Why does healthcare even exist?

For too long, we’ve been asking the wrong question

By Victor Joecks
  • Wednesday, April 8, 2009

In the ongoing healthcare debate, people often ask: Why isn't healthcare affordable and accessible to all?

This is the wrong question to ask. It assumes that a hidden supply of healthcare exists somewhere, and that if the government (or someone) could just find it or stop the wealthy from hoarding it, healthcare would be as free and accessible as sunshine.

A better question is: Why does healthcare exist at all?

Let's focus on doctors for a moment. To become a doctor, one must be smart, hard-working and well-versed in relevant science - greatly limiting the pool of candidates. After earning a bachelor's degree and attending medical school for four years, prospective doctors must spend three to seven years as a resident to be certified as a specialist. During those years, residents work 80 hours a week for $30,000 annually.

Then, according to the Association of American Medical Colleges, the average doctor graduates with $139,517 in debt.

Again, this highlights the question: Why do we have any doctors at all? Why would people put themselves through this?

Many considerations no doubt go into this career choice, including a desire to help others and the enjoyment of medicine. But the prospect of high income later is, of course, a major factor. After three years of experience, family-practice doctors average more than $200,000 a year. Some surgeons make more than a million dollars annually.

This is good, because the alternative is fewer doctors.

How many doctors would exist if the average doctor's salary were only $50,000 annually? A lot fewer.

Doctors earn more money than most people because they provide a high-demand service that requires them to go through something most people either cannot or will not.

This shows the main problem with government attempts to ensure universal coverage: Government — even with all the rhetorical gifts of a President Obama — cannot create more doctors.

Doctors exist because individuals choose to put themselves through a difficult and demanding regimen, knowing that a great reward awaits them later. If government diminishes prospects for future earnings, fewer individuals will make that choice. Society will have fewer doctors. And if you doubt that the federal government might want to diminish private-citizen earnings, where were you during the AIG hearings?

With fewer doctors, it doesn't matter who's paying. Less coverage will be available, because the government can't force people to become doctors - at least not as long as personal freedom survives. As the Cato Institute's Michael Tanner and Michael Cannon wrote recently:

Simply saying that people have health insurance is meaningless. Many countries provide universal insurance but deny critical procedures to patients who need them. Britain's Department of Health reported in 2006 that at any given time, nearly 900,000 Britons are waiting for admission to National Health Service hospitals, and shortages force the cancellation of more than 50,000 operations each year. In Sweden, the wait for heart surgery can be as long as 25 weeks, and the average wait for hip replacement surgery is more than a year. Many of these individuals suffer chronic pain, and judging by the numbers, some will probably die awaiting treatment. In a 2005 ruling of the Canadian Supreme Court, Chief Justice Beverly McLachlin wrote that "access to a waiting list is not access to healthcare."

Nevada lawmakers are not, right now, considering socializing medicine. But they are considering passing a law that would have the effect of lowering doctors' salaries.

The bill would remove the $350,000 cap on pain and suffering damages that was the key element of the 2004 medical malpractice reform initiative. The bill's proponents want to remove the cap in the wake of the hepatitis C outbreak in Las Vegas.

Strong evidence suggests the medical malpractice cap on the elusive "pain and suffering" damages has lowered insurance premiums and helped increase the number of doctors in Nevada.

The Las Vegas Review-Journal reports:

Since the passage of 2004 reforms, medical malpractice rates have dropped 30 percent in Nevada. Major insurance carriers writing premiums jumped from six to eight and minor carriers now number more than 80...

Sheldon Davidow, chief executive officer of Medicus Insurance Co., said his Texas-based firm decided to enter the Nevada market because of the stability afforded by the reforms that suggested there would be fewer large payouts. He said Monday he got approval three weeks ago to lower rates another 7.5 percent...

Dr. Weldon "Don" Havins, former president of the Clark County Medical Association, said that undoing the tort reform of 2004 could mean new doctors won't come to Nevada. He noted that the net gain in licenses issued to doctors who chose to practice in Clark County dropped to a low of seven in 2002.

Just the promise of medical tort reform passage in 2004, Havins said, brought a net gain in licenses that year to 212. The gains have continued and stabilized, he said.

As healthcare legislation is debated at federal and state levels, elected officials ought to remember this: While government can destroy incentives to become or remain a doctor, creating doctors is something simply beyond its capability.

Victor Joecks is the deputy communications director at the Nevada Policy Research Institute.

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