That, Doctor, is the right question

The Hill had an article today titled, “There aren’t enough doctors to go around.” This is one of the foundations of our current healthcare crisis: we don’t have enough doctors. We don’t have enough doctors in large part because we don’t have enough residency positions. Who pays for these residency positions? Mainly the federal government, which capped spending on residency programs starting in 1997. “As a result, what we have now is a classic bottleneck condition: More and more people want to practice medicine while less and less funding is available to help create residency programs that meet the demand.”

I have several friends who would immediately say, “Then the government needs to spend more on residency programs.” This despite our trillion-dollar-a-year deficit and a massively increasing unfunded liability problem in the form of Social Security and Medicare. Also, the Baby Boomers are retiring, leaving the much smaller Generation X to shoulder the tax burden. Then comes the discussion/argument where one side says that people are greedy for opposing higher taxes, that The People deserve to have this paid for, and the other side throws up its hands in disgust. Because there is no winning the “greedy” game.

However, I say, “If that is your answer, then you are asking the wrong question.”

Does giving the federal government control over this key piece of the medical industry allow the number of doctors to keep up with demand? increase flexibility in adding doctors? increase competition? increase quality?

After decades of the federal government stepping in and “protecting” us from a lack of doctors, we have the definitive answer: no. The number of new doctors is not keeping up with demand, the system is completely inflexible when it comes to adding more doctors, and the only increase in competition is among medical school graduates for residency spots, where the losers suffer a loss of hundreds of thousands of dollars (in both direct and opportunity costs) and over a decade of life. As for an increase in quality, the federal government funds the programs but doesn’t control them, so any change in funding source would have no direct impact on doctor quality. (I would argue that competition among funding sources would ultimately create better training at less cost and in less time, but that’s a post for another day.)

However, I suspect these questions were never even asked. Instead, the government saw the need for doctors as something so important* that it had to subsidize it, but in doing so it muscled out pretty much all alternative sources of funding (NOBODY can outspend the federal government, which means nobody can compete with it). Then the inevitable happened, and the budget was capped, leading to a de facto limit on the number of doctors since it’s pretty much impossible to become a doctor in the U.S. without going through a residency program.

The state governments control licensing and so could alleviate that by changing residency requirements and creating alternative paths for licensing, even different levels of licensing, but what would politicians’ re-election odds be if they did that? The campaign ads would write themselves: “Politician Y wants bad doctors!” Never mind that the stultifying bureaucracy surrounding the medical field already creates an environment for bad doctors to thrive and that licensing creates a higher barrier for becoming a doctor, leading to less competition. No, people believe that Licensing Equals Good Doctors! Therefore, “Less” Licensing Equals Bad Doctors!

If state governments did change the licensing laws, insurance companies would then have to change their rules about picking up such doctors. (Or doctors could become Direct Primary Care physicians, which is my preference but not the topic of this post.) And hospitals would have to change their rules about hospital privileges.

At all levels requiring change, interest groups like the AMA and AARP would push against the new rules because that’s what healthcare-focused interest groups do: protect their current base.

Do I sound…frustrated when ticking off the issues and the obstacles? Why, yes, yes, I am. We took a naturally complex system and added insane levels of complication to it and then wondered why it got more expensive and less responsive. Our answer thus far? Spend more of someone else’s money, whether that money be from taxpayers or from fellow insureds. After all, we can’t afford it.

Which is why we are now afraid to let loose the monster we have created. We can’t afford current prices, and we also can’t imagine things getting better fast enough to not bankrupt the injured, sick, and elderly.

Then when someone comes up with a possible solution to one aspect of this insanity, the person is shouted down because the answer doesn’t fix everything. At once. With no harm done to anyone. It doesn’t even suffice to predict less harm over time as compared to the current system; humans are risk averse, change averse, and terrible at estimating potential harm versus actual harm.

No solution can promise that. This is what we must first internalize as a nation before we can tackle our healthcare problems. There is no easy, pain-free solution.

That said, I shall tilt at windmills and offer my solution for this one part of the healthcare crisis: get the federal government out of the residency business over the course of 5 years, reducing the federal budget for residencies by 25% in years two through five. In year one, encourage the various Big Corporations and Big Charities (and little businesses and little charities and little associations to make common cause) to sponsor residency positions in places of the sponsor’s choice. And by “encourage,” I don’t meant special tax credits! I mean decreases in healthcare regulations to make hiring residents easier and less expensive. Bigs and Littles can partner with (or hire!) teaching hospitals to better fit their needs. This will increase competition between teaching hospitals—and hopefully increase the number of teaching hospitals and/or create alternatives to teaching hospitals—leading to ways to speed up the residency programs without sacrificing quality. If state governments feel the pinch of fewer residents in their states, they can change residency rules and/or licensing laws and/or malpractice rules and/or encourage doctors to start cash-based practices, which require less hoop jumping because they won’t submit bills to either insurance or Medicare/Medicaid. If some idiot state (I mean you, California) wants to take the place of Uncle Sam in subsidizing residencies, go ahead. It’s your funeral.

Since every year it becomes more and more the responsibility of the Bigs and Littles to pick up the slack, we can expect a fluctuation in the number of residencies each year. We might have fewer residencies in a year than we would have had with federal sponsorship, which in 2016 was something like 131,000 positions (keep in mind that those residencies are for between three and six years). In fact, I would expect that to happen as long as the regulatory burden is onerous enough to discourage residency sponsorships. But that gives otherwise recalcitrant interests in both the healthcare industry and government the impetus to change things. And can the result truly be worse than the current guaranteed shortage of doctors?

There are a lot of issues left unmentioned in my solution, from how to include foreign doctors to how to get residents to serve in rural areas to how to deal with residents’ chronic sleep deprivation. People in the industry can fill those blanks in. I don’t claim to have all the answers, just some of the right questions.

For more information on how to fix our entire system, I highly recommend The High Price of Socialized Medicine: A History of Government Meddling in American Health Care, and How a Free Market Would Solve Our Problems by Dr. James Brook. He wrote it before the inaccurately named Affordable Care Act was passed, and yet his recommendations still ring true.


*And if it’s important, the government must be involved, right? Beware when the government decides something is Too Important To Do Without.

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