There were many debates about the workings of the free market when I was studying for a bachelor of arts degree in economics. One of the few areas there was agreement was that the cost of health care was higher than it ought to be because of restrictions on the supply of doctors, nurses and drugs. Of this my professors, whether liberal or conservative, were united.
The American Medical Association, for example, controlled the certification of training centers for new doctors. The number of new interns admitted annually to these schools was restricted well below the number of candidates who qualified to be doctors in the name of protecting the public. Fewer doctors meant less supply, which meant that those doctors who made the cut could charge higher fees for their services. This had the effect of raising medical costs above what the market would allow if there weren’t any restrictions on trade.
A graph of future nursing demand is similar to the restriction on certified doctors. Demand for nurses is going up, while the supply of nurses is dropping. This, as I was taught, is not normal in a labor market and only occurs where there are restrictions on trade.
The Food and Drug Administration also restricts the number of new drugs allowed on the market. I don’t have the space here to list all the reasons why, but that raises the costs of new drug treatments.
To reduce the cost of medical care, a prudent policy would be to break the trade restrictions certain groups have on controlling the supply of medical labor and drugs.
The solutions of the 2008 Democratic presidential candidates would only compound existing problems because their solutions do not address the supply side of health care. One solution — universal health care — would reduce the cost of people going to the doctor. This would increase demand without affecting supply. With a limited number of health care workers, the federal government would have to ration health care among those who want “free” medical care. In some European countries, people die while they wait in long lines to get their turn to see the few available doctors.
Universal health care does not work, and never will, because lowering the cost of medical care increases demand to the breaking point and does not fix the supply problem.
Scott Hurban, a longtime Tracy resident, is a high school teacher in Stockton.
