Sunday, September 16, 2012
Subsidizing Med School Loans
Towards the end of this article, the author, Uwe E. Reinhardt, discusses the amount of debt that medical students graduate from school with, and the financial burden that their loans can be throughout their careers. I think his suggestion towards the end of the article about targeting general practice physicians for a program of loan amelioration is brilliant. Because general practice physicians are both relatively underpaid and perceived to be in short supply, the incentive of a reduction in student loans for graduates of medical school committing to general practice for a period of time would, in effect, be like a signing bonus from the government for new GPs. For the public, it would be a subsidy to care by general practice physicians. Best of all, the government seems oddly comfortable with financial regulations as a way to control social behavior. Of course this kind of program would be another step towards socialism, so it seems unlikely to be be implemented in the current political climate.
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This article points out the extremes of student loans as they apply specifically to medical school. However, I believe the high costs for schooling to be some what appropriate in order to ensure the talent level and efforts made by students. This in turn seems it would provide the United States with an acceptable level of qualified medical employees. I also agree with Karl that Reinhardt's amortization models for paying off debt seem to be very profound. Specifically the idea of raising annual payments in accordance with a increasing salary seems to be the most effective and approved of.
ReplyDeleteI would be interested to see something like the program put in place at Yale, that Okun mentions in his report we are reading, to work in the medical education field. The idea of paying back to the school a certain percentage of your yearly income, could easily override this problem of falling incentive by keeping medical school fees connected to future production. General practice physicians could be placed under an alternative program, just as stringent but maybe not as intense or as large in scope as current medical school curriculum. However, Okun never (at least to my knowledge) states the outcome of the program so I would be hesitant to go to the Dean at John Hopkins and offer up the solution.
ReplyDeleteThere has been some speculation that student loans have the potential to cause the next financial crisis. As we know through the recent financial crisis, major problems can arise when debtors are unable to pay back their dues. Reinhardt’s amortization repayment method sounds great to me. Programs like Sallie Mae are already trying to head towards this direction, but are not quite as progressive as the proposed amortization plan.
ReplyDeleteIn his ideas for the model, Reinhardt uses 7.9 as a compound interest rate, which I believe is too high. Since doctors are benefiting the public, people should be encourage to attend medical school regardless of their financial situation. The best doctors to society would be those who take pay cuts in order to work in hospital or facilities frequented by those of low income. We should be encouraging doctors to help the less fortunate, and if they have high rates to pay back they will not be able to do this. This being said, I believe the new healthcare reforms will have an affect on medical school costs and payback methods. Lastly, if I was a medical student and was able to use this amortization method, I would prefer the second choice. Having payments rise as my income rises makes the most practical sense.