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December 02, 2009

Supply-side health care reform? (tmi3rd)

Gregory of Yardale made a hell of a comment in Drew M.'s post on the Eugene Robinson column about health care in the WaPo the other day.

This stimulated (sound of Beavis snickering) an e-mail discussion on what supply-side reforms in health care might look like. Quote and thoughts below the fold... this is on the long side.

In the US system, there is a theoretically unlimited amount of health care available, you just have to be willing to pay for it.

You've just the nailed the fatal flaw of the Democrat's health care reform; it isn't reform at all, it's simply more regulation. If health care is getting too expensive, that means demand is rising faster than supply. Therefore, real reform would involved increasing the supply of doctors, medicines, and hospitals. ObamaCare does just the opposite, it focuses entirely on demand.

The way to increase the supply of medical care is to lower barriers to entering the market. The government could help by lowering regulatory barriers, undertaking tort reform and subsidizing medical and nursing school educations to encourage more people and more companies to enter the health care business.

A couple of thoughts on this, and I'm actually more interested (as usual) to hear what you have to say on it.

First of all, let's talk about the great point made- if it's too expensive, the demand for it is rising faster than the supply. It's so obvious that it's easy to miss. (Thanks, Gregory!) So how do we increase the supply of practitioners and hospitals?

One way that's being tried right now is that there are some demographic categories for admissions to medical and nursing school with lower requirements... the on-paper requirements for medical school have average GPAs of about a 3.7, with an MCAT score of 30+ for people to even want to talk to you. With the nursing schools in my neighborhood, you have to get a minimum of a B in freshman biology, anatomy and physiology, nursing chemistry, and nursing physics. Most of the applicants accepted in the nursing schools I'm familiar with are straight-A students. My remarks on this are going to stick primarily to doctors and hospitals... I have less experience with nurses, and don't want to speculate too much.

The obvious issue here (again, referring to lowered standards for certain groups) is that a strong percentage of these folks wash out of med school in their first two years, and a smaller (but still significant) percentage wash out of nursing school. One other significant trend among doctors is that a fair number of extraordinarily talented women (who, by the way, statistically are better medical students than men) do not stay with the profession... two to three years into medical school, they leave, or in a recent case of a family friend, she practiced for five years and decided being a mom meant more to her than being a doctor- despite her remarkable talent.

The personal decisions don't faze me at all- people need to do what they need to do. The issue becomes that X many doctors are turned out each year, and the percentages staying with the profession are in decline. Why is this?

In addition to the above reasons, there are a number of other factors. First among them- as the cost of education goes up, you can just about count on coming out of school $250K in the hole. A lot of good docs in their first years out of their residency can't qualify for a mortgage because of the crushing load of debt they carry. Even though you may make decent money out of medical school, you don't make rock-star money- most primary care physicians average about $150K annually. Many good potential docs will look at that and come to the conclusion that it isn't worth incurring that much debt for that amount of return.

So what's a solution to that? How do you attenuate the costs of becoming a doctor? Some superb medical schools like Duke, Vanderbilt, and Johns Hopkins cost $45K-$60K annually just in tuition and fees... most state schools cost $15K-$30K annually in tuition and fees. There are all sorts of fun other fees- lab fees aren't cheap in the first place, and cadaver labs cost a whole bunch.

Obviously, materials and education cost a certain amount- in order to get good gear and good teachers, you've got to pay them. Do ways exist to pay for the education outside of federal subsidy? That's one for the table...

In the meantime, there isn't a hospital in the country that's running in the black. The overriding majority of hospitals are 501(c)3 non-profits... and part of the health care bill cuts Medicare reimbursement down to 60% of cost. Just to make sure we're clear, that means that the government agrees to pay 60% of doctors' and hospitals' overhead costs. Insurance companies take a look at that and say, "If you're willing to do it for that much, then we don't need to pay you as much."

Hospitals are largely the ones eating the costs of unpaid care... the docs take their financial beating too (as private contractors, a lot of inner-city trauma surgery, for example, is unpaid-for), but the hospitals are the ones providing the gear, the spaces, and the crew of people helping the doctors do their jobs- nurses, techs, et cetera. Those people- hospital employees- are going to get paid.Obviously, you can't start a new hospital if it's not going to pay for itself.

So I pose this to the moron nation- what are some ideas for industry fixes to the shortage of physicians, nurses, and hospitals that don't necessarily involve government subsidy? Government subsidy only increases the problem at the moment... does a solution start with increased tax incentives for medical professionals? Should doctors and nurses get tax breaks over a certain duration of their student debt?

Have at it... again, I have no magic ideas that will fix this. I'm all ears for what people suggest.

Addendum: The House passed HR 3691 that repeals the Medicare cut, and must now be passed by the Senate to make it happen... this is, I believe, the "doctor fix" that has been kicked around in the news lately.

Thanks again to Gregory of Yardale for the comment!

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posted by xgenghisx at 01:10 AM

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