Some less-statist, less-destructive ideas about addressing an alleged *rural health care crisis*

Here’s some food for thought from 2022.  North Carolina Republicans in state government seem to think lowering standards and turning a blind idea to immigration issues is the way to address a “physician under-supply” in rural parts of the state.

The Mercatus Center – a free market oriented think tank at Virginia’s George Mason University – published a thought-provoking piece three years ago about a subject that has produced so much teeth-gnashing, cash-snatching and drama recently in our fair state capital:

Covid-19 exposed a lack of medical personnel in the United States to meet a national emergency, but a shortage of doctors has been a problem in the US for years. The number of doctors is a function of how many new doctors are admitted to the profession and how many leave the practice of medicine each year. The supply of new entrants is constrained primarily by the Centers for Medicare & Medicaid Services (CMS), a federal agency that provides the bulk of the funding for hospital residencies.

Hospital residencies are positions for recent medical school graduates to work in a clinical setting – usually at a hospital or doctor’s office – treating patients and continuing their training in a particular subfield. Residency durations vary by specialty. Even after medical school, an MD cannot obtain a license to practice medicine without at least one year of residency. The number of residency slots directly determines the number of licensed doctors entering practice.

CMS residency funding was capped beginning in 1997 at 1996 levels, and has only been raised once since then in Section 126 of the Consolidated Appropriations Act of 2021. From 1987 to 1997 the number of residents grew by 20.6%, while from 1997 to 2007 the growth in residencies was only 8%. The 2021 law attempts to address several issues by slowly increasing residencies in specific underserved situations such as rural areas. This officially just began with 200 new residencies nationwide this year, climbing to 1,000 additional residencies per year in five years. It is only a drop in the bucket compared to the 140,000 resident doctors in the US in 2020, the majority of whom were federally funded. Using a rough estimate from Census population data for 2000 and 2020, there are at least 50 million, or 18%, more people in the nation today than when the law was passed, making the current change a rather small effort.

This growth in population without a corresponding growth in the doctors we train each year leads to higher salaries for doctors and higher costs for patients. More people are demanding the time of a similar number of doctors, driving up the price of doctor’s time, even before accounting for the US’ aging population.

The law of supply and demand predicts that a larger supply of doctors would drive down the cost of doctors’ services as well as how much they are paid. The 1997 restriction on supply of residencies was originally lobbied for by the American Medical Association (AMA), the main professional association and lobbying group for doctors. The AMA now recognizes the shortages this created and is encouraging Congress to remove the limit. US healthcare costs are rising at a pace that the profession is actively asking for a change that will increase competition for its members. Increased supply of anything, even doctors, means decreased prices, all else being equal.

General (or family) medicine takes three years of residency while specialties can require up to seven years. Compared to general medicine, these extra years provide a doctor with an increased salary netting $1 million to $3 million dollars extra of lifetime earnings. While having an adequate supply of doctors is beneficial to patients and hospitals, practicing medicine is massively lucrative compared to almost any other occupation. Income for doctors is a large incentive to pay for education. The lowest average annual salary for physicians in a state is $149,557 per year in Georgia, according to ZipRecruiter, while some specialties have average annual incomes of a quarter to over a half a million dollars a year. […]

So, what does the author of this study suggest be done? :

 

Solution 1: Just raise the cap above 100,000 residents

Solution 2: Require hospitals to pay for more of residents’ costs

Solution 3: Doctors repay some of the cost of their residency once it is completed

Some of this requires the hospital industry shelling out some more of their accrued piles of cash. Considering how well that industry pays our elected folks, I can’t see anyone on Jones Street voting to make hospitals part with any more money not pre-destined for pockets in newly-acquired Tom James suits.