Obamacare and the 1%


I define one per centers as those who want the government to use its power on their behalf.  They want laws that advance their personal fortunes, ideologies, careers, whatever. Examples are all around us and the total of such people is closer to 100% than 1%.

Most are not evil, just putting their self interest first. Public employees want to retire after 20 years with generous benefits; unions want laws that make it easy for them to form more unions; sugar growers want import quotas; car makers want government subsidies for electric car buyers; one issue fascists want laws, pro or con, on abortion, renewable energy, gay marriage, smoking, sugary drinks, genetically modified food, global warming, localism,  etc. etc. ad infinitum.

One area of government abuse often overlooked are the laws that regulate professional standards. Such laws are justified as necessary to protect the public. More often than not though, the primary purpose is to protect the existing professionals against competition.  Becoming a barber, hairdresser, cab driver, realtor, etc., usually requires a government issued license, which can be difficult and expensive to obtain.  Almost always, the people in charge of defining the standards that the government enforces are people already in the business.  How cozy.

Most of us don’t think longshoremen and medical doctors have much in common, but the American Medical Association, like the International Longshoremen‘s Association, is a very effective labor union.  Milton Friedman wrote in his 1961 book, Capitalism and Freedom, “The American Medical Association is perhaps the strongest trade union in the United States.”

That was over 50 years ago. Has anything changed?  Unfortunately, no. To quote Friedman again, “The essence of the power of a trade union is its power to restrict the number who may engage in a particular occupation.”  The AMA exercises this power as much today as it did 50 years ago with a de facto monopoly on the issuance of  licenses to practice medicine.

This bottle-neck on the supply of doctors, according to study by McKinsey & Co. in 2007, added $58 billion to the nation’s medical bill, an amount probably higher today.  The report noted that U.S. doctors make roughly twice what their European counterparts earn.  Such high compensation should be attracting droves of new doctors but for restrictions on the supply of new doctors, crafted by the AMA and enforced by the government.

Why does it take at least nine years to become an M.D.?  The usual career path requires four years of undergraduate work plus four years of medical school followed by at least three years of residency. Some schools compress the first eight years into six.

As if this wasn’t discouraging enough, the Medical College Admissions Test is a five hour ordeal that rejects about 60 percent of the applicants. The kids who take the test are usually at the top of their classes.

Those who pass must then attend a medical school that is LCME accredited. LCME stands for Liaison Committee on Medical Education, which was formed in 1942 to oversee medical education. It was formed by the AMA, if you can imagine that.

Are all these standards needlessly high? Can the career path be shortened?  How much of the typical M.D.’s work load could be performed by less intensively trained professionals, e.g. nurse practitioners?  Do AMA standards prevent opening more medical schools, prevent more qualified students from becoming doctors?

The biggest problem with the Affordable Care Act, a.k.a. Obamacare, is that it did NOTHING to address supply bottlenecks in the medical industry, and the AMA is a big bottleneck in the supply of doctors. What to do about it?  I’ll have some thoughts in a future article, and please weigh in with your suggestions.

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