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29 IRET Congressional Advisory 1 (1994)

handle is hein.taxfoundation/iretcgadv0028 and id is 1 raw text is: IRET Advisory March 14, 1994 No. 29 QUOTAS ON QUALITY HEALTH CARE The Clintons' health care task force blames part of the rising cost of health care on the emergence of too many medical specialists. The Clintons' proposal would decree that no more than 45% of medical school graduates dee e that no would be allowed to go on to dc a nc become specialists. The rest medicalschooi would be forced to become allowed to t general practitioners. syecialists...th Furthermore, the limited slots advanced tr for advanced training would be allocated by a allocated by area of specialty by medical and by medical school, and the students woul students would be selected racial and eth under racial and ethnic quotas. The proposed limitation on access to knowledge and the infringement of individual liberty in choosing a career is frightening. Imagine the uproar if the government were to limit slots in seminaries, alter the proportions among religious denominations, and allocate students by formula to the various positions. Imagine any effort by the government to limit the number of persons studying or practicing law, engineering, plumbing - indeed any other profession. That would be unthinkable. Somehow, though, common sense flies out the window when it comes to health care, especially now that government funding and regulation have come to dominate the field. p r mor 1 grad ~inin~ rea oj scho d be nic qi The specialist provision is both bizarre medicine and bizarre economics. How can something cost too much and be in glut? Normally, over-supply is associated with depressed prices. For example, a bumper harvest of wheat results in lower wheat prices, a bane to the farmer but a boon to consumers. On the other hand, an increase in demand for an item raises prices. If a fad sweeps the nation, the price of the adored item zooms, or shortages develop. Witness the not-available-at-any-price-the- week-before-Christmas phenomenon of the cabbage patch dolls of a few years ago. When customers demand more of a product or service, they bid up the price, signalling producers to supply more. Enormous advances in medical oposal would technology have made better e than 45%c of treatments possible. The esanu4dof public is eager to buy those uates would be treatments. But specialists n to become have to be trained to deliver ited slots for the new techniques. The would be higher earnings of those so f specialty and trained encourages more ol, and the students to enter those fields. selected under Thus the consumers (patients) uotas. have called forth a greater supply of the specialists. This is the only explanation consistent with higher prices and higher production expansion of the industry. a demand-driven The Clintons seem to think, instead, that the specialists invented themselves, and somehow force patients to come to them and pay higher prices. The idea that there are simultaneously too many specialists and that they are nonetheless able to charge too much flies in the face of every known economic law. The Clintons' proposal attacks symptoms without any regard to or understanding of their Institute for Research on the Economics of Taxation IRET is a non-profit, tax exempt 501(c)(3) economic policy research and educational organization devoted to inorming the public about policies that will promote economic growth and efficient operation of the free market economy. 1730 K Street, N., Suite 910, Washington, D.C. 20006 Voice 202-463-1400 * Fax 202-463-6199 0 Internet www.iret.org

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