What does limited supply of doctors even mean? There’s a finite supply of doctors everywhere, regardless of pricing. Where is the evidence of your claim in Norway, Finland, Japan, etc.?
The U.S. has limited supply of doctors in rural areas, and that’s not due to government pricing. So what justification is there for pointing at government pricing at all? Why is that relevant here, and what makes you believe there’s a broad, general, or causal truth here, given the fact that it’s not true everywhere.
What I mean is here in Canada the government (essentially a huge insurer) sets the rates they’ll pay for various kinds of doctoring.
If those rates are too low for some doctors or potential future doctors, they’ll:
- leave to the US
- never go into medicine and study something else instead
So Canada ends up with doctors who are very good but are also too scarce, driving the overall experience down.
The same dynamic goes with all price caps. If you cap rent, capital flows away from real estate construction and towards other things. If you cap the price of eggs, marginal producers exit the egg market altogether.
With medical insurance it’s a really hard balance to get right. The insurer doesn’t have an infinite budget to throw at doctors, and has to balance competing demands from the supply and demand sides. In Canada, the insurer also has to get re-elected.
This is what happens every time a Canadian doctor moves to the US for the money.