Medical Robbery

So, like hospitals and prescription drugs, are American doctors overpriced as well? The answer seems to be yes and no.

There are indications that the number of doctors are kept artificially low so as to keep competition at bay. This is clear in medical schools who don't accept many an otherwise qualified student, not even counting qualified foreign students. The OECD statistics show that whereas there are 3.2 doctors per 1,000 people on average in rich countries, in the United States there are only 2.5. As we've said before, we'd need to have some 230,000 more doctors in the country just to come up with that rich country average. One would think that with that many more doctors, their fees would go down.

But things are not so simple. Doctor's pay varies tremendously by type of medicine practiced and even within the same type of practice. Uwe Reinhardt, a health economist at Princeton, reports that whereas the median income for a family doctor is $219,000, a neurosurgeon's median income is $656,000--almost three times as much. But the range for a family doctor is between $175,000 and $317,000 and for a neurosurgeon from $492,000 to over $1,000,000. So it is possible for a doctor within a given specialty to make twice as much as another.

You might say, these are all pretty high salaries compared to what regular people make. But folks who qualify for medical school don't belong in the average labor pool either. To be fair, they need to be compared to other high earners. In this sense American doctors don't seem to be overpaid in relation to doctors in other countries. In a study by David Cutler, another health economist cited in Forbes, looked at doctor's pay in relation to other high earners. General practitioners earned 92% of wages by other American high earners while specialists earned 137%. But specialists earn higher wages in all countries, not just the US. Looking at a group of 13 rich countries Cutler calculated that American specialists earned 94% of the average of specialists in the country group in relation to high earners in each country. General practitioners earned 98%. So by this measure, American doctors are paid just about average of what they should be earning.

I can cite other data, but the general gist is that doctors' wages are higher than what would prevail in a free market where every qualified individual could get a medical degree. But doctors' wages aren't patently out of line like hospital and prescription costs seem to be by any reasonable measure.

Maybe I'm now brave enough and start tackling Obamacare. Coming soon.