Friday, February 29, 2008

The ignored Supply Side of the Health Care Market

Expanding healthcare coverage has once again become a major issues and their have been claims that an European style system would reduce health care cost in the United States will covering everyone. There is a number of problems with this because it only address the demand side of the health care system, ie it only affects how many people are covered, how much health care services they use and how they pay for it, it does nothing to change the supply side of the health care system or the factors on that side that help to artificial push up prices. These factors include things like the American Medical Association that help to keep the number of doctors in the American market artificial low, for example putting in affect regulations that prevent qualified doctors that received their education overseas from practicing in the United States in many circumstances, the structure of how doctors practice that in many case artificial raise cost, and the way that malpractice laws are written in a number of the states. The problem with this is that if these factors are left in place any kind of single payer health care system will continue to cause price to rise or you will have to have government enforced demand rationing for non-critical medical care, as is already present in most European Countries and Canada were people that have sole the state run health insurance have to endure long waiting periods for non-critical medical procedures. In the United States, because of the supply side factors that are different from those countries, the situation would most likely end up even worse, similar to how in Illinois it is very difficult for people to find doctors that will take Medicare/Medicaid or have to wait for long periods to see the doctor. You don’t hear anyone that support a single payer system or other universal health care systems address the supply side of the market, I suspect the reason for this is that they do not want to run the risk of having to fight the insurance companies and the AMA, Doctors, ect all at once. There are far better ways to fix the US health care system than a single payers system that is used by many other countries, but it requires that will address the factors that distort both the supply and demand side of the health care system.

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