THE BLOG
03/19/2013 11:14 am ET | Updated May 19, 2013

Adding Docs Will Boost Health Bill

While much of Washington worries about how to constrain Medicare costs, two contrarian legislators want the program to spend $1 billion more annually to fund residency training for new doctors.

Their plan responds to a projected physician shortage. There's heated debate about whether there will be a physician deficit in the future and, if so, how to best respond. There's less debate about whether increasing the physician supply will increase our medical bills. It's intuitive. More doctors will not only bill more so they can make an adequate living, but will order more tests and referrals. Normal economic logic that increased supply drives prices down doesn't work in medicine.

From that perspective, the bill sponsored by Philadelphia Democrat Allyson Schwartz and Peoria Republican Aaron Schock would spend a little more now (at least by Washington standards where their billion dollars is overshadowed by a total annual Medicare budget nearing $600 billion) that will require us to spend a lot more later, when these new doctors begin practicing -- and billing -- in subsequent decades.

While this backbenchers' bill has little chance of passing in today's environment of austerity, it again points up a basic tension in the health reform debate. One side are the experts of all political persuasions who agree that that we're buying much more care than needed. As I've detailed elsewhere, there are dueling partisan plans on how to bring consumption down to what we need.

Then there's the bulk of the population -- and their non-expert legislators -- who believe that we're not getting all the services we need and worry about getting more. They fear a physician shortage, particularly in primary care, that will worsen unless we educate more doctors. Medical schools are expanding, which creates pressure for more residencies that the Schwartz-Schlock bill provides. Good legislators respond to constituents and Schwartz cannot be unaware that healthcare is the largest employer -- and most robust area of job growth -- in the Philadelphia region. Her advocacy is not unlike that of her colleagues who support expensive weapons systems produced in their districts irrespective of their efficacy.

There are also worries that patients will find the growing menu of treatment offered by these doctors unaffordable, leading to various schemes to regulate prices or provide subsidies, perhaps by expanding the Medicare or medicaid programs, to help them pay their bills. Conservatives never tire of pointing out that offering such aid alone inevitably tends to drive prices up as consumers become increasingly insensitive to price. That's a compelling theory, although it is challenging to imagine patients who are less price sensitive than is currently the case.

Those who worry about impending shortages argue that America's aging population will inevitably require more care that will require added resources, an assertion challenged by America's shrinking hospitals where number of beds in declined by 22 percent between 1990 and 2009. When in population growth is considered, the number of beds per thousand people dropped by better than a third. There are no worries about an impending hospital shortage.

The remaining hospitals are hiring doctors at a breakneck pace in an effort to protect their patient flow and accommodate the trend toward comprehensive care organizations.

A basic tenet of medical economics is that supply drives demand. A community that's home to an extraordinary number of MRI machines tends to do more imaging than is typical. And a community with an ample supply of doctors tends to have higher bills. Sadly, though, the extra resources don't improve outcomes.

That's why wariness is the right response to efforts to increase supply that will require all of us to pay while not getting anything in return.