President Obama is opposed to liberalizing restrictions on entry of foreign nurses (White House Forum on Health Reform).
He made the comment in response to a question at a health reform event at the White House last March:
REPRESENTATIVE CAPPS: ...we have a huge shortage of nurses today. And estimates are that the U.S. will be lacking over 500,000 nurses in the next seven years. Our nursing schools are only able to admit a tiny fraction of applicants. The great -- greatest bottleneck for educating more nurses comes from the lack of nursing school faculty....
I'd love to hear your thoughts.... on how we can further advance nursing education and faculty training...THE PRESIDENT: ....The notion that we would have to import nurses makes absolutely no sense. And for people who get fired up about the immigration debate and yet don't notice that we could be training nurses right here in the United States -- and there are a lot of people who would love to be in that helping profession and yet we just aren't providing the resources to get them trained -- that's something that we've got to fix....
Capps didn't ask about immigration or importing nurses, but the President must have been looking for an opportunity to make the point.
The shortage Rep Capps describes means that at current wages, the quantity of nursing services demanded is greater than the supply. The demand for nurses will only increase as baby-boomers approach their endgame and as the numbers of persons qualifying for medical insurance increases.
Foreign-sourced nurses are a substitute for American nurses. They are not a perfect substitute; there are differences in the cultural backgrounds of the nurses, in patient preferences, and in the costs of acquiring information about abilities of foreign and domestic nurses.
Since they are substitutes, when the restrictions on the supply of foreign nurses drive up the wages received by those foreign nurses who actually can get jobs, the demand curve for domestic nurses will shift to the right. As the domestic demand curve shifts, the equilibrium wage will move up along the domestic supply curve and domestic nurses will make more.
But that's not all:
- The nursing shortage will remain larger longer.
- Insurers and consumers will pay more for medical care.
- Insurance premiums will be higher.
- Insurance subsidies will be higher.
- People will purchase fewer medical services (because the price is higher).
- Doctors will be less productive (in the same way they'd be less productive if they had less capital to work with).
- The affluent, who will be able to pay more out-of-pocket, or who will be able to afford larger insurance premiums, will not be hurt as much as the less affluent.
- Working conditions for nurses will be poorer as employers try to stretch their nursing staffs (I assume that working conditions are easier the more nurses on a given shift).
- There will be an incentive to substitute technology for people to economize on human nursing services (substitute monitoring technology for nursing attention; exploit monitoring efficiencies associated with moving older people out of their homes and into wards or nursing homes).
- Consumers will have additional incentives to go abroad for medical attention.
- Family caregivers are a substitute for certain types of professional nursing care. Expect greater use of family caregivers.
- If we're having trouble training more domestic nurses because of a shortage of teaching faculty, maybe we should at least import teaching nurses.
Rep. Robert Wexler (D-Fla) has proposed legislation to modestly relax current restrictions: HR 2536.
But right now unemployment is over 10%, shouldn't we reserve these jobs for Americans? Unemployment is high right now, but its not normally high. It should begin coming down later this year. Given the long lead-time for training and deploying new nurses, reserving jobs for nurses isn't likely to play much role in reducing unemployment during this crisis. I assume, since there is big shortage of nurses, that there are relatively few unemployed nurses in the U.S.
For related, somewhat broader, discussions of alternative health reform policy, see John Palmer's The Simple Economics of Health-Care Reform and Tyler Cowen's What should we do instead of the Obama health reform bill?
Edits: various during Nov 26.