Free Trade Begins at Home

I read but passed on an op-ed posted yesterday in the Wall Street Journal, We Need Free Trade in Health Care, but, since the piece has engendered a certain amount of comment without a great deal of understanding, I’m moved to comment on it now. The authors describe a variety of measures, all intended to increase the supply of health care in the United States, including telemedicine, medical tourism, a confused and nonsensical suggestion of increasing competition in the United States by allowing foreign-owned hospitals to open here (note: we don’t even allow new domestically owned hospitals to open here), and importing more foreign-trained professionals to satisfy demand in the United States. I agree completely with this point:

But the importation of doctors is even more critical in meeting supply needs than in providing lower costs. According to the 2005 Census, the U.S. had an estimated availability of 2.4 doctors per 1,000 population (the number was 3.3 in leading developed countries tracked by the OECD).

Comprehensive coverage of the over 45 million uninsured today will require that they can access doctors and related medical personnel. An IOU that cannot be cashed in is worthless.

Massachusetts ran into this problem: Few doctors wanted (or were able, given widespread shortages in many specialties) to treat many of the patients qualifying under the program. The solution lies in allowing imports of medical personnel tied into tending to the newly insured.

That’s a problem I’ve pointed out frequently here. The fundamental problem with universal coverage isn’t “who pays”; it’s that our healthcare system doesn’t have the excess capacity to provide 20% more services.

Just a week or so ago I seem to remember seeing a spate of articles in various newspapers noting the enormous number of children in the Third World who would die because they couldn’t receive basic health care services especially in India, Pakistan, and Africa. I see no way that importing more physicians from India, Pakistan, and Africa will improve that situation.

It’s reasonable to be concerned that people in the Third World aren’t receiving basic healthcare services. It’s also reasonable to think that an increased supply of healthcare services in the United States might take price pressure off healthcare here. Professing concern that people in the Third World aren’t receiving basic healthcare services and urging that we import more foreign-trained medical professionals simultaneously is nuts.

What’s missing from the op-ed is context, both for free trade and for healthcare services.

When the United States accepted the Constitution of 1787 it created the largest free trade zone in the world. Within that large domestic free trade zone capital, labor, and trade flowed freely. It’s worked well here and encouraged our appetite for free trade everywhere.

We do not have free trade and healthcare services and have not had for a century. The supply of healthcare services here is controlled by the physicians’ guild. It controls the number of medical schools and the enrollment in those schools. Operating under the philosophy of “fewer better doctors” the number of physicians produced annually here has remained nearly constant for a generation while the country’s population has increased by 40%. As noted in the article the number of physicians per 100,000 has dwindled to its present pathetic level but worse yet is that the proportion of physicians specializing in family practice continues to fall. Importing anaesthesiologists or pathologists won’t solve that problem.

There is no lack of qualified applicants to U. S. medical and nursing schools. Such schools have long waiting lists.

The number, location, and services provided by hospitals are regulated by federal, state, and local governing bodies. This has the effect of reducing competition.

So I suggest that free trade now, as it did 200 years ago, should begin at home.