An article on foreign doctors in the US at Talking Points Memo Cafe from last year caught my eye. 

“TPM Cafe contributor Dean Baker has argued, on more than occasion, that “increased competition from foreign professionals could lead to dramatic reductions in the salaries of workers in the highly paid professions.”

In a 2003 study Baker, who is co-director of the Center for Economic and Policy Research, estimates that by adding roughly 100,000 physicians to our current pool of about 760,000, we could pull doctors’ salaries down from an average of $203,000 to somewhere between $74,000 and $126,000. For the average middle-class American family of four he reckons that would lead to savings of $2,200 to $3,700 per year

What he ignores is that, by and large, foreign doctors who work in the U.S. practice in a separate market. Indeed, an analysis of where these doctors work shows they are likely to be found in geographic areas where the physician-patient ratio is low and the rate of infant mortalities is high. Typically, they are found in rural areas where their visas have sent them and in inner cities where they treat the Medicaid patients that many American doctors refuse to see because Medicaid reimbursements are so very low. The fees Medicaid pays vary state by state, but Princeton health economist Uwe Reinhardt gives an example of just how parsimonious the government can be: “federal and state legislators may be willing to pay pediatricians $10 to see a poor child covered by Medicaid, but to pay the same pediatrician $50 or more to see these legislators’ own children in the commercial corner of the market.”

As we noted recently on The Century Foundation’s healthcare blog, Health Beat, even when foreign and American doctors practice in the same area, “medical apartheid” is the rule (see the relevant posts here and here.)

In New York City, for example, well-insured white patients see one set of doctors, while minority and poor patients see another group, many of them foreign-born. Typically those doctors charge less (or are paid less by their employers.) In the late 1990s, when it seemed we had a surplus of physicians in this country, the AMA fretted that doctors emigrating from other countries might pull down physicians’ salaries. Not to worry. While Medicare has put a brake on some doctors’ incomes in recent years, foreign doctors have had little effect. What they charge low-income patients ultimately has no influence on what the market will bear at the high end—and that’s the end that feeds health care inflation.

Moreover, even if a flotilla of foreign docs could bring down medical fees—is it fair to poach physicians from countries where tens of thousands of children are dying of treatable conditions? To put it as bluntly as possible, how many children are we willing to let die each year so that the average middle-class American family can save $2,000 to $3,700?

Baker recognizes and addresses the ethical problem. His solution is to pay for the doctors we are taking: “it would be reasonable to expect that developing countries would want to recoup the costs of educating professionals who have left the country,” he writes, “and it would be reasonable to expect that a rich nation like the United States would be willing to share some of the economic gains that it receives as a result of an increased supply of highly educated workers from poor nations…”