Does the government actually subsidize medical education?

[DoctwoB]

I've always been intrigued by the "government subsidizes your education, so you owe society" argument. I wonder if the premise of that is correct. Does the government subsidize medical education? Lets break it down.

1. State med schools receive state funding. This is obviously a subsidy, but not form the federal government, and is often done by states in the hopes of retaining physicians to that state and provide opportunities to lower income in-state residents. One could argue this creates an obligation to help the members of that state, but it doesn't apply to the private schools (majority) and the subsidy is rapidly disappearing in many states.

2. Loans. The subsidized stafford loans are a subsidy to the tune of ~15k. As for the rest of the loans, its nice that they're available, but in reality the government is currently making bank off our backs. The repayment rate is close to 100% (as docs make a decent income and these loans follow you until you die), and we pay 6.8%. The government can currently borrow a 10 year note for 3%. They borrow at 3% and lend at almost 7% (plus origination fees, etc.), and guess who pays the difference? We do. If I borrowed 200k in unsubsidized staffords, over 10 years that interest difference means the government made 96k off me. Gotta love that "subsidy."

3. Medicare pays for residency training, to the tune of ~100k/resident/year (~50k salary plus benefits/malpractice + money to the hospital for teaching and administration). This obviously seems like a major subsidy, but consider the alternative. Most services provided by a resident are services not provided by an attending (obviously there is some redundancy due to resident's lack of experience, but the overall point stands). A resident can't bill medicare/insurance for a service, only an attending (that has supervised/performed said service) can do that. Thus removing residents would mean attendings perform more services (at much higher prices then the salary paid to residents), leading to higher healthcare costs. Even hiring PAs or NPs would probably cost more then using residents.

For example, a PGY2-3 neurosurgery resident is basically a neurointensivist that costs 100k/year, that does the vast majority of the work that a 300k/year attending would.

I don't have any hard numbers on this, but I tire of hearing of our debt to society because of how much the taxpayers pay to train us. I'd be interested to hear other perspectives.

---

Members don't see this ad.

 

[Frozen]

Who cares?

Everything everyone does is subsidized by the taxpayer theses days (almost). The roads you drive on, the food you eat, the internet you surf porn on, etc.... everything including your education.

No one expects bankers, whose education is also subsidized by the government, to be martyrs, why would anyone expect it of physicians.

As a society we fund these things because we value having physicians, bankers, researchers, etc... It's not about entrapping anyone into indentured servitude.

 

[DrYoda]

Agree with frozen. You never see anyone demanding college drop outs pay us back, or that any other profession (all of which had at least k-12 picked up by the taxpayers) work for less.

 

[DoctwoB]

Fair points by both, but the "government subsidy" aspect is a primary argument made to justify the social obligation supposedly owed by physicians (see the recent NYT article about the evils of part time physicians). To further add to your point, I would say that physician training confers a reasonably high income, from which we will pay taxes at a higher rate (most likely) than if we had not been trained as a physician, thus reimbursing the government for any cost (if any) they endure. But what about the argument that the government allows significant barriers to entry to medicine, thus ensuring a cartel and physician undersupply?

*please note I'm playing devils advocate here, I fully support the rights and independence of physicians. I'm just trying to look at this issue from all angles, because more and more physicians are being called upon to sacrifice autonomy and salary for social welfare.

 

[DrYoda]

Fair points by both, but the "government subsidy" aspect is a primary argument made to justify the social obligation supposedly owed by physicians (see the recent NYT article about the evils of part time physicians). To further add to your point, I would say that physician training confers a reasonably high income, from which we will pay taxes at a higher rate (most likely) than if we had not been trained as a physician, thus reimbursing the government for any cost (if any) they endure. But what about the argument that the government allows significant barriers to entry to medicine, thus ensuring a cartel and physician undersupply?

*please note I'm playing devils advocate here, I fully support the rights and independence of physicians. I'm just trying to look at this issue from all angles, because more and more physicians are being called upon to sacrifice autonomy and salary for social welfare.

The gov is bottle-necking supply via residency funding, but I think it's currently more out of necessity (we can't afford to spend the money with the current deficit and politics surrounding it) than for the benefit of physicians.

I admit I'm not up on the whole history or polictics surrounding this situation. So anyone feel free to correct me.

 

[Angulimala]

I thought the best point of that article was that the people who finish school and then decide to be part time stay-at-home types are taking up (limited) space in schools. Others, who would work full time, presumably, would like to have those spots.

Since there's limited supply, it makes sense to try and get people who will be productive into the market.

 

[shaggy alfresco]

3. Medicare pays for residency training, to the tune of ~100k/resident/year (~50k salary plus benefits/malpractice + money to the hospital for teaching and administration). This obviously seems like a major subsidy, but consider the alternative. Most services provided by a resident are services not provided by an attending (obviously there is some redundancy due to resident's lack of experience, but the overall point stands). A resident can't bill medicare/insurance for a service, only an attending (that has supervised/performed said service) can do that. Thus removing residents would mean attendings perform more services (at much higher prices then the salary paid to residents), leading to higher healthcare costs. Even hiring PAs or NPs would probably cost more then using residents.

For example, a PGY2-3 neurosurgery resident is basically a neurointensivist that costs 100k/year, that does the vast majority of the work that a 300k/year attending would.

I don't have any hard numbers on this, but I tire of hearing of our debt to society because of how much the taxpayers pay to train us. I'd be interested to hear other perspectives.

Well whether the hospital makes money on training residents is a different issue to the government spending money on them. The government pays for the $$ for services provided PLUS it pays the salary + benefits + other costs of the resident. The government doesn't spend less money per patient if the patient is in an academic setting vs. a private setting. If a resident were not there, the government would still pay for the services provided but would not have to pay for the resident. So yes, it's subsidized by tax payers.

 

[redsbear]

Don't worry, you'll pay it back over your career (many times over) by existing in the top income tax bracket. Especially when the prevailing attitude is (at least in Minnesota) that the "richest" 5% don't "pay their fair share" (~40-some percent of all state tax).

I feel no obligation to do anything other than to do what's best for me and my family.

 

[shaggy alfresco]

Don't worry, you'll pay it back over your career (many times over) by existing in the top income tax bracket. Especially when the prevailing attitude is (at least in Minnesota) that the "richest" 5% don't "pay their fair share" (~40-some percent of all state tax).

I feel no obligation to do anything other than to do what's best for me and my family.

Hmm, will you? Let's say you make $200k and the government has spent four years worth of money training you (around $400k).

Assuming a $400k loan, at 5% interest, it would take you a very long time to pay that back in federal taxes - because you can't look at your total taxes, you have to look at the money you would have made had the government not given any money and let you be a doctor. So let's say you would have made $100k without med school and $200k with med school, that's only about x amount in "extra" in taxes. With interest (even if only at the rate of inflation), that'll probably take 20+ years to pay back. You're certainly not going to pay it back 'many times over' in the course of a typical career. And actually technically the government never comes out ahead because I bet they could find enough people to go into medicine even if they didn't subsidize residency training so that money is effectively "wasted." E.g, if the government were purely looking for a bottom line solution, they would simply cease (or cut by like 50%+) payments for residency training knowing enough idealistic pre-meds will still choose med school and do residencies without being paid.

 

[osumc2014]

Doesn't it take $1 million to train a physician? So we are getting a discount right?

 

[qwerty89]

http://www.youtube.com/watch?v=DteBlI2eihA

 

[loveoforganic]

RE: physician undersupply in the US

According to the forces that be, we have an oversupply of physicians, but a maldistribution, geographically (rural/inner city) and as far as the specialty/PC ratio

 

[DoctwoB]

The government pays for the $$ for services provided PLUS it pays the salary + benefits + other costs of the resident. The government doesn't spend less money per patient if the patient is in an academic setting vs. a private setting. If a resident were not there, the government would still pay for the services provided but would not have to pay for the resident. So yes, it's subsidized by tax payers.

This is incorrect, which is just the point that I was making. Say an attending does an H&P. He writes it up and bills medicare. Say a resident does an H&P. He writes it up, but can't legally bill medicare. Services provided by residents can't be billed to medicare.. Thus by having a resident to an activity rather than an attending, medicare saves $$.

There are other factors, however that have to be taken into account, like medicare is billed for ancillary services (e.g. labs) ordered by residents, and one could argue that residents order excess labs or imaging due to their lack of experience.

Like I said, I don't have hard numbers, but the picture of the government paying 100k/year for our education with no return just isn't true.

 

[loveoforganic]

This is incorrect, which is just the point that I was making. Say an attending does an H&P. He writes it up and bills medicare. Say a resident does an H&P. He writes it up, but can't legally bill medicare. Services provided by residents can't be billed to medicare.. Thus by having a resident to an activity rather than an attending, medicare saves $$.

There are other factors, however that have to be taken into account, like medicare is billed for ancillary services (e.g. labs) ordered by residents, and one could argue that residents order excess labs or imaging due to their lack of experience.

Like I said, I don't have hard numbers, but the picture of the government paying 100k/year for our education with no return just isn't true.

Do they not "operate under the supervision of a physician" (on paper or in practice) and allow the hospital to bill through them?

I have a hard time believing a resident is placing a central line someone without the hospital receiving some kind of reimbursement for the kit and services

 

[Perrotfish]

RE: physician undersupply in the US

According to the forces that be, we have an oversupply of physicians, but a maldistribution, geographically (rural/inner city) and as far as the specialty/PC ratio

It depends what you mean by an 'oversupply' of physicians. When people say we have too much of something they can either mean we more than society needs, or that we have more than society demands. The amount that society needs is based on very theoretical and debatable models of an ideal society. The amount that society demands relates to much more measureable economic indicators. These two values can be drastically different from one another.

Take, for example, crack cocaine. If you ask how much crack society needs, anyone would agree we have a HUGE oversupply (compared to an ideal supply of 0). If you ask how much crack society wants, we're terribly undersupplied, because there are no crack dealers who are having difficulty finding a market for their product. Similary, while the 'powers that be' might argue that we have more physicians than we actually need, I think they would be pretty daft to argue that we are meeting the demand for physicians, even for subspecialists in urban areas.

When you have an oversupply of profession, in the economic sense of the word, members of that profession become underpaid and unemployed. If you have an oversupply AND poor distribution that only increases the percentage of professionals who have trouble finding work in an oversaturated market. Physicians have very close to a 0% unemployent rate, and are (asanine comarisons to IBanking aside) extermely well paid regardless of where they work. That means that society is demanding more physicians, and that there are almost no saturated markets. Now you can argue that society really needs physicians in the sense that the Congo needs food, or you can argue that we need physicians like Detroit needs more crack. One way or another, though, I think it's clear that there is a demand for our profession that is not being met.

 

[Angulimala]

It depends what you mean by an 'oversupply' of physicians. When people say we have too much of something they can either mean we more than society needs, or that we have more than society demands. The amount that society needs is based on very theoretical and debatable models of an ideal society. The amount that society demands relates to much more measureable economic indicators. These two values can be drastically different from one another.

Take, for example, crack cocaine. If you ask how much crack society needs, anyone would agree we have a HUGE oversupply (compared to an ideal supply of 0). If you ask how much crack society wants, we're terribly undersupplied, because there are no crack dealers who are having difficulty finding a market for their product. Similary, while the 'powers that be' might argue that we have more physicians than we actually need, I think they would be pretty daft to argue that we are meeting the demand for physicians, even for subspecialists in urban areas.

When you have an oversupply of profession, in the economic sense of the word, members of that profession become underpaid and unemployed. If you have an oversupply AND poor distribution that only increases the percentage of professionals who have trouble finding work in an oversaturated market. Physicians have very close to a 0% unemployent rate, and are (asanine comarisons to IBanking aside) extermely well paid regardless of where they work. That means that society is demanding more physicians, and that there are almost no saturated markets. Now you can argue that society really needs physicians in the sense that the Congo needs food, or you can argue that we need physicians like Detroit needs more crack. One way or another, though, I think it's clear that there is a demand for our profession that is not being met.

/agree

Also, even if there *is* some place that is fully-saturated, it may not be for long if we have all these ENT (early nights & tennis) and PMR (plenty of money and relaxation) part-timers going through the system.

 

[loveoforganic]

It depends what you mean by an 'oversupply' of physicians. When people say we have too much of something they can either mean we more than society needs, or that we have more than society demands. The amount that society needs is based on very theoretical and debatable models of an ideal society. The amount that society demands relates to much more measureable economic indicators. These two values can be drastically different from one another.

Take, for example, crack cocaine. If you ask how much crack society needs, anyone would agree we have a HUGE oversupply (compared to an ideal supply of 0). If you ask how much crack society wants, we're terribly undersupplied, because there are no crack dealers who are having difficulty finding a market for their product. Similary, while the 'powers that be' might argue that we have more physicians than we actually need, I think they would be pretty daft to argue that we are meeting the demand for physicians, even for subspecialists in urban areas.

When you have an oversupply of profession, in the economic sense of the word, members of that profession become underpaid and unemployed. If you have an oversupply AND poor distribution that only increases the percentage of professionals who have trouble finding work in an oversaturated market. Physicians have very close to a 0% unemployent rate, and are (asanine comarisons to IBanking aside) extermely well paid regardless of where they work. That means that society is demanding more physicians, and that there are almost no saturated markets. Now you can argue that society really needs physicians in the sense that the Congo needs food, or you can argue that we need physicians like Detroit needs more crack. One way or another, though, I think it's clear that there is a demand for our profession that is not being met.

I agree with your points, and I don't have an answer to your which to argue. Broadly though, I'm not sure whether supply of physicians based on demand is an ideal thing, since that demand isn't entirely the product of the patient.

 

[Perrotfish]

I agree with your points, and I don't have an answer to your which to argue. Broadly though, I'm not sure whether supply of physicians based on demand is an ideal thing, since that demand isn't entirely the product of the patient.

Where do you think the demand is ultimately coming from, if not the patient?

 

[DoctwoB]

Do they not "operate under the supervision of a physician" (on paper or in practice) and allow the hospital to bill through them?

I have a hard time believing a resident is placing a central line someone without the hospital receiving some kind of reimbursement for the kit and services

Medicare will be billed for the equipment even if a resident does the whole thing, its just physician services that would not be billed.

"In the regulation, HCFA states that a physician who is teaching a resident may not bill Medicare for his or her professional services unless the physician performs the "key portion" of the service for a Medicare beneficiary. So, if the physician is precepting a physician resident (thus functioning primarily as a teacher), and the resident is providing the "key portions" of the service, then the physician may bill Medicare neither for his or her services nor the services rendered by the resident. This is for two reasons.

First, HCFA contends the physician is in some way being compensated for his or her teaching/preceptor time through the GME payments flowing to the teaching institution. Compensation may be, for example, by virtue of being on staff in a teaching institution or by working under contract as a clinical preceptor. Second, the resident's services are already paid for by GME. HCFA thus concludes that when key portions of the physician services provided to a Medicare beneficiary are provided by a resident, then Medicare, through GME, has already paid for the resident's time; it is therefore illegal to submit what is essentially a second bill."

I'm sure that what defines the "key portions" is up for debate, and that there are excesses where a resident does the work and an attending bills, but that would technically be medicare fraud.

 

[IvyHopeful20]

I would like to see numbers on how much $$ is billed to Medicare for similar procedures between an academic vs non academic place. I'd be surprised if the numbers were massively different but I'm willing to be corrected.

 

[loveoforganic]

Medicare will be billed for the equipment even if a resident does the whole thing, its just physician services that would not be billed.

"In the regulation, HCFA states that a physician who is teaching a resident may not bill Medicare for his or her professional services unless the physician performs the "key portion" of the service for a Medicare beneficiary. So, if the physician is precepting a physician resident (thus functioning primarily as a teacher), and the resident is providing the "key portions" of the service, then the physician may bill Medicare neither for his or her services nor the services rendered by the resident. This is for two reasons.

First, HCFA contends the physician is in some way being compensated for his or her teaching/preceptor time through the GME payments flowing to the teaching institution. Compensation may be, for example, by virtue of being on staff in a teaching institution or by working under contract as a clinical preceptor. Second, the resident's services are already paid for by GME. HCFA thus concludes that when key portions of the physician services provided to a Medicare beneficiary are provided by a resident, then Medicare, through GME, has already paid for the resident's time; it is therefore illegal to submit what is essentially a second bill.

I'm sure that what defines the "key portions" is up for debate, and that there are excesses where a resident does the work and an attending bills, but that would technically be medicare fraud.

Gotcha, thanks!

Where do you think the demand is ultimately coming from, if not the patient?

Provider-induced demand for services (due to whatever reason, be it financial incentive, avoiding malpractice, etc.). The patient only has so much information to guide his utilization, a lot has to rest on physician judgement. Not saying it's the major factor, just a factor in addition to traditional demand.