A recent New York Times report describes how South Korea’s tightly regulated national health system is straining under a shortage of physicians willing to staff emergency rooms and other high-intensity specialties. Government-set reimbursement rates, combined with long hours and high stress, have made these fields relatively unattractive, leading many doctors to choose less demanding, better-compensated specialties, such as dermatology and plastic surgery. Meanwhile, as OECD economist Chris James explains, emergency rooms are further crowded by patients with “low-acuity” conditions, “causing delays in treating high-risk patients.” This illustrates how a system that promises universal access can still fall short when it lacks the workforce where patients need it most.
Recent reporting highlights the stark and deeply human consequences of these shortages. Ambulances reportedly shuttle critically ill patients from hospital to hospital, sometimes for hours, unable to locate an emergency room willing or able to accept them. Patients with serious conditions—like cardiac events or traumatic injuries—face dangerous delays as facilities turn them away due to staffing shortages or lack of specialist coverage. Families describe the anguish of watching loved ones deteriorate in transit or waiting areas, as workforce gaps close the window for life-saving care.
South Korea’s emergency room crisis is not an anomaly. It reflects a broader problem with centrally administered health systems: when policymakers set prices for medical services, they inevitably get some of them wrong. If reimbursement for high-stress, essential specialties like emergency medicine is set too low relative to the demands of the job, physicians respond accordingly—by choosing other fields.
While workforce policies and working conditions also play a role, administered pricing strongly influences how physicians allocate their labor across specialties. And when those prices fail to reflect the demands of high-intensity care, shortages follow. The result is predictable: shortages where patients need care most.
This problem is hardly unique to South Korea. In Canada, emergency departments face chronic overcrowding and staffing shortages, with some patients waiting 20 hours or more, and hospitals are periodically forced to close ERs due to a lack of personnel. In the UK, the National Health Service struggles with similar pressures: long waits, workforce vacancies, and limited resources have produced what one academic review describes as “crisis-level” delays, with evidence linking prolonged waits to worse outcomes—again reflecting the consequences of mismatched incentives and constrained supply.
In the United States, government payment systems create similar distortions. Because Medicaid reimbursement rates are typically lower than those of Medicare or private insurers, physicians are less likely to participate in the program or accept new Medicaid patients. Studies have found that states with more generous Medicaid payments have higher physician participation rates, and many doctors report that low reimbursement leads them to limit or avoid treating Medicaid patients altogether.
The result is reduced access—fewer available providers, longer wait times, and care concentrated among a small subset of clinicians—illustrating a basic economic reality: when central planners, rather than decentralized market forces, set prices, they lack the information and flexibility needed to align supply with demand. Mispricing is not an aberration but an inevitability, and shortages emerge predictably when reimbursement fails to reflect the true costs and demands of providing care.
Nor is this dynamic limited to Medicaid. Medicare’s administered pricing similarly shapes provider behavior: payments are significantly lower than those from private insurers, which, in 2020, paid an average of about 143 percent of Medicare rates for physician services, creating strong incentives for providers to favor better-paying patients. In Affordable Care Act (ACA) marketplace plans, insurers often control costs through narrower provider networks and lower negotiated rates, which can further limit access to physicians and hospitals.
The problem is compounded on the demand side. Third-party payers insulate patients from the cost of care, making them less price-sensitive and more likely to consume low-value services. That disconnect further distorts demand, exacerbates imbalances, and places additional strain on already scarce resources.
And when taxpayers fund third-party payers, policymakers—not markets—set reimbursement rates, often prioritizing budget constraints over clinical and economic realities, making it more likely that prices fall short of what is needed to sustain an adequate workforce.
Systems can promise universal coverage, but they cannot repeal the laws of economics—or the importance of autonomy for both patients and clinicians. When policymakers override price signals, they constrain physicians’ choices about how and where to practice, while insulating patients from costs in ways that weaken their ability to make informed trade-offs. The result is not just distorted incentives but real human consequences for patients who find that access exists on paper but not when they need it most.
