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Stanford Medicine

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Medical Education, Medical Schools

It’s time for innovation in how we pay for medical school

handstiedThere is a tremendous amount of handwringing among students, workforce researchers, and medical school deans about the record amount of debt that medical students incur – more than $175,000, according to the Association of American Medical Colleges. This has unintended consequences, including student selection of more lucrative specialties and placing medical education beyond the reach of low-income and minority students. The average household income for a matriculating medical student is more than $110,000 per year. We must get serious about reducing this debt. A talented medical workforce is a national priority.

[Louis Sullivan, MD,] authored an op-ed piece published in the Washington Post on June 9, 2014, “The Outrageous Cost of Working in Medicine.” In the piece, Sullivan discusses this challenge from both diversity and equity perspectives. He wrote, “You shouldn’t have to come from a wealthy family (or be willing to tolerate a lifetime burden of debt or the deferral of buying a home and starting a family) to go into health care.” Yet 60 percent of medical students hail from families with incomes in the top 20 percent of the nation. Meanwhile only 3 percent come from families with incomes in the lowest 20 percent.

National policymakers believe that, because professionals with medical degrees have high earning potential, they should therefore be in a position to repay loans in excess of $250,000 to $300,000. It simply hasn’t worked out that way for many talented young people who have turned away from the health professions altogether. The “gentrification of health care” serves no one well.

(In this post, I’m not talking about financing graduate medical education – GME – which is funded by Medicare, Medicaid, and academic institutions. In March 2001, Joe Newhouse, PhD, and Gail Wilensky, PhD, published an article in Health Affairs on GME asserting that it does not meet the economist’s definition of “public good:” benefits that are equally available to everyone that cannot exclude consumers from consumption. In the same issue, Uwe Reinhardt, PhD, and Adepeju Gbadebo, MD, pointed out that if GME is indeed a public good, society must also be willing to pay reasonable costs. In return, the leaders of academic medicine must inform society what each component of their social mission really costs, and be willing to be held more formally accountable for their use of the resources.)

What options exist to decrease undergraduate medical school debt?

Decrease medical school tuition and increase efficiencies. Tuition is actually a small part of most medical schools’ revenue. Most revenue comes from clinical services, transfers from teaching hospitals, and research funding. Although less than 5 percent of total revenue at most schools, tuition payments are still significant enough that their loss would impair the institutions’ ability to sustain their missions. There is significant variation in medical school tuition between and among public and private institutions. We could analyze the costs of education to determine if efficiencies can be realized using shared core faculty, distance learning, and MOOCs (massive open online courses) “to inform society what each component of their social mission really costs, and be willing to be held more formally accountable for the use of resources,” per Reinhardt and Gbadebo.

Make medical school free and government-funded. Peter Bach, MD, and Bob Kocher, MD, propose that medical school should be free. In their May 28, 2011, New York Times editorial, they advocated a new way of paying for medical training to address the looming shortage of primary care doctors and to better match the costs of specialty training to the income it delivers. They proposed that the government pay medical school tuition and then defray the costs of $2.5 billion per year by charging doctors for specialty training. This is not the first proposal to recommend making primary care training more accessible. The National Health Service Corps helps doctors repay their loans in exchange for a commitment to work in an underserved area, but few doctors sign up.

Make medical school more affordable for students committed to public service. The Wall Street Journal on April 22, 2014, published an analysis of federal student loan debt forgiveness programs, which increased nearly 40 percent in the past six months. One program, “Pay As You Go,” requires borrowers to pay 10 percent a year of their discretionary income – annual income above 150 percent of the poverty level – in monthly installments. Under the plan, the unpaid balances for those working in the public sector or for nonprofits are then forgiven after 10 years. At least 1.3 million Americans are enrolled in the program.

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