As part of the American Recovery and Reinvestment Act (ARRA), the Health Resources and Services Administration (HRSA) has been authorized to spend half a billion dollars on "addressing workforce shortages in the health professions." According to HHS Secretary Kathleen Sebelius, "The Recovery Act will help ensure we grow our healthcare workforce and give our aspiring doctors, nurses, and health professionals the tools and training they need to provide top-quality care to more Americans."¹

There are many indications that we do have a shortage of healthcare workers. But why is this the case, and is it really necessary for the government to try to fix it?

In a free labor market, temporary shortages of high-demand workers would quickly disappear as wages for those professions rise, thereby attracting new talent to the field. It is possible for there to be some delays in satisfying the new demand—after all, an individual cannot switch careers and become a doctor overnight, or even in a few years. But increased wages would also attract already-trained physicians out of retirement or from other countries. These dynamics apply to practitioners at all levels, including physician assistants, clinical nurse specialists, nurse practitioners, and nurse midwives. There shouldn't be a shortage.

In a free market, shortages can temporarily exist, but they cannot persist because other variables are free to fluctuate in response. Only in a market hampered by government-imposed constraints can one have a sustained period of excess demand for labor compounded by a falling supply of it.² In the United States, the market for healthcare services is severely hampered by government both on the demand side (primarily by the freewheeling Medicare and Medicaid programs) and on the supply side (primarily by licensing restrictions and controls on which institutions can teach medicine).

The government does not need to spend taxpayer money solving the problem of labor shortages in healthcare; it needs to extricate itself from healthcare and let the industry adjust accordingly.

Something else is also amiss with the HRSA grants: who gets this free money, and why? The most recent round of grants totals $33 million and will be going to six programs as follows:

• $19.3 million for scholarships for disadvantaged students going into health professions schools and training programs
• $4.9 million to establish or expand programs for minority individuals
• $3 million to schools of public health for public health traineeships
• $2.6 million to nursing schools to increase nursing education
• $2.5 million for scholarships to help disadvantaged students train for health careers
• $810,925 to the dental public health residency training program

For this round at least, about 90 percent of the funds will go to "disadvantaged" or "minority" individuals. If our labor shortage needs such urgent attention, why does anyone care what race or ethnic group our new doctors come from?

The purpose of government is to protect individual rights, not to fix labor imbalances or redistribute tax revenues to groups that are already politically favored. Not only are these grants are unnecessary for economic reasons, they are suspect for political reasons.

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¹ Manos, D. "HHS releases $33 million in stimulus funds to train health professionals" Healthcare Finance News, September 13 2009

² Reisman, George. Capitalism. Jameson Books, Illinois, 1990, p261

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