There was a lovely little dovetail this morning between what I listened to on my drive to work and my catch-up reading once I got there. First the bit from the radio, courtesy of WBUR:
WBUR’s Martha Bebinger reports that Massachusetts hospitals, some of the state’s largest employers, are preparing for the worst as the federal deficit super committee looks to make cuts in Medicare. The local hospitals say the cuts could hurt doctor training programs, among others.
The Massachusetts Hospital Association is out with a new analysis that shows that one year cuts in the program could reach hundreds of millions of dollars. Over 10 years, that number could reach into the billions.
Martha: [Medicare] pays doctors to care for many of their sickest patients, the elderly and disabled and several proposals would affect how much or the way doctors are paid. But the biggest worry right now Bob is possible cuts to graduate medical education. Medicare pays part of the cost of training doctors, that’s salaries and equipment and services. And if the super committee reduced medicare spending here, the Massachusetts Hospital Association say members would lose between $100 and $300 million a year or one to $3.2 billion over ten years.
Bob [Oakes]: There are about 5,000 doctors in training in Massachusetts at any given time. How many men and women would this affect?
Martha: We don’t have exact numbers, but one estimate says hospitals would have to eliminate several hundred student or resident slots.
Then there was this fascinating post over at the main page about whether at to what degree the government should subsidize education, by the League’s own James K. Here’s the bit that stuck out a bit:
What may surprise some of you is that 2 implies no need for a subsidy either, not even 2A. This is where that point I asked you to remember earlier comes into play (you did remember to remember it, right?). You see, if your actions benefit others, but they pay you for the privilege already then there’s no externality – the market has already taken care of it. Doctors benefit society, but they get paid well because of that fact. So if all a particular degree does is make the possessor richer, then the government need not get involved. But wait, you might say. Some careers have value that is not adequately captured in the market, what about degrees that lead to those careers? Well, while there might be a market failure there, but the failure in in the labour market, not the education market. The subsidy should be for hiring people in the relevant field, not studying in the relevant field.
I respectfully direct you to the full post for a description of what is meant by “2,” which is hard to summarize here. In a nutshell, it addresses the concept of education as a personal investment.
Perhaps unsurprisingly, I am strongly opposed to cuts in the Medicare subsidy for graduate medical education. Cutting this subsidy is the very definition of a false economy. Given the projected shortfall of 150,000 physicians in the coming decade, I’m not sure how one could support anything that would make an already-bad problem worse.
I understand Jack’s point about how well-compensated physicians are, which he thus uses to argue against the idea of subsidizing medical education. One easy response is to agree in part, but to then point out that if you’re going to accept an average educational debt of $157,000 per doctor then you can’t credibly argue in favor of cutting healthcare costs by lowering physician compensation.
However, beyond medical school there is the cost of training residents. I wonder if James would consider this a subsidy for hiring rather than education, since residents fall into a murky region between students and employees. Regardless, it seems inarguable to me that having a sufficient number of physicians to meet the country’s needs w0uld fall into the category of a “social good,” and one that thus merits subsidization. Cutting the subsidy will only result in a loss of training programs, as hospitals cannot afford to swallow the hundreds of millions of dollars (in Massachusetts alone!) that continuing them would entail.
Residency is where students become doctors. We need residency training programs. In addition to training doctors in their respective specialties, residencies keep hospitals staffed with physicians around the clock. Someone has to pay for them, and the collective benefit makes government subsidy a no-brainer.