Harvard Professor Greg Mankiw posted a chart comparing the income of doctors in the US and in the OECD countries. US doctors have higher income in absolute dollars, as a percent of total medical spending and as a percent of GDP.
Mankiw, being the intelligent economist that he is, looks beyond the numbers for an explanation. However, he posts his analytical answers as hypothetical and rhetorical questions, which will leave the economically uneducated reader without the direct answer.
US doctor income is higher because US doctors pay for their own medical education, as opposed to other countries where the taxpayer is paying for the doctor's education. US doctors charge more in part to recoup their education costs and other countries do not include doctor education costs as part of health care costs.
In the US, income dispersion is higher than in other countries and there are more opportunities to make high incomes. Doctors' income must compete with these alternative opportunities, such as lawyer, investment banker, entrepreneur, etc., otherwise the medical profession will not be able to attract the better physician candidates.
Mankiw also seems to believe that part of the explanation for higher US physician income is due to the high premium paid in the US for skilled labor.
Mankiw's complete blog post on this topic is here.
Mark Perry of the Carpe Diem blog, however, believes it is mostly due to the American Medical Association's power in limiting the number of medical schools and the number of medical students. He notes that there has been almost no growth over the last 20 years.
Howvever, Mark Perry forgot to consider the availability and effect of the competition of foreign medical schools.
A study of US citizens who attend foreign medical schools shows a significant increase in foreign schooled doctors in the US. The study, "U.S. Citizens Who Obtain Their Medical Degrees Abroad: An Overview, 1992-2006" by John R. Boulet; Richard A. Cooper; Stephen S. Seeling; John J. Norcini; Danette W. McKinley found:
International medical graduates (IMGs) constitute approximately 25 percent of practicing physicians in the United States, a level of participation that has increased from 18 percent in 1970 and only 10 percent in 1963.
It is because American Medical Association's power in limiting the number of residency. Foreign medical school graduates still need get residnecy before practice. Therefore,medical Dr are protected in this country. Everybody knows Murphy's law, 20% shortage causes 80% price increase. America Medical Association is the major problem.
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