The Doctors’ Cartel We Don’t Care About

Dean Baker on Doctors' CartelBreaking the taxi industry cartel’s and promoting Uber has been somewhat of a cause célèbre among economists in recent years. Any card carrying economist can give you the two minute tirade on the evils of the taxi cartel and the benefits of Uber…

What is striking is that the enthusiasm for the virtues of competition seems to disappear when we switch the topic from the taxi cartel to the doctors’ cartel. Doctors actually have been far more effective than taxi companies in limiting competition. Doctors largely get to set standards of care, which not surprisingly requires twice as high a percentage of highly paid specialists as in other wealthy countries. They also restrict the number of doctors with a wonderfully protectionist rule that prohibits doctors from practicing in the United States unless they have completed a US residency program. This means that even well-established doctors in places like Germany, France, and Canada would face arrest if they attempted to practice medicine in the United States.

As a result of this cartel, doctors in the US earn on average more than $250,000 a year, putting the average doctor not far below the one percent threshold, even assuming no other family income. This is roughly twice the pay as the average doctor earns in other wealthy countries.

It is striking that the doctors’ cartel gets so much less attention from economists than the taxi cartel. After all, we spend close to $250 billion a year on doctors compared to $6 billion a year on taxis. I could suggest that the lack of interest is due to the fact that many economists have parents, siblings, or children who are doctors, but I wouldn’t be that rude.

–Dean Baker
Economists, Doctors’ Cartels, and Uber

1 thought on “The Doctors’ Cartel We Don’t Care About

  1. True enough. When you compare it to the racket that is Law School though, a bit of restriction seems to be a good idea. But only a bit. Medicine is more and more a science and not an art so…

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