Everything you say is true for a free market in goods/services. In that case, rising prices would induce more people to become doctors, thereby increasing the supply.
Unfortunately, there is no free market in medical training - supply is artificially capped. A huge number of qualified people who want to become a doctor are turned away from medical school, and the government artificially restricts the number of medical schools (at the behest of the AMA) [1].
[1] Some numbers. I'll assume the average black medical student is qualified (but the 49'th percentile is unqualified), giving me cutoff of MCAT VR 8.3 for a "qualified doctor". This cutoff is chosen so I can call people who disagree with me a racist. Some gaussian-fu suggests we could train at least 10-15k more doctors per year.
Unfortunately, there is no free market in medical training - supply is artificially capped. A huge number of qualified people who want to become a doctor are turned away from medical school, and the government artificially restricts the number of medical schools (at the behest of the AMA) [1].
[1] Some numbers. I'll assume the average black medical student is qualified (but the 49'th percentile is unqualified), giving me cutoff of MCAT VR 8.3 for a "qualified doctor". This cutoff is chosen so I can call people who disagree with me a racist. Some gaussian-fu suggests we could train at least 10-15k more doctors per year.
http://web.archive.org/web/20080801022539/http://www.aamc.or...
(Unfortunately the AAMC took the numbers down, but the wayback machine is helpful.)