Win-Win: Obama’s Student Loan Reform Decreases Student Loan Premiums and Works towards Health Reform Passage

Student loan legislation is being twinned with the health care reform legislation proposed by the House for reconciliation.  The language contained in the House “fix it” bill would stop federal subsidies to private lenders like Sallie Mae and would instead originate all federal student loans in the Department of Education.  Such reform is estimated to save taxpayers $67 billion over ten years according to the Congressional Budget Office.  The savings would be used to fund more need-based Pell grants, which are provided to low-income students to promote access to higher education.  In the past year alone, applications for Pell grants have skyrocketed due to the fact that many people are returning to school given the difficult economy.

Because only one reconciliation bill may be passed per year, the student loan reform legislation has been included in the health care reform bill.  President Obama wants to include the loan language in the bill because of its estimated savings as well as the benefits it will offer need-based students, and he finds the inclusion a “no brainer.”  The Democrats will need at least 51 votes in the Senate to pass the bill, however, and several members from their own party, including Ben Nelson of Nebraska and Blanche Lincoln of Arkansas, have already voiced concerns about the negative impact these changes will have on the loan companies and their employees.

The House Education and Labor Committee has already tried to discredit the claims of those who want to keep the loans with private lending companies. Rachel Racusen, communications director for the Committee was quoted as saying:

Lenders’ claims about job losses have already been debunked as another scare tactic to save their sweetheart deal.  While this legislation will trim the profits of banks, it will not lead to enormous jobs losses.

Democrats in favor of the bill add that the private lending companies will still be utilized for other loan services.  Some point to the alliances created in the Senate between loan companies and Senators.

Dissenters of the loan reform are missing the bigger picture concern: the benefits reaped by society through the intellectual development and financial security for America’s students.  Senator Patty Murray of Washington said:

My own personal perception is, when we have thousands of kids on the street marching because they can’t get into our universities and don’t have the capability of pay for college, this is the best time for us to act.

Medical Education & Health Reform

John Argyropoulos Teaching Medicine at the Hospital of the Kral in c. 1448

[Ed. note: As noted in the post above, we are very pleased to welcome Associate Dean & Professor of Law Kathleen M. Boozang, J.D., LL.M., to Health Reform Watch today.]

The news has been much absorbed by the “scandals” associated with physician conflicts of interest arising out of their relationships with the pharmaceutical and medical device industries. Concerns include the potential biases created by industry funding of continuing medical education, the impact on patient care of physician activities as paid industry consultants and promotional speakers, as well as the impact on the integrity and patient safety of industry-funded research.  Analogous issues emerge from industry funding of medical schools themselves.

A pervasive conception of systemic health care reform would provide the opportunity to address many of these problems.  Academic medicine’s drive for money arises not only from the amount of uncompensated care they provide to the under- and uninsured, but from the structural flaws of the funding mechanisms for medical education and research in the United States.  According to the June MedPac Report on medical education,  it is unclear how much it actually costs to train new physicians, partly because of the multiplicity of funding sources.  While it could be that the funding is sufficient, medical school faculty and deans nonetheless find themselves under tremendous pressure to raise money from government grants, industry relationships, and clinical practice to support themselves. This pressure increases as constrained state budgets contribute less to public universities. Income from physician practice plans is leveling off as academic medical centers become unappealing participants in managed care plans — they too frequently focus insufficiently on primary care, and managed care increasingly balks at contributing to the costs of medical education which are built into academic hospital rates. Further, many academic medical centers are less nimble and efficient than the multi-practice plans and surgi-centers pervasive in many communities.

While greed and poor judgment are certainly factors driving some physicians’ relationships with industry, academic medicine’s over-reliance on “alternative revenue” streams can also be explained by the irrationality of the extraordinarily complex mechanisms for funding medical education and research. More frustrating is Medicare is spending $9 Billion annually to new train physicians to function in a health care system that is hopefully short-lived in its current form.  Meaningful healthcare reform will rest on reform of the delivery and finance systems — new health care professionals must be educated to perform in this reformed environment, which should involve increased collaboration between physicians and allied healthcare professionals; treatment of patients outside of the hospital; and knowledge of comparative effectiveness of alternative therapeutic options.

Health care reform should condition future financing of medical education on the absence of collaborations that create conflicts of interest that threaten the integrity of the medical profession.  It should also jumpstart radical reform of the content, methodology and quality of educating medical students, residents, and physicians, who are the linchpin to changing how we deliver healthcare.  The plan for systemic reform should compel a reconceptualization and expansion of allied health care professionals’ roles in health care delivery to address cost, access, quality, and error avoidance.  Finally, the vision for the future should commit to resolving the inequities in the health care status of all who live in the United States, an issue whose solution is inextricably linked to producing a sufficient number and variety of health care providers available in every part of the country who have a broader conception of health care, with the knowledge and skills to achieve the goals of health for all.

States Respond to College and University Health Care Practices

A little while back, NPR Morning Edition reported that states are taking a closer look at how health insurance and care is provided at colleges and universities. You can listen to the broadcast or read its transcript here.   While many colleges and universities simply require proof of insurance for admission (and offer a school-sponsored plan to uninsured admitted students), some schools charge an additional health fee or even require participation in the school’s particular plan.  Students with their own insurance who opt-out of the school plan, if there even is such an option, often find that on-campus health facilities will not accept their private insurance and that they must pay for treatment with cash.  Even worse, a recent survey showed that less than one quarter of such out-of-pocket expenses are in turn reimbursed by students’ private insurance companies.  This dilemma has caused many parents to purchase the school sponsored insurance, despite the fact that their child is already insured– effectively causing them to pay double. Nonetheless, Chad Henderson, director of health services for the University of Rhode Island and president of the American College Health Association, told NPR that school-acceptance of private health insurance can be “an administrative nightmare” because of “multiple carriers with multiple different policies, multiple different beneficiary bundles.”

Photo by taberandrew via Flickr

Student medical debt, despite student medical insurance coverage, has increasingly become a concern.  The Boston Globe recently highlighted efforts of Massachusetts state regulators that would require colleges and universities to tally and report the amount of student medical care liability which surpasses school provided insurance coverage.  The proposal is in part a product of the diligent efforts of student organizers at Massachusetts’ Tufts University, who formed the Student Health Organizing Coalition.  Tufts Daily, the student newspaper of Tufts University, reported on the state effort in Massachusetts, as well as the efforts of Attorney General Andrew Cuomo in New York State.  Cuomo recently launched an investigation of New York colleges and universities that will most likely lead to disclosure requirements similar to those proposed in Massachusetts.

Other states are seemingly less skeptical of schools’ involvement with health insurance.  Read more

Doctors and Debt

An article in the NY Times reports that The New England Journal of Medicine has said that “Almost one-quarter of U.S. medical students now graduate from medical school with $200,000 or more in debt, an expense that limits entry to the profession.”

A graph which tracks various educational costs and doctor compensation in relation to the CPI over the last 10 years accompanies the article.

Of particular note, Over the last 10 years:

The CPI has risen slightly more than 30%

The cost of:
Public 4-year undergraduate tuition has risen over 100%
Private 4-year undergraduate tuition has risen over 70%

Public “in state” med school tuition has risen over 100%
Public “out of state” med school tuition has risen 70%
Private “in state” med school tuition has risen 50%
Private “out of state” med school tuition has risen roughly 45%

The median compensation for:
All medical specialists has risen roughly 42.5%
Primary care physicians has risen roughly 30%

The median compensation for primary care physicians has risen slightly less than the CPI.

In a recent post, we noted that the AMA has predicted a future shortage of 35,000 to 40,000 primary care physicians. See full NY Times article and graph here.