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Dr. Pardes writes today in the WSJ:

The doctor shortage was fostered in 1996 when Congress capped the number of new doctors Medicare would pay to train, a practice that continues to this day. Teaching hospitals, which now make up about 10% of hospitals nationwide, depend on those Medicare funds to pay about two-thirds of the cost of doctor-training. (Training costs include residents’ salaries, malpractice insurance, equipment, the extra time that teaching procedures add to patient care, as well as the added costs associated with caring for the sickest patients.)

Right now we train roughly 16,000 doctors a year. To keep pace with demand, this nation will need to train an additional 6,000 to 8,000 each year for the next 20 years. If we increased the number of training slots today, it would take seven to 10 years for the new doctors to see patients (four years of medical school, plus three years of residency and additional specialty training).

He goes on, of course, to urge Congress to raise the limit on the number of doctors that “Medicare” is willing to provide training to.  To which I will only comment:

  1. Medicare does not say that you are not allowed to train doctors, they just limit how many the taxpayers will pay for.
  2. If someone were to argue, “well, we just cannot afford to train doctors unless Medicare steps in and does it” then it makes a lot of sense to ask, “why has it come to be this way?”
  3. Find me any reasonably functioning market where the growth prospects for future demand are so obvious, where salaries throughout the profession are remarkably high, where lots of people understand the opportunities that possibly await them, yet where major shortages exist today and are predicted to get worse? Contrast what happens in medicine to what has and still happens on Wall Street. I would venture to say that 50% of the majors I talk to want to end up in Wall Street for a career. Why? Because that’s where the money is. In fact, that’s where the “easy” money is. More on that in the future. And my guess is that among these 50%, only about 10% of them are going to Wall Street because of some innate desire to work on financial intermediation issues. The point being, while high salaries are still prevalent (and I think this is a problem because I believe a good deal of the income used to pay these salaries comes from monstrous crony capitalism), no one in their right mind will argue that there are not enough financial analysts and engineers running around. What I find intriguing is that I don’t sense any push by Wall Street to limit who gets to enter the industry, unlike of course in the medical field.

227 Responses to “The Coming Doctor Shortage”

  1. Harry says:

    I had no idea medical schools were so heavily subsidized by Medicare. Wintercow is right to ask how we could get into such a mess.

    I gather then that medical students pay only a fraction of the cost of tuition. But I thought medical school was expensive to the student. Not having shopped recently, I may be mistaken.

    Is the bottleneck in the early years of medicine, or in specialist training?

  2. […] The Coming Doctor Shortage (The Unbroken Window) […]

  3. Kevin Brown says:

    Medical school is indeed very expensive for the student. However, they tend to pay heavily into the “school” portion of training (the first four years), and then live on a low salary through their internship (the 3-11 years of supervision after school required to be a full-fledged doctor). The cost of school is great enough that most students do not pay it off for well over ten years, and I’ve heard of some that don’t for twenty.

    The medical profession is right to keep a close eye on the quality of professionals entering their field; if quality falls malpractice will skyrocket, putting the entire system at risk of failure. Blame insurance there… when investment firms royally screw up the government bails them. Not so with hospitals and doctors.

    The only people who get a free medical education? Of course… military doctors.

  4. Harry says:

    Kevin, that is my take, too.

    My guess is that the doctor shortage is the same as the East German consumer product shortage, although I would not pretend to know how this particular shortage has come to pass.

    Surely a young person contemplating a career in medicine has to have a lot of courage to commit to that path, and it would not surprise me if there are relatively fewer able people applying.

    I know the word “able” is loaded, and that American medicine has high standards. Maybe medical schools should relax standards, if that is where the problem lies. But who are we to tell the medical schools whom they should admit?

    Indeed, who are we to design a system for the correct number of family doctors, or neurologists, or vascular surgeons? By setting future compensation rates from an armchair in Rockville, Maryland?

    Ludwig VonMises could hardly have imagined our present situation, but he would not be surprised to find we are several thousand doctors per year short in a few categories, or a few thousand plaintiff lawyers long, by the progressive planners’ standards.

  5. Joseph says:

    I am currently a medical student and I am cognizant of the fact that the AMA is indeed a cartel. And while I agree that it is the primary reason for the physician shortage, I do not agree with loosening up licensing requirements (or abolishing them completely). I know that in the long-run, the free market will distinguish good doctors from bad ones, and will allow division of labor etc. However, it’s important to understand that in the meantime, many patients will be harmed and even killed at the hands of under qualified physicians. Medicine is a very delicate field, and even the slightest mistake can cause death. Not to place medicine on a pedestal, but it is incomparable to wall street jobs, or engineering as Wintercow suggested. An unskilled Hedge fund manager may lose money, but a mistake made by an under qualified doctor could kill a patient right then and there. One may point out that there are unlicensed doctors that practice illegally, trying to argue that regulation does not ensure safety. That is true, but permitting a lunatic or con-man to practice legally only makes it so much easier for them to obtain equipment and sell themselves as a legit practitioner.
    I sense a general sentiment among the public that physicians are overpaid. While a physician’s salary may seem high to the average person, it is important to remember the sacrifices that student has made to get through the long and arduous process. And after owing $200k+ in loans (plus interest), that salary doesn’t seem so high. As I said, I do believe that something should be done to solve the shortage issue. The gov’t ought to mandate that more medical students be accepted, and at the same time demand that insurance companies compensate physicians more. This will offset the decreased salaries as more people enter the field, while still maintaining the incentive to attract talented applicants, and also solving the shortage crisis. If the gov’t lacks the courage/”strength” to impose demands on the insurance companies, it could alternatively cut out wasteful spending and subsidize physician salaries.

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