Medical School Costs Keep Young Doctors Out of Primary Care

Justin Haskins Heartland Institute
Published February 11, 2016

Consumer Power Report #493

Health care reform efforts over the past two decades have focused primarily on creating ways to help more Americans obtain health insurance, but little has been done to address the rapid medical school cost increases now plaguing hundreds of thousands of new doctors. Increasing medical school tuition and fee rates are not only problematic for new graduates, they are causing many medical school students to reject careers in family medicine in favor of higher-paying specialties, which in turn means there are fewer primary care doctors available to work in communities where there are still too few physicians, such as many rural and urban areas.

According to data reported by the Association of American Medical Colleges (AAMC), the average total cost of attending medical school over four years, including required health insurance, fees, and room and board, is $215,000, significantly more than the costs associated with virtually any other graduate degree program in any field. Based on AAMC data, the average medical school graduate in 2000 paid about $100,000.

Doctors may pay more for their graduate degrees than the vast majority of other professionals do, but they also earn very high salaries. In 2012, consulting firm Merritt Hawkins and Associates reported the average salary for family physicians was $189,000. What many people don’t understand is it takes several years for young primary care doctors to earn these high incomes.

All doctors are required to work as medical residents before being licensed to practice on their own. Residencies last between three and five years for primary care doctors and other related practices, and medical graduates earn only about $50,000 while they work through their residencies – all while many work to pay off student loan debt. Once a doctor finishes his or her residency, a doctor, similar to other professions, will start at a lower salary. It takes several more years before many doctors are earning the high average figures mentioned above. By then, many doctors are 30 years old or older, and a large number of them still have hundreds of thousands of dollars in debt.

Faced with higher levels of student debt and an ever-changing health care industry, many medical school seniors are deciding to go where the money is: high-paying specialties. On average, U.S. cardiologists earn $512,000. Orthopedic surgeons earn $519,000. Many Americans may not think of urology as a high-paying field, but urologists earn $461,000 on average, and other specialties receive similarly large paychecks.

A recent study published in the academic journal Family Medicine by Dr. Stanley M. Kozakowski, Gerald Fetter, and Ashley Bentley reveals in 2015, there were 38 percent fewer U.S. medical school seniors matching into a primary care specialty compared to residency match data from 1997.

Millions of Americans still do not have access to quality care, and even those who do are faced with increasing costs. This dangerous trend in primary care will likely continue in the foreseeable future – unless something is done to bring down the cost of earning a medical degree. To ask young doctors to become primary care doctors after spending four years in undergraduate school, four years in medical school, three to five additional years in a relatively low-paying residency program, and then another three to five years working on the lower end of a specialty’s salary scale – all while paying off more than $200,000 of student loan debt – is unrealistic and ultimately harmful to communities most in need of additional family physicians.

Many factors have contributed to the recent rise of medical school tuition and fee rates, but perhaps the most significant is the massive government takeover of the student loan industry by the federal government under reforms put into place by the Obama administration. The vast majority of graduate students, in all specialties, now receive from a federal student loan program the funds needed to pay medical school costs. These programs guarantee the vast majority of students who apply will receive as much funding as is needed to cover the full cost of attending a college (and often for as long as it takes to receive a degree).

Medical schools and other colleges have taken advantage of these provisions. They know they can charge a seemingly infinite amount of money, and students will be able to pay it because of the federal student loan programs. Without some sort of a market to encourage students to choose less expensive options, medical schools across the nation have no incentive to keep costs down. In fact, schools with lower tuition rates are actually at a disadvantage because they have less funds available to build new facilities and hire prominent faculty members.

By phasing out the federal government’s involvement in the student loan industry, costs will be subject to market forces and competition, making it far more likely young doctors will have lower medical school debt and will be more encouraged to go into rewarding, albeit lower paying, fields, such as family medicine.

— Justin Haskins


IN THIS ISSUE:


WYOMING GOV. MEAD CALLS FOR MEDICAID EXPANSION

Wyoming Gov. Matt Mead is calling on state lawmakers to expand the federal Medicaid program.

The move could extend health insurance coverage to some 20,000 low-income adults in the state.

Mead is speaking to lawmakers in Cheyenne Monday in his annual state of the state address that kicks off the legislative session.

Mead says accepting federal funds to expand Medicaid could save the state over $30 million a year by reducing pressure on other state health programs. Expanding the program is a key element of the federal Affordable Care Act.

The Wyoming Legislature has rejected Medicaid expansion repeatedly in recent years and a key committee has recommended rejecting it again this year. Many lawmakers say they don’t trust federal promises to continue to fund the program.

SOURCE: Associated Press


U.S. IS PROBING A POSSIBLE HALF-BILLION-DOLLAR HEALTH CARE FRAUD SCHEME

The FBI is reportedly investigating a half-billion dollar health-care fraud scheme involving pain-management creams.

The specialty compounding creams are mainly marketed at athletes and the elderly as a way to quickly alleviate pain and cramping. According to The Wall Street Journal, sales have risen lately following a marketing blitz that included ads featuring former NFL quarterback Brett Favre. Investigators are looking into claims that some of the creams have no medical value, pharmacies have overbilled, sent patients more than they ordered, or refilled prescriptions without being asked. Some companies have charged over $10,000 for a single tube of the ointment.

The fraud has supposedly affected private insurance companies, Medicare, and Medicaid. The biggest alleged victim is a health insurance program for military personnel and veterans. Investigations are still in their early stages, and no charges have been filed.

SOURCE: By Michal Addady, Fortune


HOUSE LOOKS TO ROLL BACK OBAMACARE CALORIE RULES

The House is expected to vote in the coming week on legislation to roll back some menu labeling requirements of the Affordable Care Act.

The Common Sense Nutrition Disclosure Act, introduced by Reps. Cathy McMorris Rodgers (R-Wash.) and Loretta Sanchez (D-Calif.), would exempt most grocery stores, convenience stores, gas stations and movie theaters from having to provide calorie counts for prepared food items.

In an effort to combat obesity and help consumers make healthier food choices, ObamaCare required the Food and Drug Administration to issue a rule forcing vending machines, restaurants and other establishments that sell prepared foods to list the calories in food items.

The House bill would only apply the nutrition rule to establishments that derive more than 50 percent of their total revenue from the sale of food.

McMorris Rodgers claims it will be impossible for certain food vendors to comply with the FDA’s new rules.

“These recently finalized menu labeling regulations are more than 400 pages long and, according to estimates, could cost American businesses more than $1 billion to comply and 500,000 hours of paperwork,” she said in November after the legislation passed the Energy and Commerce Subcommittee on Health.

House Majority Leader Kevin McCarthy (R-Calif.) says the House is ready to take action. He said in February on the House floor that the bill addresses harmful menu labeling regulations that will burden every grocery store, convenience store and pizza restaurant in the country.

SOURCE: By Lydia Wheeler, The Hill


INDIANA RESIDENTS LEAVE OBAMACARE EXCHANGE TO SIGN-UP FOR EXPANDED MEDICAID PROGRAM

Fewer Hoosiers used the federal health exchange to get insurance this year than did last year, the federal government reported Thursday.

The U.S. Department of Health and Human Services said 196,242 Hoosiers selected a 2016 plan through the open enrollment period that ended Jan. 31.

That compares with 219,185 Hoosiers who selected a 2015 plan during last year’s open enrollment period.

Nationally, 4 million more people selected a 2016 plan in the 38 states using HealthCare.gov.

The drop in Indiana is because some switched their coverage to Medicaid after Indiana expanded eligibility last year, according to federal and local officials.

But more than 200,000 Hoosiers estimated to be eligible for exchange coverage still haven’t signed up, according to the nonpartisan Kaiser Family Foundation.

Nearly half of this year’s plan selections were made by people living in the Indianapolis area.

Those without coverage could be upset when they face the increased penalty for not having insurance.

The penalty, which kicks in when 2016 federal income taxes are paid next year, is $695 per adult, or 2.5 percent of annual household income – whichever is higher.

Federal officials said that, based on what they heard from local enrollment sites and the response they tracked from enrollment reminders that mentioned the penalty, it was a large motivating factor.

SOURCE: By Maureen Groppe, Indianapolis Star