The High Price of Doctors: A Disease of Regulation
What’s driving the high price of doctors: market inequality or government entry restrictions? My co-bloggers’ debate reminds me of a random encounter with some striking evidence: The Digest of Education Statistics‘ Table 294.
If you peruse this table, you’ll discover that total number of new M.D.s per year has been virtually flat for 30 years. During this period, population increased over 30%. As a result, the new M.D./population ratio has declined for decades.
If you’re not horrified, consider that the senior population – doctors’ best customers – increased by over 50%. As a result, new M.D.s per senior fell by about a third over the last three decades:
This is exactly what you’d expect when government imposes rigid numerical quotas in the face of sharply rising demand: a constant quantity regardless of market conditions.
If you’re still not convinced, know this: Over the last thirty years, new female M.D.s have sharply increased. How is this possible given the stagnant total? Because the number of new male M.D.s dropped like a rock! New male M.D.s per person are down by over 45%.
New male M.D.s per senior are down over 50%:
In any normal labor market, massive female entry would have led to a large increase in total workers. But the market for new doctors is anything but normal. The rise in new female doctors has been almost perfectly offset by a matching fall in new male doctors.
My point, of course, is not that women have “stolen” men’s places in medical school. My point, rather, is that that draconian government entry barriers are the only credible explanation of the facts. Why else would the number of male doctors have fallen so far relative to demand? Infinitely inelastic demand for medical services? A massive decline in the talent of male applicants to medical school?!
As our population ages, we have naturally seen a large increase in the demand for doctors. If the market for M.D.s worked normally, however, we would have fortuitously experienced a large offsetting supply shock: the rise of the female doctor. Regulation has deprived us of this godsend – and deprived vast numbers of qualified men and women of the right to work in their preferred occupation. Thanks to government entry barriers, demand has gone up and supply is frozen in place. Consumers and taxpayers are paying a fortune for medical care. And the problem is only going to get worse.
The post appeared first on Econlib.
I believe this article was written in 2013, with data as available as of that date. If I'm correct, I wish you would label your Substack communications with actual date of publication.
What are the key regulations preventing medical schools from increasing in size or from new med schools forming? Does it run through the professional associations? Also it would be useful to see statistics on stocks as well as on flows. How has the number of MDs per capita shifted over time? Or # MDs per senior ? Aren’t those the most relevant statistics ? A quick online search found that it has actually increased from 2009 to 2019. So doctors trained abroad are filling in the gap to some degree.