just happens because congress passes an arbitrary law on such and such day.

Nobody plans their life according to things that just happen like this. People can easily plan their lives around a single payer system.
Any stupid people listening?
written by Dave, June 07, 2014 11:29

Idiots! No responses? Complete crap is what economics is!

Goddamed! Anyone listen to this? Get it you stupid pieces of shit?

We undermine labor markets with immigration! Good? Idiots!

Fuck you, you fuckin morons!

God damned idiots!

I'm done with economists.
Oh my god!
written by Dave, June 07, 2014 11:35
Dean, you had me until you started down this path.

You've lost me, completely and forever. You are out of touch with Americans.

Get out of your office and talk to people. We have a culture that if it degrades into Fox kind of shit, we'll lose. Get it?

This is absolute crap!
written by Dave, June 07, 2014 11:42
You lose, Dean.

Everything Americans want, you argue against. You stupid liberal ass hole.

Liberals are dumb! They think they understand the world better than anyone else, and then they defend crap!

Fuck you, Dean. This is not where the party is, this is not where anyone can agree, and just go to hell.

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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.