Sunday, July 6, 2008

Supply Side Economics & the Health/Sickness Care Issue

By Fredrick Bernanke - July 6, 2008, 8:20PM
[Note: The following was written on and transmitted to the Official Barack Obama Campaign Website. The piece is re-printed here with no alterations except spelling corrections, which I was no able to do on the Obama site.]--FB

It's a nasty word in Democratic circles: Supply Side Economics.

But aside from its Reaganesque connotations, its a side of the healthcare equation that needs examination; and if such examination is instituted, one will observe that the supply of physicians has been artificially restricted by the American Medical Association, essentially the lobby for physicians.

Most of the proposals for Universal Health Care have the effect of increasing the Demand side of the equation. But none of the proposals I am familiar with address the Supply side of medical care, particularly the number of physicians practicing medicine.

Below I will excerpt a few paragraphs from an article published in USA Today on March 2, 2005. I will also supply a link to the full article.
"The predictions of a doctor shortage represent an abrupt about-face for the medical profession. For the past quarter-century, the American Medical Association and other industry groups have predicted a glut of doctors and worked to limit the number of new physicians. In 1994, the Journal of the American Medical Association predicted a surplus of 165,000 doctors by 2000....
"It didn't happen," says Harvard University medical professor David Blumenthal, author of a New England Journal of Medicine article on the doctor supply. "Physicians aren't driving taxis. In fact, we're all gainfully employed, earning good incomes, and new physicians are getting two, three or four job offers."
"The marketplace doesn't determine how many doctors the nation has, as it does for engineers, pilots and other professions. The number of doctors is a political decision, heavily influenced by doctors themselves.

"Congress controls the supply of physicians by how much federal funding it provides for medical residencies — the graduate training required of all doctors. "

Rather than merely increasing the Demand side without any concomitant increase in the Supply side of medical care (as measured by numbers of physicians), proposals should address both sides of the equation.

Obviously, an increase in the supply of physicians-per-capita is going to mean a decrease in the average income of physicians, not a result the AMA is likely to support.

But since physicians enjoy a monopoly on medical care by the grace of Government, their special interest in limiting the supply of medical care must be subordinated to the overall interest of the Public.

The AMA is a tough opponent to take on. But unless some politician does so, the Nation is doomed to having its resources sucked into the Black Hole of sickness-care forever.

This is the link to the full article:

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