Carpe Diem

American Medical Association: the strongest trade union in the U.S.A.

 

As a follow-up to the post below on Milton Friedman’s Mayo Clinic talk on the “economics of medical care,” I present the two charts above.  

The top chart shows the number of annual graduates from U.S. medical schools (AMA data here) per 100,000 U.S. population, from 1962 to 2011. Between about 1970 and 1984, there was a significant increase in medical school graduates that pushed the number of new physicians from 4 per 100,000 Americans in 1970 to almost 7 per 100,000 by 1984.  Since 1984, the number of medical school graduates has been relatively flat (see red line in bottom chart), while the population has continued to grow, causing the number of new physicians per 100,000 population to decline to only 5.3 per 100,000 by 2008, the same ratio as back in 1974.  Over the last few years the number of medical school graduates has increased slightly, and the ratio of graduates per 100,000 increased to 5.56 last year, the highest in a decade.

The bottom chart compares the actual number of medical school graduates (red line) to the projected number of graduates if the number of new physicians had keep pace with U.S.  population increases, i.e. the ratio of graduates per 100,000 Americans had stayed at the 1984 level of 6.91.  In that case, we would now be graduating close to 22,000 new doctors annually, and the cumulative increase in medical school graduates from a rate of 6.91 per 100,000 population over the last 27 years would mean that we would have 84,000 additional physicians today.    <

In most professions, as the population grows and the demand for those occupations increase, we would expect to see an increase in the number of people employed in those professions.  Over the last 25 years, the U.S. population has both increased in size, and gotten significantly older on average due to increasing life expectancy, and both of those factors would put upward pressure on the demand for physicians.  But in the case of medicine, the supply of students entering medical schools has been restricted relative to the growing population, leading to an insufficient supply of doctors, and higher-than-market wages.   This restriction on the supply of doctors relative to a growing population is one example of the "power of organized medicine" that Milton Friedman talks about in his lecture at the Mayo Clinic.

Also, in his classic 1962 book Capitalism and Freedom, Dr. Friedman describes the American Medical Association (AMA) as the “strongest trade union in the United States” and documents the ways in which the AMA vigorously restricts competition. For example, the “Council on Medical Education and Hospitals” of the AMA approves both medical schools and hospitals. By restricting the number of approved medical schools and the number of applicants to those schools, the AMA effectively limits the supply of physicians, which increases their wages, and raises the overall cost of medical care.

8 thoughts on “American Medical Association: the strongest trade union in the U.S.A.

  1. In 1996, the Institute of Medicine of the National Academy of Sciences issued a decree that no new medical schools be created and no increase in post graduate training programs be established. THey did this based on erroneous manpower studies that suggested that there were major surpluses in the number of physicians, particularly specialist physicians. I am not a member of the AMA but it is not correct to attribute the current situation to the AMA. Rather, it was academic studies and a government related institute that drove the current situation. Currently, there is a large expansion underway in the size of medical school classes and the number of new schools. You are correct in your assessment of the data but not correct in the cause of the disorder. You also must realize that it is at least a 5 to 7 year lag for increasing the number of medical students graduating and another 4 years for new fully trained doctors to be available.

    • stan, although u are correct in many things u say, u are going to be wrong about a lot of these things going “Forward”. The reason naturally is OBAMACARE. This massive healthcare spending bill/law/insurance is going to be a three-headed hydra coming down the pike. Soon, with all the newly, socially insured, clinics and doctors offices will be flooded with patients. Everything from hangnails to brain tumors. It’s going to be like a tidal wave of humanity hitting the medical system. Since, as u know the system is NOT all that resilient, the only think the system can do is add more workers. It will mean more nurses aides and physician/medical assistants but also more nurses, doctors, med techs and therapists…and therapy aids. And, the turnover time is going to be MUCH quicker. Instead of pre-med students going for four years of University training, I anticipate their going for only two years to a junior or community college in order for them to get finished sooner and into medical school. More underqualified med students will be accepted because more med schools will have been built with bigger classrooms (as u mentioned). the length of med school likely will be shortened to: two or three years? course challenges and intensity will decrease, and an MD degree won’t hold the same weight as it once did. furthermore, the newly graduating med students won’t yet have learned the beginnings of proper diagnosing techniques let alone treatments. med residency programs likely will be foreshortened and watered down too. graduates will be ill-prepared to handle cases as young attendings, not having put in 1/2 the time as previously recommended as a minimum. surgeries will be botched and medical diagnoses and treatments will be incorrect. going to a doctor in the future will be a sham, but it will more than what many people got in the past. undoubtedly the public will still be happy to get a chance to see a doctor. the real question will become: after having world-class care in our country, will we be able to tolerate a significant dumbing down of our medical personnel?

  2. The AMA is not a trade union. The vast majority of its financial resources come from the federal government via Medicare contracts to write code books (ICD and Cpt code books). Only about 15 percent of physicians are members and the organization acts against the best interests of both physicians and patients. The organization is best described as a branch of the federal government which funds it. It is a regulatory/enforcement arm of Medicare. Those physicians who belong are pretty much the same as the old Communist party apparatchiks in the old soviet union.
    Kent J. Lyon MD

    • Kent, are u saying that I was funding the old apparatchiks of the USSR by being a member of the AMA? it did have a certain feeling of coercion for joining as if you didn’t give them the money, they may come break your arm. well, my arm never got broken but I guess I’m out the money for things that did seem weren’t in my best interest at times. oh well, easy come, easy go – I don’t belong anymore.

  3. Another poorly researched study. Again as stated above, most physicians do not belong to the AMA as for thirty years it has poorly represented their needs and beliefs. The genesis of the physician shortage began in the early 1980′s with a government sponsored study predicting a physician surplus. This was a thinly veiled attempt to limit Medicare spending by limiting the number of providers. At that time many medical schools were planning to expand their classes. Most schools cancelled these plans and some even cut back on class size. Another example of the failure of centralized planning. CPrickettMD

  4. The responders to this great article miss the point: even though most physicians are not AMA members, quasi governmental organizations have the authority to limit the supply of physicians via caps on medical school and residency size

    In a true free market no big government license (dependent upon completing a so called accredited residency) would be needed to practice medicine

    The free market would select the best doctors

  5. I am an Aerospace Engineer who has come to know and appreciate the Federal Aviation Administration (FAA). Flying is by it’s nature a risky form of transportation. The FAA has made it one of the safiest and efficient forms of transportation of goods and people. The United States needs a Federal Medical Administration (FMA). It is no accident the U.S. has the most expensive Medical cost in the World. How much do you think we would pay for a Carpenter if the Carpenter’s Union controled how many Carpenters the were allowed to pratice? The AMA is a very strong Union and it’s past time the U.S. Government needs to make sure this Union is brought under control. The AMA is adding a very large cost to U.S. companies that can’t pass the cost on, thus U.S. manufacturing is shrinking.

    • Death remains at 100%,more doctors will lower the cost of being robbed before the end. So free medical school for all and unlimited doctors, some medicine will be better than no medicine.

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