EclectEcon

We know why there are shortages of physicians of all types in Canada: The gubmnt banned extra-billing, thus keeping the price below the equilibrium price for all physicians, and at the same time medical schools cut back on admissions and graduations (in an ill-designed attempt to cut health-care costs) in the 1980s.

But why is there a shortage of GPs in the US? A facebook friend wrote to my son (Adam Smith Palmer) back in April,

Things aren't much better south of the border. The plethora of machines makes access readily available, but the number of exams being done has gone up exponentially as a result. That's led to imaging centers buying more machines to make sure there are absolutely no wait lists in an effort to compete with their neighbors. You can imagine what this does to insurance premiums in and of itself. ...

And what does the average American get for the high premiums? A shortage of family docs that parallels our own [in Canada].

He also wrote that when he and his family went to a large urban area for a year, they were advised to sign up immediately to get a family physician. They were put on a 6-month waiting list!

What he wrote was later laid out in an article in the WSJ referenced here [h/t to Brian Ferguson].

A "critical shortage" of primary care physicians [PCPs] in Massachusetts has led many doctors to stop accepting new patients, according to a report released Tuesday by the Massachusetts Medical Society, the Wall Street Journal reports [EE: led to? how about "resulted from"?]. According to the Journal, the lack of PCPs "threatens to undermine" the Massachusetts health insurance law, which took effect July 1 and requires all state residents to obtain coverage or face tax penalties.

The study found that 49% of internists in the state are not accepting new patients and that 95% of the 270 general practice physicians at Boston's top three teaching hospitals have stopped accepting new patients. The Journal reports that "some providers say they have no idea how they will accommodate an additional half-million patients seeking checkups and other routine care." The average wait time for Massachusetts residents who make an appointment with their PCP is more than seven weeks — a 57% increase over last year, according to the medical society.

It appears the demand has increased as a result of the health insurance law (in Massachusetts, at least) without a concomitant increase in the supply.

So why is there a shortage of GPs in the U.S., where markets are allegedly so free? I always tell my students, "You cannot say there is a shortage; you must say there is a shortage at the current price!"

My guess is that because of health insurance, specialists earn buckets of money, but GPs are much less lucratively recompensed (especially true for Medicaid cases, I'm told). If so, people might very well begin medical school intending to become family physicians, but the salary differential is so huge and raises the opportunity costs of becoming a GP so much, they are drawn into some specialty. But that still doesn't explain why the market hasn't adjusted. Why, even in Boston, is there a shortage of GPs? Are they not allowed to raise their fees? Is it not possible to find a GP who will take you on as a patient by offering to pay more? Is that an equilibrium? As the WSJ ($, no link) says,

... [P]rimary-care doctors, including internists, family physicians, and pediatricians, are in short supply across the country. Their numbers dropped 6% relative to the general population from 2001 to 2005... . The proportion of third-year internal medicine residents choosing to practice primary care fell to 20% in 2005, from 54% in 1998.

A principal reason: too little money for too much work. Median income for primary-care doctors was $162,000 in 2004.... Specialists earned a median of $297,000, with cardiologists and radiologists exceeding $400,000.

At the same time, is it possible the markets are in the process of adjusting? If so, look for compensation for GPs to rise relative to that for specialists. But if that doesn't happen, look for continued shortages of GPs (at the current relative prices) so long as health insurance and gubmnt programmes keep the compensation for GPs fixed below market-clearing prices.