Maixin Research

Demographics. Geopolitics. Innovation.

The Healthcare Labor Shortage Skyrockets

Discussing Innovation

In 2010, I stood before an audience and predicted that health care for an average US family would eventually become a high five figure cost per year and possibly a six figure cost in the long run. No one believed it at the time and I understand why: no one could afford this. Using ceteris paribus measurements, one high deductible plan in 2007 for an individual set its “high” deductible at $250 (for the year). That same plan as of the time of this writing is a $2700 annual deductible. This does not include the monthly charge for the plan – which has also seen growth (from $12 a month in 2007 to $71 a month at the time of this writing). Almost a decade later from that prediction, high five figure health care for a family exists and the prices are only rising. Health care costs will continue to rise because fundamentally, the problems have not been solved, nor will be solved any time soon.

US States Begin Dropping Requirements

Because the labor shortage in medicine is abysmal, some states in the United States have dropped requirements to become primary cares or to practice some medicine. In some of these jurisdictions, a person can practice as a primary care or family doctor as a nurse practitioner over becoming a medical doctor (the qualifications of a nurse practitioner are lower than a medical doctor). Unfortunately, even with these solutions, health care across the United States is still unevenly distributed and this affects poorer communities the most. In addition, the costs for wealthier communities will still rise.

Technology Hasn’t Saved the Day

While people in technology tend to believe they can solve any problem with technology, for US health care, they have been unable to solve this problem. There are numerous reasons and a few of these are the following:

  1. The United States graduates almost as many lawyers as doctors. Lawyers prefer a system of complexity since it’s profitable and lawyers are incentivized to produce this system because it’s profitable. Innovation only comes come simple systems where people have the freedom to test and experiment. Health care is one of the most regulated industries in the United States. If regulation were reduced, the cost for the lawyers within this system would be enormous – they would lose a lot of money. These lawyers have the financial power (and judicial backing) to halt innovation.
  2. The United States is not the most competitive place to practice medicine. Related to the above point, if you graduate a US school with a medical degree and you have offers in other countries which allow you more freedom and less bureaucracy, would you stay in the United States or move to freer countries? We see a growing number of graduating doctors move to other countries because they have less bureaucracy.
  3. With an ever growing number of lawyers graduating, health care is only increasing in complexity. At the time of this article, only 15 out of all of US Congress are medical doctors – the majority of members in US Congress are lawyers. Unfortunately this means that the people passing the laws in an industry have no knowledge of that industry. Imagine relying on a plumber to pass laws for air pollution regulation – this sounds absurd, yet in the US system lawyers are passing and dictating laws on medicine, even though they have no authority in this area of knowledge.
  4. Millennials believe that health care should be free, yet when we compare the percent of Millennials entering health care to other generations, we don’t see labor growth even considering the Millennial generation’s size. In addition to an aging population that is large in size (Baby Boomers), Millennials want free demand, but are unwilling to provide that “free” supply (the demand and supply being health care).

Fundamentally, these involve problems outside of technology’s control. In addition, technology companies cannot solve health care problems without facing strict regulation that often encumbers their ability to provide low-cost solutions.