Doctors in debt
Tuesday, January 13 2009
I missed a story last month that I think is worth coming back to: from the NY Times, Doctors Awash in Debt. Check out the graph in particular.
So new physicians have a lot of debt. This is not news to the medical blogosphere: you don’t have to read many doc blogs before you come across someone invoking the awful burden of medical school debt. Kevin is especially reliable on this: see here, here, and here for examples. In each of these posts, Kevin suggests the government should pay down medical students’ debts; this from a guy opposed to government-run healthcare.
The argument from Kevin and other physicians is that when we’re talking about the incomes physicians earn, we have to keep in mind their tremendous debt – as if the income followed from the debt. But this is backwards: the reason physicians have more debt is because they have more income.
I am going to use this post to try to introduce graphics into my blogging, so bear with me if it doesn’t work. Specifically, I want to post three graphs from this study of medical student debt.
The first graph shows median debt for graduated physicians who have debt (some don’t). This is similar to the NY Times graph, but with a longer window. (I don’t think this graph is adjusted for inflation, but that’s not essential here.) Twenty years ago, medical student debt was fairly low.
The second graph shows physician salaries in this same time window. This graph includes a line adjusted for inflation – constant 2003 dollars. You see that physician salaries increased slightly, adjusting for inflation. Twenty years ago, physician salaries are about as high as they are now.
Now the third graph: it shows the rise in tuition and fees at public and private medical schools, both adjusted for inflation (constant) and not adjusted (current). The upward trend in the adjusted lines means that medical school tuition has outpaced inflation – significantly in fact. (The study includes a graph to this point, but it’s a little confusing so I left it out of this post. The NY Times graph also includes a CPI line – Consumer Price Index – to track inflation.)
What’s clear from this is that a big part of the reason new physicians graduate with so much debt is that their alma maters charge so much in the first place. Outlandish debt is not intrinsic to the physician’s career – at least, it wasn’t a generation ago. So why the change?
One possible reason is because physicians had high salaries in the first place. From a med school’s point of view, this is money left on the table. They know – and their financial aid counselors will tell their students – that the amount students borrow should correspond to their expected earnings. So medical schools have bumped up tuition in line with those expectations, in effect taking a significant chunk of the first several years’ of a physician’s earnings and leaving a smaller margin for the physician. This is an entirely rational decision from the school’s point of view, but it’s also entirely rational for the prospective student to accept these terms going in. Medical schools get a lot more money, but their students still earn a reasonable amount of money.
Now here’s a bone for Kevin, since I’ve picked on him: one problem with this dynamic is that medical schools apparently have no way to know who will become a primary care physician and who will not, so everybody gets charged the same high amount and has to borrow tremendously. There’s no incentive at present for med schools to change the way they treat prospective PCPs, which in turn creates a huge disincentive for students to choose primary care. But post-hoc treatment of loans only feeds the dynamic; it is not an efficient solution to this problem.
There may be a real reason why med schools need to charge way more than they did twenty years ago, or it could just be that – like lots of other educational institutions – they want fancier buildings and better salaries. Or maybe the fear of staggering debt is another way to scare off potential competitors.
Point is, insofar as medical student debt is a problem, it is a problem of and by the medical community. It’s silly to point to that debt as if it entitles physicians to other people’s money – whether from patients or taxpayers. Would-be doctors have a choice in what they buy and borrow in the course of their education. If they have a problem with the choices available, they need to take it up with their own establishment. What’s missing from every complaint I’ve seen about medical student debt is any criticism or reflection as to what exactly they got for all that money.
