Medical School Quotas, the Healthcare Market, and Health Insurance

The government recently announced plans to increase medical school admissions incrementally each year, and even unveiled a plan to establish so-called public medical schools. The Korean Medical Association is protesting, while some local governments support it. Setting aside the stated justification for this policy, what consequences will it actually bring about?

Historically, the medical profession has struggled to secure professional independence and autonomy in medical practice. Of course, these are not examples from Korea but from the history of modern Western medicine in Britain and the United States, though they are not all that distant in time. As late as the mid-19th century, a British physician wrote in his book with deep and serious concern about “how doctors might survive.” He argued that “the physician’s struggle for subsistence hinders every rational and developed awakening,” and that young doctors in particular were more vulnerable to such conditions, writing that “those who have just graduated from medical school have no option but to throw themselves into the struggle for mere survival.” At the time, Britain’s medical markets were close to being completely open. In other words, anyone could perform procedures they considered to be medical treatment, and patients could purchase such services according to their financial means.

Up to the early 19th century, British medicine in this nearly fully open medical market moved in two directions. One was toward self-regulation by the guild-like Royal Colleges in the cities, which positioned themselves as sellers of premium goods in the market. Even today, such formerly flourishing institutions in London and Edinburgh remain in essentially museum-like form. In other words, they did not succeed, and as a result they now survive largely on historical prestige. At the turning point of their fate in the 19th century, students in the medical education market gradually turned away from them, and in the medical market as well, the prestigious status they had enjoyed steadily disappeared. This may partly have been because the value of what they offered was low relative to the price, but they were also overtaken by medical schools and their graduates in the medical market.

The second direction was to make the university the central axis, symbolize university faculty as the embodiment of the medical elite, establish rigorous medical curricula, and professionally train groups of sellers for the medical market. This strategy led to tremendous success amid the exceptional expansion of the 19th-century medical market after the Industrial Revolution, regardless of the actual level of development in medical scholarship. Medical schools succeeded in attracting students, who were potential sellers in the medical market, and thereafter continuously raised the level of their curricula while simultaneously raising admissions standards. Rising tuition was a secondary result. But because patients in the medical market preferred doctors who had graduated from medical schools, students saw medical education as worth investing in.

From the late 19th century onward, through repeated revisions of the Medical Act and state intervention, along with the numerous groundbreaking achievements of “modern medicine” that began pouring forth around the same time, physicians came to receive firm social recognition of their authority over medical practice.

In the story of Western medicine outlined above, the most decisive part related to medical professionalism is the concluding phase beginning in the late 19th century. But if the earlier expansion of the medical market, the market strategies of medical schools, and the value of medical practice formed through them had not existed socially, the very concept of medical professionalism could not have developed in the first place. In other words, medical professionalism is inseparably linked to the medical market and to the value of medical practice within it. The reason it is important to view medicine from the perspective of the market is that the essence of the market is not the exchange of money or goods, but the verification of value that reflects human beings’ subjective and relative perceptions.

In Korea, the value of medical practice and medical professionalism were not established through long trial and error in the market and competition among diverse institutions, as in Britain. Rather, they were in part naturally transplanted with the introduction of the Western modern medical institution known as the medical school. Of course, since the latter half of the 20th century, Korean physicians have also made various efforts to maintain the value of their medical practice and their professional authority. Korean physicians recognized the distinctive nature of the medical market: unlike ordinary goods markets, it must be regulated so that low-quality goods are not sold immorally. Given that strict control over the quality of supplied goods makes a decisive contribution to the value of those goods in the market, it can be said that Korean physicians have long waged an uphill battle against a government focused on increasing the quantity of goods supplied.

Korea’s health insurance system, formed alongside the growth during industrialization of a middle class with the purchasing power to support the medical market, came in the 1990s to cover the entire population. In essence, however, it was effectively a discount on medical expenses for patients. From the market’s perspective, Korea’s health insurance system meant an expansion of demand, bringing into the market many consumers who previously could not participate because prices were too high relative to the value of the service. Because the state artificially increased demand in the market, either the quantity of goods supplied or the number of suppliers had to increase. At the time, the compromise between these two was low medical fees and caps on medical school admissions.

As a result, Korean physicians positioned themselves somewhere in between, rather than following Britain’s path, where doctors were substantially absorbed into a state-led healthcare system and effectively became civil servants, or America’s path, where doctors kept their distance from the state and chose autonomy in the medical market. Socially, this policy was fairly effective in that, during the subsequent rapid expansion of Korea’s medical market, the state did not have to bear all the costs and thus avoided the severe fiscal pressure seen in Britain. Over time, however, as the meaning of the state’s discount on basic medical care gradually weakened, physicians came to compensate for low medical fees through the profits from expanding non-covered services.

Some may wonder: if there had been a major increase in medical school admissions from the outset, together with nationwide implementation of health insurance, would that not have resolved supply and demand in the medical market much more easily? If that had happened, it is highly likely that the issue would not have been solved at the level of market supply and demand, but that the health insurance system itself would have collapsed much earlier. One of the important premises that has allowed Korean healthcare to function more or less until now has been the maintenance of an appropriate number of physicians, and this was directly tied to the stable maintenance of the health insurance system amid changes in market supply and demand caused by government intervention.

In other words, because Korea’s health insurance system effectively guaranteed patients discounted access to medical expenses, the financial soundness of the system depended from the outset on physicians’ professional ethics, especially the assumption that they would not demand unnecessary overtreatment from patients. To make this possible, excessive competition among physicians, such as that seen in the oversaturated British medical market of the early 19th century, had to be avoided. People tend to mistake what they have always enjoyed for something that ought naturally to be enjoyed. In Korea’s history of modern Western medicine, the reason the value of medical practice could be established smoothly without the social costs of the many trials and errors seen in British medical history was that so much had been naturally transplanted through the social institution of the medical school. But if the value of medical practice once again becomes unstable in the medical market, can we continue to expect physicians’ professional ethics as we do now?

From this historical perspective on the Korean medical market and physicians’ professionalism, the government’s recent policy of strengthening public healthcare—especially intervention in the form of a large increase in medical school admissions—is highly likely to break the precarious balance between Korean physicians and the health insurance system, and it is very likely that the results will not follow the government’s intentions. The same has been true thus far in education and real estate policy. Government policies that intervened in the market for academic credentials and in the real estate market using the college admissions system and the tax system as weapons repeatedly produced results worse than non-intervention would have, while merely generating a mass of increasingly complicated policy guidelines and regulatory provisions.

Policymakers with left-wing ways of thinking seem to believe that public healthcare, education without competition, and one house per person are good. This childish binary belief in good and evil was also fashionable in Western history amid the storms of 19th-century Romanticism and collectivism. Unfortunately, the masses of that time were ignorant of the subjectivity of value, the core philosophy of the marginal revolution in economics that emerged in the same period. Korean university students, too, may know Karl Marx but not Carl Menger. In a society like Korea, where the lonely individual is losing his place amid the inflation of collective emotion, ignorant policies that disrupt the market’s value system inevitably arise. I do not think left-wing politicians are uniquely dogmatic. Rather, I only hope there will be an urgent recognition that the left-wing ideas in the minds of the public who support them—that is, the uncritical acceptance of artificially constructed “goods” or virtues (socialist goals) such as welfare, equality, and community—are themselves what lead to dogmatism.

Baemin Bae

History Teacher, Soongeui Girls’ High School

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Original title: 의대 정원, 의료시장과 건강보험

Author: Min Bae

Date: 2020-08-19

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=13&idx=23009