The AMA and other licensing organizations are a part of the huge healthcare costs. Because you absolutely have to be licensed to get a job as a doctor, the AMA and other associations work to limit the number of new doctors. In this way they can keep the supply of doctors low enough to force a higher salary while at the same time decreasing overall medical care.
David Friedman: "Of all the craft unions that exploit licensing, the most important is the American Medical Association, which is not usually considered a union at all. Physicians are licensed by the states, and the state licensing boards are effectively controlled by the AMA. That is hardly surprising; if you were a state legislator, whom could you find more qualified to license physicians than other physicians? But it is in the interest of physicians to keep down the number of physicians for exactly the same reason that it is in the interest of plumbers to keep down the number of plumbers; the law of supply and demand drives up wages. Physicians justify restricting the number of physicians, to others and doubtless to themselves as well, on the grounds of keeping up quality. Even if that were really what they were doing, the argument involves a fundamental error. Refusing to license the less qualified 50 percent of physicians may raise the average quality of physicians but it lowers
the average quality of medical care. It does not mean that everyone gets better medical care but that half the people get no care or that everyone gets half as much.
Some of the restrictions the AMA has advocated, such as requiring applicants for medical licensing to be citizens and to take their licensing examinations in English, have a very dubious relationship to quality. They look more like an attempt to prevent immigrants from competing with American doctors. It is interesting to note that during the five years after 1933 the same number of physicians trained abroad were admitted to practice in this country, as during the previous five years, despite the large numbers of professional people fleeing here from Germany and Austria during that period. This is striking evidence of the power of organized medicine to limit entry to its profession. How does the AMA control the number of doctors? Refusing to license doctors after they are trained would create a great deal of hostility among those rejected; that would be politically expensive.
Instead, it relies mainly on the medical schools. In order to be licensed, an applicant must be a graduate of an approved medical school; the states get their list of approved schools from the Council on Medical Education and Hospitals of the AM A. For a medical school, removal from the list means ruin. In the 1930s, when doctors, like everyone else, were suffering the effects of the Great Depression, the Council on Medical Education and Hospitals wrote the medical schools, complaining that they were admitting more students than they could train properly. In the next two years, every school reduced the number it was admitting. Since then the AMA has become less obvious in its methods, but the logic of the situation has not changed."
From "The Machinery of Freedom"
David Friedman: "Of all the craft unions that exploit licensing, the most important is the American Medical Association, which is not usually considered a union at all. Physicians are licensed by the states, and the state licensing boards are effectively controlled by the AMA. That is hardly surprising; if you were a state legislator, whom could you find more qualified to license physicians than other physicians? But it is in the interest of physicians to keep down the number of physicians for exactly the same reason that it is in the interest of plumbers to keep down the number of plumbers; the law of supply and demand drives up wages. Physicians justify restricting the number of physicians, to others and doubtless to themselves as well, on the grounds of keeping up quality. Even if that were really what they were doing, the argument involves a fundamental error. Refusing to license the less qualified 50 percent of physicians may raise the average quality of physicians but it lowers
the average quality of medical care. It does not mean that everyone gets better medical care but that half the people get no care or that everyone gets half as much.
Some of the restrictions the AMA has advocated, such as requiring applicants for medical licensing to be citizens and to take their licensing examinations in English, have a very dubious relationship to quality. They look more like an attempt to prevent immigrants from competing with American doctors. It is interesting to note that during the five years after 1933 the same number of physicians trained abroad were admitted to practice in this country, as during the previous five years, despite the large numbers of professional people fleeing here from Germany and Austria during that period. This is striking evidence of the power of organized medicine to limit entry to its profession. How does the AMA control the number of doctors? Refusing to license doctors after they are trained would create a great deal of hostility among those rejected; that would be politically expensive.
Instead, it relies mainly on the medical schools. In order to be licensed, an applicant must be a graduate of an approved medical school; the states get their list of approved schools from the Council on Medical Education and Hospitals of the AM A. For a medical school, removal from the list means ruin. In the 1930s, when doctors, like everyone else, were suffering the effects of the Great Depression, the Council on Medical Education and Hospitals wrote the medical schools, complaining that they were admitting more students than they could train properly. In the next two years, every school reduced the number it was admitting. Since then the AMA has become less obvious in its methods, but the logic of the situation has not changed."
From "The Machinery of Freedom"