Maybe Loan Debt Isn’t the Problem Doctors Complain it Is

I’ve discussed physician salaries many times on this blog. No topic brings me hate mail faster. I don’t bring it up because I believe that docs make too much, or should have their salaries cut. I bring it up because I think there are few professions that seem to do as well financially, which also complain about pay so vocally.

Regardless, the number one response to any discussion of high physician salaries always centers around educational debt. It costs a ton to become a doctor, and that’s why physicians need to make so much.

Well, we also face a physician shortage in parts of this country. So some areas have come up with novel solutions to attack both these problems at once:

When the taxpayer-funded Peninsula Health Care District established a loan program to attract new physicians in 2003, officials promoted it as a way to address doctor shortages in parts of San Mateo County.

The program was designed to help primary care physicians cover the costs of setting up private practices or relocating to the district, which includes Burlingame and Hillsborough, two cities with some of the highest real estate prices in the nation. Doctors who practiced in the district for four or five years would have their loans forgiven.

There’s just one problem. In a decade, not one single physician has taken them up on this offer. In 2006, they expanded the program to more specialties. Still no takers. Some did consider it, I suppose:

The closest the Peninsula Health Care District came to having a doctor complete the program was a recruit who enrolled in 2005. She received a $50,000 loan to open a private practice in San Mateo. But she left two and a half years later for a job outside the district. She has since repaid most of the $25,000 that remained of the loan, with interest, Fama said.

Let me be clear once again. I don’t want to minimize educational debt, nor am I saying that I think physician salaries are objectively too high. I am saying, however, that I think we do have a knee jerk response to protect those salaries without allowing debate, and we often cite educational debt as the reason they must be maintained. Some have offered the removal of this debt as a way to tackle the problem of high physician salary. I have responded in the past that I don’t think that will work. The above shows why. We may complain about educational debt, but really we care about the freedom to pursue our economic livelihood more. That’s perfectly fine; we should just be honest about it.

[Cross-posted at The Incidental Economist]