← Back to context

Comment by matthest

5 days ago

Supply and demand 101 continues to work.

So funny that. Weirdly even if you build nothing but market rate housing, housing gets more affordable. :-)

Someone should try this with medicine. Instead of subsidizing insurance (demand side), let’s spend the money to bring doctors to the USA from all over the world and have them work in free clinics (supply side).

  • we also could just stop having the federal government limit the number of residency slots so we could have enough doctors trained in the US.

  • You basically can’t or it won't have the same effects because medicine doesn’t really follow the same dynamics as most other markets: the supplier (doctor) has an information asymmetry and thus makes most of the decisions, while the buyer (patient) is not usually the payer (insurance) so aren’t really incentivized to save.

    Kenneth Arrow famously analyzed the healthcare market and made the above insight: https://assets.aeaweb.org/asset-server/files/9442.pdf

    I know he was a Nobel Laureate but not sure if this is the work that won him the Nobel.

    Updated: I should qualify my statement by pointing out this is for the US healthcare system.

    • > the supplier (doctor) has an information asymmetry and thus makes most of the decisions, while the buyer (patient) is not usually the payer (insurance) so aren’t really incentivized to save

      Counterfactual: patients in India routinely shop around for second opinions and negotiate fees.

      1 reply →

    • Fixing a severe shortage is actually likely to have some impact.

      For instance, if there's a lot more doctors, the payer may be able to negotiate lower prices. We already have insurance mechanisms that drive patients to the providers that the insurer has negotiated with...

    • It's even worse. This isn't a simply supply-demand curve. Supply here often increases demand (patients live more and longer; They need more care).

  • You don't even need to import foreign doctors: just increase the number of residency slots.