Free Trade in Health Care

Via Greg Mankiw, Jagdish Bhagwati and Sandip Madan propose free trade and greater competition among U.S. doctors:

But the importation of doctors is even more critical in meeting supply needs than in providing lower costs. According to the 2005 Census, the U.S. had an estimated availability of 2.4 doctors per 1,000 population (the number was 3.3 in leading developed countries tracked by the OECD). Comprehensive coverage of the over 45 million uninsured today will require that they can access doctors and related medical personnel. An IOU that cannot be cashed in is worthless. Massachusetts ran into this problem: Few doctors wanted (or were able, given widespread shortages in many specialties) to treat many of the patients qualifying under the program. The solution lies in allowing imports of medical personnel tied into tending to the newly insured. This is what the Great Society program did in the 1960s, with imports of doctors whose visas tied them, for specific periods, to serving remote, rural areas. U.S.-trained physicians practicing for a specified period in an “underserved” area were not required to return home. It is time to expand such programs – for instance, by making physicians trained at accredited foreign institutions eligible for such entry into the U.S. But in order to do this, both Democratic candidates will first need to abandon their party’s antipathy to foreign trade.

The late Milton Friedman would likely be impressed. Not only was he a proponent of free trade, his diagnosis of the health care issue was often that we needed more competition among doctors. This plea also reminds me of what Dean Baker has often argued.

But I must protest the last line in this oped. Some liberal Democrats (e.g., yours truly) do not have an antipathy to the free mobility of workers. Bhagwati and Madan have an excellent proposal that I hope Barack Obama decides to adopt.