Friday, August 16, 2013

The Takers: Obamacare Opponents

On Facebook, I follow Senator Mike Lee, a man completely obsessed with the goal of defunding and repealing Obamacare. As you may see from his Facebook page, he goes on and on with posts about defunding and repealing Obamacare. But he seems to have a blind spot: protection for the healthcare industry, particularly for doctors.

In a normal economy, when supply gets low, prices rise and the suppliers increase the supply to meet the demand. This dynamic tends to normalize or even drop prices for the resource in demand. We see this with commodities like wheat, coffee, electronics and other items that are mass produced. Demand has often been met with imports.

But that is not happening with healthcare. In the United States, we pay double what many other industrialized countries pay for healthcare as a percentage of GDP. Yet, there is no policy effort underway to increase the supply of doctors. US Doctors make twice as much per year as their counterparts in other industrialized countries, yet, no one seems to mind.

If we were to cut our healthcare costs in half, we'd be seeing federal budget surpluses for years ahead rather than deficits. But Mike Lee won't tell you that. He has an important job: protecting the healthcare constituency.

The New York Times has an interesting piece identifying all the ways that the American healthcare system discriminates against foreign competition. The path to becoming a doctor in the United States is already expensive and confusing. But the barriers to entry to the market for foreign doctors can take far longer than American entrants to the field. The barriers to foreign doctors are not just protectionist beyond what is necessary to ensure quality doctors, they contribute healthcare inequality by raising the costs beyond what many Americans can afford. The high cost of health insurance has suppressed wages and that has dampened the economy.

The most important bottleneck to remove is to increase the number of residency positions available that are subsidized by Medicare. The number of residency positions supported by Medicare has been capped by Congress since 1997. Maybe Mike Lee doesn't understand economic theory, and that healthcare costs are a matter of supply and demand. You know, increase the supply of doctors and the cost of healthcare will drop.

But that's not what we're hearing from Mike Lee. No, what we're hearing is that he wants to defund and repeal Obamacare without offering any concrete or specific alternatives. It is also notable that we don't hear the American Medical Association chiming in about increasing supplies, either.

I think that the AMA is quite a bit like the US Chamber of Commerce. They are loathe to suggest real solutions that would help everyone. Rather, they want to help others so long as the earning power of doctors is not diminished in any way. Introducing foreign competition, increasing the number of slots available for residency at hospitals or harmonizing regulations with other countries in the healthcare industry never even make it to the conversation.

Until Mike Lee and his cohorts are ready to address the doctor shortage with meaningful solutions that include foreign competition for our domestic healthcare industry, we can only assume that they are just posturing for political points. What other logical conclusion is there to draw?
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