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The Economic Health of the Health Care Industry

By Jonathan W. Emord
(June 18, 2010)

Originally appearing at

Among its many harmful effects, the new health reform law will significantly worsen a doctor shortage in America. Without the bill, the United States will be short by an estimated 85,000 to 200,000 doctors by 2020. Retiring baby boomer physicians are not being replaced in sufficient numbers to meet demand anticipated before the bill’s passage, let alone the enormous increase in demand generated by the new law. By forcing every American to buy a single product, health insurance, the new health law will cause more people to seek medical care than ever before.

Combine the shortage of physicians with the explosion in demand and you have the makings of a disaster characteristic of countries around the world where socialized medicine reigns, including the need to get in a cue for care, rationed services and equipment, and the demise of patient-centric, quality care in favor of a one-size-fits-all, bureaucratized care. In short, we will soon experience the horrors of the further destruction of market forces in the health care sector and it will means less timely and quality care for everyone.

Many Americans who are not presently insured rely on self-help in most instances to handle routine colds and flu, sinus infections, allergies, and other non-life threatening ailments. When the health care law kicks in, they will be forced into the ranks of the insured and they will have no financial incentive to avoid visiting the doctor or hospital. Required to pay for insurance or be covered by a medical insurance plan, they will have every incentive to take advantage of the new plans. In large numbers all across the United States, they will seek medical care for everything from a common cold or virus to serious conditions. They will place extraordinary demands on the health care system, clogging offices, engendering administrative nightmares, and forcing administrators and their federal overseers to make difficult choices concerning who gets access and to what kinds of services and who must wait for care. The system is about to be overwhelmed.

At the same time, fee caps common in Medicare billing will now reach almost all services. Those caps already force physicians and hospitals to limit time with patients, cut services, avoid provision of premium care in favor of unquestionably Medicare covered care, and lose opportunities for more lucrative patient interactions. As fee caps become common for all services, physicians and hospitals will experience a financial squeeze to a degree previously unknown. As insurance companies, serving as proxies for the federal government, exert even more pressure on physicians by second-guessing their professional judgment and overruling their recommendations for patient care, case by case the practice of medicine will become even more bureaucratized. In addition, far greater record keeping and administrative burdens will further enmesh providers in red tape.

The economics of providing medical care will worsen for those who provide it, reducing their enthusiasm for working in the profession and enhancing the value of alternative occupations. Many already fed up with the amount of regulation and the degree of limitation on billing imposed by the federal government will leave the profession. Thus, many more physicians will choose other lines of work or will enter early retirement rather than cope with low profits, huge administrative demands, and less freedom to exercise independent professional judgment. This will add to the presently anticipated physician shortage.

Moreover, prospective medical students will see their bright futures in medicine dim and will choose other professions free of profit limits, regulatory oversight, and constrictions on professional judgment. As the opportunity for profit in the medical profession goes down and the need to devote far more time to regulatory compliance increases, many bright young people will go where income potential is greater and regulation less.

The health care law thus creates the makings of a perfect storm. Demand for medical care will grow enormously. The anticipated shortage of health care providers will worsen considerably. The dreaded cues of patients, rationed services and equipment, and replacement of bureaucratized care for patient-centric care so common in socialist countries will become common here too. If you thought existing health care problematic, consider the brave new world of Obamacare. If you are not sick over it now, you will be, and when you go to see a doctor for treatment, you may need to take a number, stand in line, come back another day, or go without.

To be insured by force of law is not to be insured against disease, insured to receive timely medical care, or insured to receive proper medical care. The President and Congress have just sacrificed freedom for government control, and we are about to see in a direct and personal way the consequences of that evil bargain.

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