David R. Henderson  

DeLong on Obamacare

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Categorize this in the "I wish Brad had asked these questions in 2009" file.

In a recent post, Brad DeLong sounds like Obamacare critic and health economist John C. Goodman. Here's an excerpt:

But Massachusetts has been walking down this exchange-and-public-program-expansion road for six years now, since Mitt Romney signed RomneyCare. Massachusetts has been vacuuming up doctors and nurses from Costa Rica and elsewhere and still has been finding that the cost of treating your state population is higher when 97% are insured than it was when 88% were insured. And there aren't enough loose doctors and nurses in the rest of the world for the ACA to vacuum up enough of them to meet the needs of not 1 state but 50 states.

The investments in medical infrastructure and workforce--less than $30 billion for 32 million newly insured, less than $1000 for newly insured--seem an order of magnitude low.

What is your guess as to what will happen if the ACA works for access, works for quality, works for coverage--but the extra health-care workforce needed isn't there, and the lines start to get longer?


A number of his commenters provide some interesting, and sometimes good, answers. One commenter, John B, noted that the last line in the quote above doesn't quite make sense: if coverage increases and the extra health-care workforce isn't there, how exactly does quality increase.

HT to Tyler Cowen.


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COMMENTS (17 to date)
Brad DeLong writes:

John C. Goodman: the man who fired Bruce Bartlett for stating the true fact that George W. Bush was a lousy conservative?

Please don't compare me to him.

Bye.

Paul Simon writes:

[Comment removed for rudeness. Email the webmaster@econlib.org to request restoring your comment privileges. --Econlib Ed.]

Daniel Kuehn writes:

[Comment removed for irrelevance.--Econlib Ed.]

Jon writes:

Yes, the ACA neglected to tackle the most important of targets:

Breaking apart the medical school cartel that leaves the US with lowest number of doctors per-capita of any developed country in the world.

Ted Levy writes:

Brad, would you care to comment on why this wasn't OBVIOUS 3 years ago? It was to some you don't wish to be compared with...

Daniel Kuehn writes:

Ted Levy -
I'm not even convinced this is an obvious problem now, much less 3 years ago. I can see how ACA could drive up costs and how that could be a problem. I can see how ACA could reduce welfare by forcing people to make purchases they wouldn't have otherwise made. But I am struggling to see how the ACA would prevent labor markets from functioning how they normally do, raising wages and drawing more workers into these fields. Neither David nor Brad have made it especially clear to me why this is what we should be worrying about.

David R. Henderson writes:

@Daniel Kuehn,
But I am struggling to see how the ACA would prevent labor markets from functioning how they normally do, raising wages and drawing more workers into these fields. Neither David nor Brad have made it especially clear to me why this is what we should be worrying about.
The ACA doesn't prevent this. The restriction on the number of slots in medical schools and nursing schools does. Brad does raise the possibility of immigration and I'm more hopeful about this than he appears to be.

egd writes:

I peeked at Mr. Delong's blog. Is it supposed to merely be a quote aggregator of Krugman and Keynes, or is it something more?

Jon writes:

David writes: "Brad does raise the possibility of immigration and I'm more hopeful about this than he appears to be."

Residency slots are part of the issue though. Doctors can be practicing for years in another country. They come here, and they need to redo their residency to get licensed. They are excluded from the good programs in the good areas.

Meanwhile for US doctors the residency progress is basically years of hazing with low-low-wages and unreasonable hours.

Hyman Rosen writes:

Shouldn't it cost just 10% more to treat 97% of the people than 88%, because 97/88 = 1.1?

Brad D writes:

@Daniel Kuehn

The lack of supply of doctors is created by the way in which they are renumerated. The ACA uses Medicaid as the the primary vehicle for expanding healthcare coverage. Medicaid reimbursement rates are so low that many, no most! doctors won't participate.

So, while the ACA enrolls folks into Medicaid, wait times, which are already lengthy by any standard, will become even longer.

Kevin writes:

Hyman Rosen said:

Shouldn't it cost just 10% more to treat 97% of the people than 88%, because 97/88 = 1.1?

Not if the newly insured are disproportionately expensive (e.g., by having pre-existing conditions).

Daniel Kuehn writes:

Brad -
Right, and we'd ultimately be forcing people into a lower quality program. But that seems like a Medicaid reimbursement problem not a labor market problem.

Yancey Ward writes:

Daniel,

And the ACA has "promised" to lower costs.

My complaint is that this was always the empty part of the promise if the access part was to be upheld. Someone has to pay to for the new labor you expect to come in and relieve the supply constraint- ACA does not provide for this as it now stands.

Keith Eubanks writes:

Hyman Rosen said:

Shouldn't it cost just 10% more to treat 97% of the people than 88%, because 97/88 = 1.1?


Cost to whom?

The vast majority of the 88% were previously covered by private mechanisms. I assume a significant majority of the additional 10% are covered by government mechanisms. So, the resulting cost increases born by government paid health care would be substantial.

Furthermore, even if the health costs of that 10% were being covered by government programs prior to the Mass mandates, with "insurance" that group would likely consume more health care. Pre-Mass/Romney Care, there would have been some question as to their personal costs associated with health care. After the Mass/Romney Care, it is clear (for now) that the government will pick up the tab for those who cannot. With lower personal costs, I assume this group would consume more.

mm writes:

Jon- you have little to no knowledge of residency- it is not just hazing- the vast majority of medical training occurs there- med school is mostly the conceptual framework/basic science underlying medicine. God help you if you should get treatment from new med school grads w/o residency training or supervision. Physicians invest an enormous number of hours in their training-much more than lawyers, MBAs etc. The hours are long & the pay low (altho the pay of MDs later is in part recompense).
Rosen- no it is not 10% more- any businessman can tell you that the costs/benefits of customers is not equally weighted across all the customers- a small %age of customers bring most of the profit & a small %age create a disproportionate amount of the cost.

Jeff writes:

There are two ways to lower the price of something. Either restrict the demand for it or increase the supply. By causing more people to have health insurance, Obamacare increases the demand for health care services, so that will increase costs, not decrease them.

If the political system were serious about reducing health care costs, it would take action to increase the supply of health care providers. Along these lines it could recognize the residencies immigrant doctors have already completed in other countries known to have high-quality training. Or, since most residencies are funded by the VA and HHS, it could just fund a lot more of them.

Of course, we will not see either of these options pursued. What Obamacare is really about is having the government make more of the decisions that used to be made in the private sector, thereby increasing the power of political incumbents.

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