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> The American Medical Association (the AMA is the most powerful union in history) has pushed through laws to protect its members from competition, making it ex

> The American Medical Association (the AMA is the most powerful union in history) has pushed through laws to protect its members from competition, making it extraordinarily difficult to provide low cost healthcare This is a common misconception. I've posted about this many times before, but in short, it's the AAMC, not the AMA, that used to medical school spots. They are no longer the bottleneck anymore, however; the issue is that we don't have enough residency slots, and the funding for those comes through Medicare[0]. That said, this isn't really a driver of costs anyway, because providers themselves are responsible for only 10-15% of spending. > Basically, all entrepreneurs who don’t join the union are shut off the health care industry. This is why you pay so much money in insurance & for simple doctors visits. Do you think if a fresh entrepreneur opened a hospital you would pay $8,000 per day for a room? No, the reason that you pay so much is because of the convoluted way that Medicare reimbursements work (even if you're not on Medicare). In short, Medicare doesn't cover its own costs, so private insurers and uninsured patients are overcharged in order to cover the difference[1] [0] https://news.ycombinator.com/item?id=8122377 https://news.ycombinator.com/item?id=8122377 [1] https://news.ycombinator.com/item?id=10479398 https://news.ycombinator.com/item?id=10479398

msabalau 10y ago
Oh, so there is free movement of foreign medical staff to the US, so that medical professionals have to compete on the same basis as a working class manufacturing employees?
- carbocation 10y ago
  They have to get re-licensed according to US regulatory standards, which are burdensome for everyone (whether from the US or not), but sure, they can (and do) come practice here regularly. And, regardless, if physician pay went to 0, US healthcare costs would drop by only 10%.
  - maxerickson 10y ago
    Isn't it pretty highly likely that we need to do 20 or 25 different things that average dropping the price by 2%? If we consider them in isolation, shrug and say the cut won't fix the problem, we won't fix the problem.
    - carbocation 10y ago
      This is true. I'm biased, of course, but to me the administrative costs are what's breaking the back of medicine. The roles of physicians and nurses are essential (I'm not saying that they can't eventually be automated, just that they have to be done). Those of administrators generally are not. But the growth in administration has been astounding: http://image.slidesharecdn.com/pnhplongsetweisbartversion-121221105916-phpapp01/95/pnhp-long-setweisbartversion-52-638.jpg?cb=1356087906 http://image.slidesharecdn.com/pnhplongsetweisbartversion-12... So, sure, we can cut physician salaries and nursing salaries (nursing pay collectively is about the same as physician pay). But I don't see a downside to trying to reduce the administrative burden as a means of cost reduction.
      - maxerickson 10y ago
        FWIW, when I think about cutting physician pay, I think about incentivizing new supply, as it is likely the most effective way to do it and also probably the fairest. I definitely have lots of concerns about the mega institutions that are swallowing hospitals. It's hard to believe that they really do much to improve outcomes for patients (and it's pretty observable that they haven't done any good for prices).
        carbocation 10y ago
        > FWIW, when I think about cutting physician pay, I think about incentivizing new supply Sorry for potentially being probably completely obtuse here due to being deep within the structure of medicine, but new supply of what?
        maxerickson 10y ago
SilasX 10y ago
> They are no longer the bottleneck anymore, however; the issue is that we don't have enough residency slots, and the funding for those comes through Medicare[0]. Can you elaborate? I don't understand what dynamic is being alleged with this often-cited reference to limited residency funding. If there really are (quasi) monopoly profits to be made, why would government funding limit that? That is, if it's really lucrative to become a doctor, but you have to do a residency, but no one will pay for it, then potential doctors should be happy to eat the costs, knowing that they can lay it back from later high salaries. Let me put the argument in another context to say why it doesn't make sense: "demand for passenger air travel is through the roof, with revenues at hundred of times the cost of a flight. But we can't increase the number of flights because the government won't purchase more airplanes to give to the airlines." In that case, it would be a poor argument: buy the new airplanes with the passenger revenue; you don't need a government subsidy there.
- chimeracoder 10y ago
  > Can you elaborate? I don't understand what dynamic is being alleged with this often-cited reference to limited residency funding. If there really are (quasi) monopoly profits to be made, Well, there aren't. There's a bottleneck in the supply, but there aren't monopoly profits to be made, because Medicare acts more like a monopsony. Medicare sets reimbursement rates unilaterally, and medical providers are forced to accept them, even though they don't (in the aggregate) even cover the direct COGS, let alone allow for the overhead of running a practice. I'm only bringing up residency funding to explain that the AMA has nothing to do with restricting the supply of doctors, as is commonly (mistakenly) believed. But the real topic that OP brought up was the costs of care, and the supply of doctors isn't really relevant to that topic either, because providers' earnings only account for 10-15% of total costs of care.
  - SilasX 10y ago
    That doesn't addressing my point, and my point doesn't depend on there being a monopoly, just much-higher-then-typical returns. That was why I said "quasi" and gave a clear example of (what I believe is) an analogous situation, in airlines, to show why lacking government funding couldn't be blamed. Nor did I ever endorse the claim the doctor compensation was a significant factor, although I should have perhaps made that clearer to avoid the rabbit hole. My comment was intended to challenge the claim that the small number of Medicare-funded residency slots could affect doctor supply, which you seemed to genuinely believe and be able to defend. (If you can't defend this claim, I would recommend not repeating it.)

msabalau 10y ago

Oh, so there is free movement of foreign medical staff to the US, so that medical professionals have to compete on the same basis as a working class manufacturing employees?

carbocation 10y ago
They have to get re-licensed according to US regulatory standards, which are burdensome for everyone (whether from the US or not), but sure, they can (and do) come practice here regularly. And, regardless, if physician pay went to 0, US healthcare costs would drop by only 10%.
- maxerickson 10y ago
  Isn't it pretty highly likely that we need to do 20 or 25 different things that average dropping the price by 2%? If we consider them in isolation, shrug and say the cut won't fix the problem, we won't fix the problem.
  - carbocation 10y ago
    This is true. I'm biased, of course, but to me the administrative costs are what's breaking the back of medicine. The roles of physicians and nurses are essential (I'm not saying that they can't eventually be automated, just that they have to be done). Those of administrators generally are not. But the growth in administration has been astounding: http://image.slidesharecdn.com/pnhplongsetweisbartversion-121221105916-phpapp01/95/pnhp-long-setweisbartversion-52-638.jpg?cb=1356087906 http://image.slidesharecdn.com/pnhplongsetweisbartversion-12... So, sure, we can cut physician salaries and nursing salaries (nursing pay collectively is about the same as physician pay). But I don't see a downside to trying to reduce the administrative burden as a means of cost reduction.
    - maxerickson 10y ago
      FWIW, when I think about cutting physician pay, I think about incentivizing new supply, as it is likely the most effective way to do it and also probably the fairest. I definitely have lots of concerns about the mega institutions that are swallowing hospitals. It's hard to believe that they really do much to improve outcomes for patients (and it's pretty observable that they haven't done any good for prices).
      - carbocation 10y ago
        > FWIW, when I think about cutting physician pay, I think about incentivizing new supply Sorry for potentially being probably completely obtuse here due to being deep within the structure of medicine, but new supply of what?
        maxerickson 10y ago

SilasX 10y ago

> They are no longer the bottleneck anymore, however; the issue is that we don't have enough residency slots, and the funding for those comes through Medicare[0]. Can you elaborate? I don't understand what dynamic is being alleged with this often-cited reference to limited residency funding. If there really are (quasi) monopoly profits to be made, why would government funding limit that? That is, if it's really lucrative to become a doctor, but you have to do a residency, but no one will pay for it, then potential doctors should be happy to eat the costs, knowing that they can lay it back from later high salaries. Let me put the argument in another context to say why it doesn't make sense: "demand for passenger air travel is through the roof, with revenues at hundred of times the cost of a flight. But we can't increase the number of flights because the government won't purchase more airplanes to give to the airlines." In that case, it would be a poor argument: buy the new airplanes with the passenger revenue; you don't need a government subsidy there.

chimeracoder 10y ago
> Can you elaborate? I don't understand what dynamic is being alleged with this often-cited reference to limited residency funding. If there really are (quasi) monopoly profits to be made, Well, there aren't. There's a bottleneck in the supply, but there aren't monopoly profits to be made, because Medicare acts more like a monopsony. Medicare sets reimbursement rates unilaterally, and medical providers are forced to accept them, even though they don't (in the aggregate) even cover the direct COGS, let alone allow for the overhead of running a practice. I'm only bringing up residency funding to explain that the AMA has nothing to do with restricting the supply of doctors, as is commonly (mistakenly) believed. But the real topic that OP brought up was the costs of care, and the supply of doctors isn't really relevant to that topic either, because providers' earnings only account for 10-15% of total costs of care.
- SilasX 10y ago
  That doesn't addressing my point, and my point doesn't depend on there being a monopoly, just much-higher-then-typical returns. That was why I said "quasi" and gave a clear example of (what I believe is) an analogous situation, in airlines, to show why lacking government funding couldn't be blamed. Nor did I ever endorse the claim the doctor compensation was a significant factor, although I should have perhaps made that clearer to avoid the rabbit hole. My comment was intended to challenge the claim that the small number of Medicare-funded residency slots could affect doctor supply, which you seemed to genuinely believe and be able to defend. (If you can't defend this claim, I would recommend not repeating it.)