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> 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)

> 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.)
- chimeracoder 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. It does address your point. As I stated, there aren't higher-than-typical returns, because Medicare acts like a monopsony. Monopsonies result in lower-than-typical returns. Medicare is involved in a number of different ways, but the two main ones here are to set the number of available residency slots, and separately to control providers' revenues through a monopsony power. Aviation is highly regulated, but neither airlines nor passengers are monopsonies, so the analogy doesn't work.
  - SilasX 10y ago
    I meant the returns to becoming a doctor, not general medical practice returns. (Was that not clear? The very next sentence, after I mentioned the monopoly, referred to the returns to becoming a doctor.) Are you saying that the financial return to becoming a doctor is lower than for other occupations? If not, then you probably misunderstood the argument. Medicare doesn't somehow lower the return to becoming a doctor. >Aviation is highly regulated, but neither airlines nor passengers are monopsonies, so the analogy doesn't work. The relevant buyer would be the passengers or the employers of doctors, neither of which is a monopsony, and the use of airlines was arbitrary. Again, the point is that (lack of) governmmet subsidies can't be a bottleneck when existing revenues suffice to pay for whatever expansion is necessary. In three comments, plus two citations, you have not provided substantiation to address the point (that lucrative businesses can't be bottlenecked by subsidy caps), and at this point I don't think you understand the criticism, but prefer instead to dismiss any clarification of the relevant dynamics with "oh that's regulated". I request that you stop propagating your argument (and dismissing critics as having a "misconception") until you understand these criticisms better.
    - chimeracoder 10y ago
      > I meant the returns to becoming a doctor, not general medical practice returns. (Was that not clear? The very next sentence, after I mentioned the monopoly, referred to the returns to becoming a doctor.) I did my best to make it clear that these two things are intricately linked. > If not, then you probably misunderstood the argument. Medicare doesn't somehow lower the return to becoming a doctor. Medicare absolutely does lower the returns to becoming a doctor, just as any monopsony lowers the returns for suppliers in that market. > The relevant buyer would be the passengers or the employers of doctors, neither of which is a monopsony Until very recently (the last 2-5 years), the majority of doctors were self-employed, meaning that insurers were the direct purchasers of their services. And because of both its size and also various laws, Medicare has monopsony power in the insurance market. The recent employment of physicians by hospital groups doesn't really change those economic forces; it simply adds an extra layer of indirection when resolving them. > you have not provided substantiation to address the point (that lucrative businesses can't be bottlenecked by subsidy caps), and at this point I don't think you understand the criticism, but prefer instead to dismiss any clarification of the relevant dynamics with "oh that's regulated" I've stated pretty clearly that medical practice is not a particularly lucrative business (hence why private practices have been going bankrupt and being bought out by hospitals and insurers, and why so many hospitals have negative gross profit margins). That's not a 'dismissal' of your criticism; it's a refutation of the underlying premise. > I request that you stop propagating your argument (and dismissing critics as having a "misconception") until you understand these criticisms better. I could request that you stop dismissing me as 'misunderstand[ing] the argument' until you understand what I'm saying better. Admittedly, this is a complex topic requiring both a detailed understanding of the ontology of the health insurance industry and a firm grasp of some economics concepts that are usually only covered at the graduate level. Most HN readers, understandably, have neither of these. I happen to have domain knowledge about both of these, and sometimes I share pieces of it in HN comments where relevant, and when I think it might be appreciated. Neither one of these is particularly easy to convey in only a few hundred words, which is the amount of text I have written today on the topic. Sometimes I succeed, and sometimes I don't. Perhaps I have not succeeded in this particular instance. Perhaps I could if I spent more time, or elaborated more, I could convey these points better, and maybe then we could come to an agreement. But that's the amount of time and energy I have to spend today writing HN comments on the matter.

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.)

chimeracoder 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. It does address your point. As I stated, there aren't higher-than-typical returns, because Medicare acts like a monopsony. Monopsonies result in lower-than-typical returns. Medicare is involved in a number of different ways, but the two main ones here are to set the number of available residency slots, and separately to control providers' revenues through a monopsony power. Aviation is highly regulated, but neither airlines nor passengers are monopsonies, so the analogy doesn't work.
- SilasX 10y ago
  I meant the returns to becoming a doctor, not general medical practice returns. (Was that not clear? The very next sentence, after I mentioned the monopoly, referred to the returns to becoming a doctor.) Are you saying that the financial return to becoming a doctor is lower than for other occupations? If not, then you probably misunderstood the argument. Medicare doesn't somehow lower the return to becoming a doctor. >Aviation is highly regulated, but neither airlines nor passengers are monopsonies, so the analogy doesn't work. The relevant buyer would be the passengers or the employers of doctors, neither of which is a monopsony, and the use of airlines was arbitrary. Again, the point is that (lack of) governmmet subsidies can't be a bottleneck when existing revenues suffice to pay for whatever expansion is necessary. In three comments, plus two citations, you have not provided substantiation to address the point (that lucrative businesses can't be bottlenecked by subsidy caps), and at this point I don't think you understand the criticism, but prefer instead to dismiss any clarification of the relevant dynamics with "oh that's regulated". I request that you stop propagating your argument (and dismissing critics as having a "misconception") until you understand these criticisms better.
  - chimeracoder 10y ago
    > I meant the returns to becoming a doctor, not general medical practice returns. (Was that not clear? The very next sentence, after I mentioned the monopoly, referred to the returns to becoming a doctor.) I did my best to make it clear that these two things are intricately linked. > If not, then you probably misunderstood the argument. Medicare doesn't somehow lower the return to becoming a doctor. Medicare absolutely does lower the returns to becoming a doctor, just as any monopsony lowers the returns for suppliers in that market. > The relevant buyer would be the passengers or the employers of doctors, neither of which is a monopsony Until very recently (the last 2-5 years), the majority of doctors were self-employed, meaning that insurers were the direct purchasers of their services. And because of both its size and also various laws, Medicare has monopsony power in the insurance market. The recent employment of physicians by hospital groups doesn't really change those economic forces; it simply adds an extra layer of indirection when resolving them. > you have not provided substantiation to address the point (that lucrative businesses can't be bottlenecked by subsidy caps), and at this point I don't think you understand the criticism, but prefer instead to dismiss any clarification of the relevant dynamics with "oh that's regulated" I've stated pretty clearly that medical practice is not a particularly lucrative business (hence why private practices have been going bankrupt and being bought out by hospitals and insurers, and why so many hospitals have negative gross profit margins). That's not a 'dismissal' of your criticism; it's a refutation of the underlying premise. > I request that you stop propagating your argument (and dismissing critics as having a "misconception") until you understand these criticisms better. I could request that you stop dismissing me as 'misunderstand[ing] the argument' until you understand what I'm saying better. Admittedly, this is a complex topic requiring both a detailed understanding of the ontology of the health insurance industry and a firm grasp of some economics concepts that are usually only covered at the graduate level. Most HN readers, understandably, have neither of these. I happen to have domain knowledge about both of these, and sometimes I share pieces of it in HN comments where relevant, and when I think it might be appreciated. Neither one of these is particularly easy to convey in only a few hundred words, which is the amount of text I have written today on the topic. Sometimes I succeed, and sometimes I don't. Perhaps I have not succeeded in this particular instance. Perhaps I could if I spent more time, or elaborated more, I could convey these points better, and maybe then we could come to an agreement. But that's the amount of time and energy I have to spend today writing HN comments on the matter.