The doctor monopoly on the medical profession needs to end; I am a supply sider and so are you
One tiny silver lining that has come from the pandemic has been the greater independence given to nurse practitioners (NPs). NPs can do everything a primary care doctor does, but have traditionally not been allowed to practice on their own. They have been required to be supervised by a doctor. When the pandemic sent patients to hospitals on an unprecedented level, out of necessity, NPs were given the ability in many states to work independently. In some states, what were temporary changes have become permanent.
Just this year, New York allowed NPs to have full independence. Half the states plus DC now give NPs full independence although alleged free market bastion Texas does not. Doctor groups, led by the American Medical Association (AMA), are not pleased. They claim that giving NPs full independence does nothing to expand access for patients or save them money and compromises their safety. What goes unmentioned is the financial incentive AMA members and other doctors have in keeping NPs under their control.
Many doctors believe that they are businessmen or women first and foremost. They are selling a service that patients can either take or leave. Their goal is to make money and medicine is just how they happened to go about accomplishing that. While many people might react with horror or anger to hearing that, I actually do not begrudge doctors who feel that way. In fact, I do not mind it at all. Doctors are entitled to make good money given the value of the services they perform, not to mention the obscene amount of student debt they incur getting there.
That said, I do have a problem with the glaring inconsistency of the claim that doctors are businessmen or women with the position of the AMA and doctors in general with respect to NP independence. Businessmen and women have all kinds of characteristics. They are interested in making profits, they are acting in their own self-interest (not in a bad way, mind you) and they are not doing what they do out of the sheer goodness of their hearts. Nobody is ever surprised to hear that Wal-Mart does not sell things at low prices out of altruism.
There is one characteristic though about those in business that the AMA and other doctors who claim they are businessmen or women are not keen on having. That is being subject to competition. Wal-Mart is subject to competition as is Microsoft, Exxon and Home Depot just to name a few. If any of them lobbied to try to ban others from doing what they do everyone would be up in arms. But doctors have gotten away with that and the AMA has been at the scene of every crime.
Granted, the stakes in medicine are higher than they are in retail. Despite that, NPs are hardly bums off the streets. The same is true for physician assistants (PAs). Both have extensive medical training and are capable of treating all kinds of patients. Doctors want to keep them away not because they threaten patient safety, but because they might threaten their bottom line.
It is not just NPs and PAs who doctor groups want to keep out, but other doctors, too. As I have written about before, the AMA’s efforts are why all foreign doctors must undergo a residency when they first come to the US no matter how experienced they are. It was the AMA who helped convince Congress in the 1980s that there were too many doctors and the number of residency slots needed to be cut. For those who do not know, residencies are paid for by Medicare and so can be expanded or contracted depending on how much money is given to it to do that.
Doctor groups have fought and opposed the introduction of retail clinics. Why? Because they are convenient, less expensive and much more reliable than many doctors are. They are open for much longer than doctors’ offices are and often do not require an appointment. Patients can get treated for all kinds of illnesses and can get prescriptions, which is extra convenient when the clinic is part of a pharmacy chain. Retail clinics are not a substitute for hospitals and cannot provide emergency care, but for a large majority of illnesses they can get patients the treatment they need just fine.
If doctors want to think of themselves as businessmen or women and want people to see them that way, I do not hold that against them. But if that is how they want to think of themselves and be seen by others, then they will have to be treated that way, too. My problem is that doctors want to have it both ways. They want to have all the upsides of being businessmen or women without any of the downsides. Those in business are subject to competition and doctors should not be treated any differently.
This phenomenon is a part of what I have been writing about a lot lately and that is the need to focus on the supply side of the economic equation, including on the issue of health care. Health care policy arguments have focused heavily on the demand side, i.e., expanding insurance. I do not disagree with that and want to see everyone insured, which the Affordable Care Act has gotten us closer to compared to just a few years ago. The problem is that even if everyone is insured, without enough providers, access will still be an issue, particularly for Medicaid patients. If no supply side changes are made, there will be lots of insured people waiting a long time to get needed care even if many people are theoretically now able to access care they previously could not due to lack of insurance.
So many of the policy discussions have focused on the demand side for a long time now. That has certainly had its place, especially during the financial crisis and the pandemic. We have succeeded in dealing with demand in many areas. The stimulus measures in response to the pandemic were very successful in preventing the economy from collapsing. Now, we have to expand the supply of all kinds of things not just today, but going forward so we can reduce prices and expand options. Expanding supply tends to take longer than boosting demand because it tends to involve things that do not happen overnight, i.e., building houses, power plants, transmission lines, etc. Boosting demand can be accomplished quickly through fiscal and monetary policy. Supply tends to not work that way.
Luckily, there are things that can be done right now to quickly expand the supply of medical providers. NPs and PAs can be given full independence to work on their own without being supervised by a doctor. They are already trained and can begin working right away. We can allow foreign doctors (as well as foreign nurses, PAs and NPs) to begin practicing immediately when they come to the US. We can make the immigration process smooth and easy. We can also allow for more telemedicine. Those things could expand the number of medical providers in short order.
Beyond the immediate moment, we can do plenty of other things to expand the number of medical providers. We can increase the money given to Medicare to spend on residencies. No medical student should be denied a slot. We can also allow medical school to be an undergraduate major rather than have it only be allowed after a four-year degree. Congress can also require states to recognize licenses of doctors, nurses, PAs and NPs from other states. That would prevent any state level cartels from keeping other providers out.
Doctor groups may not be the only thing standing in the way of all those changes, but they are by far the biggest obstacle. It is understandable why they would fight those measures. Greater competition could mean they do not get to charge as much as they do now. It might also mean fewer patients. Doctor groups may honestly believe that only they can practice medicine safely, but their financial incentives line up perfectly with the current arrangement. It is not a conspiracy what they are doing. It is only to natural to want to make as much money as possible and not have to face competition. Every business would love to have a legal monopoly in their area. Luckily, they do not get to decide that and doctors should not either.
Supply side economics is very misunderstood
At least since the 1980s, the macroeconomic policy debate has, in its most simplistic form, been about Keynesians versus supply siders. The former has been associated with Democrats and the left while the latter has been associated with Republicans and the right. That has been very unfortunate, especially for supply side economics. Stereotypically, supply side economics is narrowly viewed by many as just being about cutting taxes for people at the top. This is often referred to pejoratively as trickle-down economics.
In reality, the supply side is much broader than taxes. In fact, taxes are usually a demand side solution. While tax cuts can have effects on the supply side, there are many degrees of separation between a tax cut and long-term investments and determining the causation is very difficult. Many other factors are at play in determining investments of any sort. Think of it this way: the number of things you can do on the supply side is the length of a football field and taxes are one inch of it. Supply side economics has been hijacked and caricatured by right-wingers who just refer to the tiny taxes part of it and ignore the rest. That is wrong and it is good that more people on the left are recognizing that and it is time for supply side economics to get its due.
At its core, supply side economics simply means making it easier for people to provide goods and services. What I just wrote about with respect to making it easier for people to provide medical services is part of supply side economics. Supply side economics has very little to do with levels of taxation. Of all the barriers to providing more goods and services, taxes barely register. What is a huge barrier is overregulation. This is an area where more and more people on the left recognize there is a problem, but among elected officials the move has been very slow. Unfortunately, they will probably be the last people to get on board, but that is usually how it works. As I wrote before, we are still living in the 1970s where building was seen as excessive and needing to be cut down on. Operating on the same paradigm for decades is hard to undo and it never happens overnight, especially when many of our current leaders came of age during the 1970s. Still, I really think we are starting to see the tide turning albeit much slower than I would like. I would love for us to be living in the 2020s, but if we can at least get into the 1990s, I’ll take it for now.
Cutting back on zoning laws is absolutely necessary to make housing affordable in many currently expensive places. That is part of supply side economics. We want to make it easier to build housing so there will be more of it and prices will go down. Fighting against the NIMBYism that is crippling nuclear power and hindering the building of transmission lines, along with solar and windfarms, is a supply side issue. We want it to be easier for people to provide clean energy. To get there, we will have to cut back on regulations standing in the way.
Keynesianism has its place for sure. When the economy was on the brink of falling into an abyss in 2020, the federal government stepped in to give people and businesses financial support so they would not go bankrupt or face a huge financial hit. That allowed businesses to keep people employed (keeping demand for labor intact) and allowed individuals to keep spending (keeping demand for goods intact). Both of those measures kept the economy alive and saved us all from a world of hurt.
The dichotomy of being a Keynesian versus a supply sider is false. When someone asks me if I am a Keynesian or supply sider I say yes. I am both of them and so are you, dear reader. Just to make it even more obvious, do you think education is good? Of course, you do! Education is a supply side issue. We want people to be educated so they can be productive in the workforce and learn the skills to make that happen. Do you think we should spend money on infrastructure? Of course, you do! That, too, is a supply side issue. We want good infrastructure so people and goods can move around more easily so can we increase our productivity. In the short run, infrastructure spending boosts demand, but when the projects are finished they are almost all about the supply of people and/or goods moving around. Immigration is also a supply side issue in that involves increasing the supply of labor to provide all kinds of goods and services.
Did you think the CARES Act was good? Of course, you did! That was a Keynesian initiative. It boosted short term demand when the private sector could not. That is what Keynesianism is all about. On the monetary side, the interventions by the Fed to stabilize credit markets when the private sector was unable to do it kept us from having another financial crisis. You may not be aware they did that, but you are a major beneficiary of it. That is also Keynesianism. See, dear reader, you are a Keynesian and a supply sider.
When it comes to things like housing and clean energy, demand is there. The barriers are almost all on the supply side. What is keeping clean energy from taking off is not a lack of subsidies or tax breaks, but bad regulations. Whether it is pure NIMBYism or just relics from decades ago, bad regulations are keeping us from getting the clean energy we need. To be sure, spending money on research and development for clean energy is good, but that, too, is a supply side issue. The goal of research and development is to create and deploy new technologies and not to boost demand for things already in existence. The same is true for housing. Demand is very much there. Tons of people want to live in places like California and New York. The problem is those places have not built anywhere near enough housing to accommodate that, hence the sky-high house prices.