Supply curves slope upward, installment #1438

Hospital emergency rooms, particularly those serving the urban poor, are closing at an alarming rate even as emergency visits are rising, according to a report published on Tuesday.

Urban and suburban areas have lost a quarter of their hospital emergency departments over the last 20 years, according to the study, in The Journal of the American Medical Association.

…Emergency rooms at commercially operated hospitals and those with low profit margins were almost twice as likely as other hospitals to close, Dr. Hsia and her colleagues found. So-called safety-net hospitals that serve disproportionate numbers of Medicaid patients and hospitals serving a large share of the poor were 40 percent more likely to close.

In addition, hospital emergency rooms in the most competitive markets were 30 percent more likely than others to close.

The laws of economics have not yet been repealed.


"Emergency rooms are required by law to provide treatment regardless of ability to pay. “People will have coverage, but there’s a concern that there will be nowhere for them to go,” Dr. Schneider said. "

That is why the natural consequence of Obamacare is the 'takeover' of the health system by government even if though the current law is not quite that drastic. Government will end up either forcing private hospitals to accept these plans or it will provide its own hospitals. It only gets worse.

EMTALA predates Obamacare; it dates from 1986.

How does it have anything to do with Obama? The closure statistics are for the last 20 years. Obama has been around for barely two years.

Obamacare is just an extension of medicare and medicaid. It is all about having the government getting involved into private businesses and we getting unintended consequences like the article describes.

You're right, if only we let private businesses provide poor people with emergency medical care without forcing them too. I'm sure that there's loads of money to be made there.

That is clearly not the point. Healthcare is a scarce resource like any other. If you force companies that produce it to give it away for a lower price these companies will find ways to work around it.

Government help should only be given in the form of money to the very needy and just for the very basic health needs. Anything else will create this kind of distortion that we are seeing now.

Ben, that's exactly how health care for the indigent used to work. Sorry if your fantasies about how private businesses work don't work.

At some point this isn't a debate about the economics but about morality. How much death / suffering (the sort that gets people to the ER) can you bear to see silently without getting squeamish.

The agument isn't about whether we deal with the problem or not. It's whether we deal with it in an economically literate way. A system that pretends that private actors will supply a service without regard to cost is not a solution. This does not mean that we are left with only one alternative, which is poor people writhing in agony at the entrances to hospitals.

Exactly what Kebko said. Plus, what the Democrats did with Obamacare (basically lying about costs and any eventual need for cuts in medicare/medicaid) is not the way to go. There is a good chance Republicans will get control next year and repeal the whole thing bringing the whole debate back to zero.

Again, in my view the only solution is: drastic cuts on who benefits from government assistance (means testing all the way - something Republicans are very not clear about) and make sure that assistance is delivered in the form of vouchers.

@kebko @FYI

Agreed. We just need more reasonable, practical solutions.

FYI, There's still a supply issue here. Just because you give people vouchers, doesn't mean there will be an affordable place to use them. One reason people are the in ER is because primary care doctors won't accept medicaid reimbursement rates. I agree that we shouldn't make doctors "work for free", so the only way ensure (from a market standpoint) that physician rates come down is to increase competition amongst primary care providers. Current immigration and licensing regimes restrict the amount of available doctors thereby restricting supply. I'm not confident enough to say we can throw out licensing altogether, but there are government enforced barriers to competition.

We shouldn't make doctors work for free, but we also shouldn't guarantee that they don't have to compete against other able practitioners.


One competition enhancing move is uniform federal licensing standards rather than force re-certification from each state a doctor practices in. Another progressive move would be international treaties with other (select) nations recognizing each others doctors. Is a German, French or Scandinavian trained doctor going to be seriously worse than an average American doctor?

I am all for increasing supply. But in many ways I think the discussion we are having now is about demand. It is crazy to think that the government can somehow cut costs and increase coverage. It drives me crazy when I hear it from Democrats and it drives me crazy when I hear it from Republicans.

We need to understand that it is just impossible to have this utopia where everyone gets access to the best care and we don't go bankrupt. It is just impossible. We can choose how we will ration healthcare - it is either money or your place in line - but we will have rationing because it is a scarce resource. At the same time, we need to offer some basic care so we don't have poor people dying of easily curable deceases while not spending a bunch of money on inneficient emergency rooms. It is a complex problem but it is not an impossible one once people admit the existing contraints.

"At some point this isn’t a debate about the economics but about morality. How much death / suffering (the sort that gets people to the ER) can you bear to see silently without getting squeamish."

No, it's about whether simplistic mandates actually achieve their stated goals.

I don't think that it's a matter of not having anywhere to go, but overcrowding of emerency rooms. Also, poor people usually don't easy transportation to the hospital in the event of an emergency; so, closing hospitals will make it harder for these people to get help, therefore costing lives. Ambulances are very expensive (not everyone can afford) and even if these people do call an ambulance (and put themselves in debt) it will take longer for the ambulance to arrive, and offer help being that the hospitals will be more scarce and spread out. Closing hospitals (especially in low income areas) isn't a good idea; if anything more hospitals need to be opened so that they're all equal distances apart. Emergency rooms are already overcrowded, and something needs to be done to fix this problem.

'So-called safety-net hospitals that serve disproportionate numbers of Medicaid patients and hospitals serving a large share of the poor were 40 percent more likely to close.'

And when the democrats force everyone on Medicaid what hospitals will remain open? The ones that serve people rich enough to buy Medicaid + private insurance.

"And when the democrats force everyone on Medicaid what hospitals will remain open?"
The government run ones. And I expect much like private schools there will be private for-profit hospitals. More than likely they'll be significantly more expensive and have outcomes that are not much better than public hospitals, but they'll almost certainly have better food.

That is more or less what happens in the UK. In many cases, its the same doctors and the same operating theatres, just private rooms and nicer food.

Blame that 20 year decline on Obamacare because markets always predict future laws with greater accuracy than the voters.

I once had to go to the ER in a poor area. I had to wait three hours to get seen, all while under excruciating pain due to high pressure against my prostate, which, among other things, made me unable to urinate or defacate despite feeling strong urges for both. The prostate also acts as a source of pleasure/pain center for men, and I was (obviously) on the worse side of that.

It took three hours to get any relief because I had to get in line behind numerous people obviously not in excruciating pain, for non-emergency reasons.

Six months later, I learned that the hospital was being "moved" to a new location, where it could not be reached on foot (unlike the one I had gone to), and in a wealthier area.

It took me about half a second to figure out why.

No triage?

In my experience, triage would have been useless for Silas, because as soon as the drug-seekers and chronic illness ignorers saw that pain without an obvious injury would get them seen more quickly, the whole ER would be howling and writhing.

Like Howl said, they did invite me over behind the counter to hear about how I couldn't pee, but that just wasn't important enough for me to jump the queue ahead of a druggy with pain in his elbow.

Also, there was nobody at the counter when I got there (~11 am), so I could have been spurting blood and all I would have is a sign in sheet to greet me.

Won't be a problem now that the ghetto folk can't just walk in. Great system, guys.

So... more competitive markets have more closures. Would this be a problem if the providers were restaurants? Barbar shops? Corner gas stations? How is this even noteworthy?

Oh yes. People have a "right" to healthcare. They can force doctors to work for them for free. The evil doctors don't like this arrangement. How terrible.

An excellent parody of a right wing nut, bravo.

I think you have your wings wrong.

Is that not exactly the kind of weak caricature of a left winger that a right winger would make?

"Oh yes. People have a “right” to healthcare. They can force doctors to work for them for free. The evil doctors don’t like this arrangement. How terrible."

It's terrible when you are sick and don't have health insurance. Then you are expected to pay the cash rate which is far higher (50%- 200% higher) than what private insurance actually pays. And for the bottom 50% of Americans this is often the reality. If their job does not offer insurance and they don't qualify for medicaid, they are screwed. (ERs stabilize patients and then hound them with debt collectors for sums they can never afford to pay, they don't do long term chemo etc.) If they get sick they often suffer in silence for years and / or they die.

And if this happened to you I am sure you sarcasm would be suddenly mute.

That's a good point. I wonder how many of the tough-guy "let-them-pay-or-suffer" rhetoric would stand if you made people spend a day in the ER. Personal exposure often upsets abstract idealism.

Sure, I understand how difficult this issue is. I wish liberals could spend a few months as a poor person in Brazil during the 80s where we had 20% unemployment and 30% inflation a month. I bet they would re-think many of their policies about our debt.

As Tyler says, The laws of economics have not yet been repealed no matter how difficult out choices are.

You are right. Extremists and idealists on both sides are guilty of this.

I am a low-income person who is still working to pay off ER debt stemming from an emergency room visit after I suffered a large laceration while uninsured.

I do not believe that people have a right to free health care. I suppose that means either a) I am a counterexample to your blanket assertions, or b) I am a troll. I have a guess as to which you think is true.

Well, if you must know, my wife had an ovarian cyst burst, which required emergency surgery when I was finishing my undergraduate degree after leaving the Air Force in 1990. Our treatment was..substandard. Our bill, for the ENTIRE episode (initial ER, eventual referral to surgeon, the surgery, the overnight stay at the hospital) was $270. I was outraged. (That is was so little.)

In 1987, while awaiting induction, my job situation fell apart. I did not even CONSIDER going on the dole. I was a healthy adult male.

So yes, like a college professor, I practice what I preach.

And this, my friend Ray, is why Obamacare is going to suck, since it guarantees that EVERYBODY will have the sucky health care you describe. And yes, my wife does health care billing, so I hear about this all the time from her.

It says the number of Emergency Departments declined. Maybe there was consolidation across hospitals? Without knowing the size of the emergency departments this statistic is not very conclusive?

Another development that the study very conveniently ignores is the emergence of "urgent care". Urgent care centers started in the 1980's and have channeled away a lot of the non-critical traffic from the emergency departments. Apparently, there are more than 10,000 urgent care centers in the US today. This number is a order of magnitude larger than the ED numbers and hence could very well have compensated.

Good points, particularly about the growth of urgent care.

In addition, some states have moved the indigent care population out of the emergency room into a more managed care environment, requiring pations to see doctors regularly and not just in an emergency room.

The article also omits the growth of urban hospital satellite clinics which also displace emergency rooms, and will be the new area of growth under the new federal healthplan as hospitals and managed care populations bid on parts of the pool.

“Emergency rooms are required by law to provide treatment regardless of ability to pay."

Well, what did you think would happen with such a policy? It becomes so unprofitable to keep ERs open that it's far better to close them. The government can mandate something, but that will go nowhere unless you make it at least cost-neutral by subsidizing care for the poor.

In the end, health care choices boil down to simply:
1. single payer
2. public-private 2 tier system with wait time and service quality differences
3. dog eat dog model of concierge care for me, scraps for you

Doctors used to treat everybody and spread the cost over all their patients. The difference? Health care wasn't a RIGHT; if you couldn't afford it, you had to pay something, even if it was just lawn-mowing or tree-trimming or a chicken. And you couldn't be abusive because you were still buying a service even if at a lowered rate. And if a doctor felt you were mallingering, he could refuse to treat you.

The Feds should open and run some new hospitals with emergency rooms staffed with Doctors and Nurses that are not able to get licenses from the states. (There are foreign born and trained Doctors around that are unable to practice in the USA because they cannot pass the boards.)

Also since the Fed Gov cannot be sued they can practice without malpractice insurance.

That's a great idea! We can ease the unemployment problem by calling some of the long-term unemployed "doctors" and "nurses" and putting them in ObamaCareCenters nationwide.

Why didn't Nancy or Harry think of that?

Actually, Floccina's idea is excellent. It helps increase supply while avoiding state level battles over licensing.


So, if Medicare and Medicaid patients cannot sue...then providers can choose between buying liability insurance and dealing with the private sector.... or not having to buy liabbility insurance and get paid at Medicare/Medicaid rates. Why not?

Matt, I hasn't thought about that...Good point.

Not only that, they'd get more hands on emergency care experience in two years than they could in ten at a suburban upper-middle-class facility.

I wonder if there is a 'first mover' effect. If there are two hospitals in a region, wouldn't the first one to jump and close the emergency room have an advantage because the second one will then face intense public pressure to keep its ER open?

A naive question: Don't Medicare / Medicaid cover ER? So why would the rise of Medicaire / Medicaire / Obamacare cause ER's to shut down? If at all it should reverse the trend.

The truly non-insured are the only ones going to leave the hospital without reimbursement. If EMTALA anyways compels ERs to admit everyone won't they be happier if the sick came with Medicaire / Medicaire / Obamacare coverage?


Why does the study mention 1998-2008 initially and then 1990-2009 later? Are these 20 year conclusions or 10 year conclusions?


Yes, Medicaid and Medicare cover emergency rooms - everything covers emergency rooms visits, however, Medicaid in many states is essesntially bankrupt and has this nasty habit of up and deciding to not pay physicians for the care they provide to Medicaid participants. This had led a lot of physicians, a whole lot of physicians in fact, to stop accepting Medicaid at all - they simply refuse to see you if you do not have private insurance.

This has led a lot of Medicaid participants to wait until they get sick enough to go to the ER. This has led to a massive increase in the number of ER visits and - this is Tyler's exact point - increased the cost of treating everyone. ER's that were already on the verge of not being able to pay their bills before this were thrown over the ledge and had to shut down. This may not be immediately obvious why this is, but basically it works like this, even though the new Medicaid patiets coming in the hospital are having their care covered by Medicaid, Medicaid is not covering the increased costs of providing care to the un-covered people who were already there. A very simple example of this is: imagine you are waiting in an ER with a wound and you will need a blood transfusion for some reason (also, you are uninsured). If there are 2 people ahead of you, let's say you will need 2 units of blood. If I add a third person, even though that third person will have their costs covered, you will now need 3 units of blood. Medicaid is not going to cover your third unit of blood. The hospital must bear this additional cost on its own, and if they are just able to bear the burden of 2 units of blood, the last unit will bankrupt them and they must down. It's like that, only there are tens of thousand of you.


I don't believe your claim: Medicaid "has this nasty habit of up and deciding to not pay physicians for the care they provide to Medicaid participants."

Can you cite any evidence that Medicaid is bankrupt and the states have not been paying for ER's for Medicaid patients?


Sure, but first I need to correct you a little bit. It's not ER visits for Medicaid patients, it's Medicaid patients for non-ER services, this leaves a lot of people unable to go to a doctor unless they go to the ER.

Anyway, here's some stuff I was able to find in about ten minutes with the Google for you:
South Carolina:
South Dakota:

Sorry for the brokenness of the data, I was not expecting 'States try to balance their budgets by cutting Medicaid reimbursement rates' to be that controversial.


You were the one who say it was ER for Medicaid patients. Not me.

The post was about ER rooms closing and you responded that they are because of bankrupt Medicaid not paying for ER services.

Read your own comments.


The articles you cite are complaints about reimbursement rates. States still have the obligation for providing the services under the program. There may be fewer doctors of the patients choice, or the doctors may not get what they want, but the states still have the obligation, whether they are kicking or screaming or not.

"This has led a lot of Medicaid participants to wait until they get sick enough to go to the ER. This has led to a massive increase in the number of ER visits and – this is Tyler’s exact point – increased the cost of treating everyone."

Wasn't this the argument for a public option in the first place? It's been recognized for decades that the "uninsured" in desperate need of care will find ways to get it somehow even if they have to walk out in front of a car, and as a result it's always a far more expensive way than basic medical care. By "uninsured" I mean under funded Medicare/Medicaid patients, and those without enough insurance or any insurance at all. If the ER's go out of business near to where they live and are injured, won't the ambulance just take them to closest ER no matter where it happens to be? All that'll accomplish is to increase the cost of the ambulance ride. How are the states going to be any better off with that system? Whether the rest of us pay for it through higher insurance premiums, cash payments to providers, federal/state/local taxes, or charity is irrelevant.


Technically, I believe the argument for the public option also included a lot of evil corporations are evil, but yeah, pretty much. It is also the argument for single-payer, and the argument for the individual mandate, and the argument for abolishing the EMTALA, and the argument for abolishing Medicaid/Medicare. Pretty much everybody uses, "Treating people without health insurance is really, really expensive" to advance their chosen solutions.

But is there any evidence of that whatsoever? I understand it is a pretty story, but isn't all the cost due to end-of-life care (basically)?

If I interpret correctly, you're saying the disproportionately high end-of-life care costs, which are slowly but inevitably bankrupting all aspects of health care (privately insured, Medicare, Medicaid, whatever), are just having a more immediate effect on those facilities that serve the highest percentage of Medicaid recipients, due to the limited funds available in Medicaid. In other words, the ER bankruptcies are just the appearance of the first hard evidence that all health care cannot be sustained as it is presently funded.

That certainly makes sense, especially if combined with the disproportionately high ER costs they're already subjected to.

TGS- health care is getting worse.

Really? Given that the healthiness of our lifestyles is steadily decreasing by almost every standard while our expected lifespan is increasing, what is your explanation if not improved health care?

I am regularly shocked by the advances in treatment which I observe after an interval of a few years.

The second to last 'graph of the story

"Often beneficiaries turn to emergency rooms for care, because many physicians do not accept Medicaid payments, said Dr. Sandra M. Schneider, president of the American College of Emergency Physicians."

It would seem that perhaps we need more doctors. Presmably if there were more doctors, the physician component of health care costs would come down. If competition drove down the going rate a doctor can charge, Medicaid reimbursement rates may look more attractive. Poor and uninsured people might more often go to a primary care doctor. The flow of people going to see primary care doctors would relieve some of the stress on the ER sector.

I ostensibly agree with Floccina in that there are plenty of capable foreign born doctors (both abroad and already here) that deserve the right to practice their craft. Why do we not allow this? Why does the supply of doctors appear to be less than optimal? Why does it appear as though the supply is (artificially?) restricted?

I ostensibly agree with Floccina in that there are plenty of capable foreign born doctors (both abroad and already here) that deserve the right to practice their craft. Why do we not allow this? Why does the supply of doctors appear to be less than optimal? Why does it appear as though the supply is (artificially?) restricted?

Some answers:

1. Medical Licensing boards having a perverse incentive to restrict doctor supply and drive up wages
2. Crappy immigration laws (where's Steve Sailer?!)
3. Unduly onerous doctor licensing. The dream of Mercedes-care. Either we'll have top notch doctors (which many cannot afford) or none at all.

I was posing those questions in a sort of rhetorical / food-for-thought way, but that is definitely what I was getting at.

I think you would (unfortunately) see an even harsher attitude towards immigration if the professional classes started facing competition from immigrants. It's one thing when you can get good affordable manual labor-- yay for the professional class that employs and benefits from them. It's another thing when you suddenly start earning less as a professional because perfectly able immigrants are willing to do you job for less.

Lots of professionals already face stiff competition but they take it spiritedly (mostly): e.g engineers, accountants, programmers etc.

Doctors (unfortunately) have managed to escape competition. We need to stop coddling them.

There was a time Rahul, when doctors entered the profession for reasons other than just the wealth. I realized this wasn't the case anymore when one of my friends asked a young man at our yacht club who was graduating from medical school, what kind of doctor he was planning to be. He answered, "A money doctor".

Umm... The usual way of getting more of something is to offer more money. How do you get there from here?

Single payer is the only real solution.

Right, single payer. I pay for mine.

Which is why Canadians come over the border to the USA when they can't get their single payer to pay for enough health care to satisfy their needs.

Third world immigration, legal and illegal, are why the emergency rooms are closing.
CIS has whitepapers out the yin-yang on the topic.

If immigrants really are of benefit to White economies, why can't they stay at home and benefit their own economies? And if immigration benefits the economy, per se, why don't all these third world countries import immigrants?

Are you the same loser who couldn't give me one source on how legal immigrants don't pay taxes?

In anycase, how about one (just one) article that shows how legal immigrants are over utilizing emergency rooms?

Your final question makes me positive that you are the same guy. You just cannot understand that immigration is not about country importing people! It is about people choosing to live in the best possible country. So obviously those skilled immigrants were helpingtheir home countries - they just choose to immigrate so they can help themselves.

It's also funny how the number of people who are "qualified" to sit in the elderly or disabled section of a bus always exceeds the number of available seats reserved for such people. The same phenomenon happens with handicapped parking spaces. Build it, and they will come! (with their haughty sense of entitlement in hand)

Hang on, are you telling me that US medical qualifications are by state rather than at federal level? Isn't that a huge impairment on both freedom and efficiency?

That's how I understand the US system; although I'm neither a native nor a doctor. So I could be wrong. There are mutual agreements between states for reciprocity but not sure how strong or easy.

Wow, this is really freaky. Suddenly Marginal Revolution's comments have been invaded by clueless idiots. What is it about health care that brings out the "We don't care if the economics of X don't work; we want it even if we can predict that it will not; can not; shall not provide us the ends we seek." crowd?

one of the basic factors in making healthcare a scarce resource is that the number of doctors is determined by agreement between the government and the ama and they also collude to limit/exclude skilled physicians from immigrating and practicing in the us

This shows which they last very much lengthier and thus saving you income which could otherwise are actually utilized to purchase new ones.

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