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For Young Doctors Drowning in Debt, Legislation Offers Lifeline

Andrew Kitchenman | December 17, 2013

Proposed bill would forgive medical school loans up to $200K if doctors stay in NJ

rodrick stewart
Medical school student Rodrick Stewart speaks in support of a bill that would forgive up to $200,000 in debt for young doctors who stay in the state. To his right is medical resident Lisa Draucikas

A loan-forgiveness plan could help ease New Jersey’s shortage of primary care physicians while providing relief to young doctors burdened with huge medical-school debt.

A bill, A-1269, would forgive loans up to $200,000 over four years to doctors who work in or near New Jersey municipalities with a relatively high percentage of low-income residents.

The state will have a shortage of 2,800 doctors by 2020, including 1,000 fewer primary care doctors than needed, according to the the New Jersey Council of Teaching Hospitals.

Primary-care doctors have long expressed concern about the combination of rising medical school costs and the pay differential between them and specialists, who often have several times the income. This often leads doctors trained in New Jersey to choose specialties other than primary care or to practice primary care in states with a lower cost of living that New Jersey.

A 21-year-old loan redemption program for primary care practitioners has drawn few doctors because of its restrictive standards, such as only applying to doctors working for practices in cities with few medical practices.

The new program would be more generous, paying up to $50,000 annually and $200,000 over four years compared with a maximum of $33,600 annually and $120,000 over four years in the current program.

It’s received enthusiastic backing from medical students in the state.

Rodrick Stewart, a third-year medical student at Rowan University’s School of Osteopathic Medicine, spoke in support of the bill. He estimates that he and his wife will graduate with roughly $500,000 in education loans.

“It keeps me up at night,” said Stewart, who was born in Trenton and would like to practice family medicine in the state.

The new program would also cast a wider geographic net, including practices that are within five miles of a municipality in which at least 20 percent of residents have income less than 150 percent of the federal poverty line, which currently amounts to $17,235 for a single person and $35,325 for a family of four. This will allow it to cover a broader range of cities and townsthan the current program, which serves 53 municipalities.

While the bill is intended to serve low-income communities, allowing funding for doctors who work within five miles of these municipalities could open up the possibility that practices in high-income areas will benefit.

But bill proponents note the measure allows state officials to determine which applicants are more likely to serve low-income workers. It also requires all practices that employ loan-forgiveness recipients to accept Medicaid patients and to charge other low-income patients based on their ability to pay.

The current program serves several health professions in addition to doctors, including dentists, advanced practice nurses, certified nurse midwives and physician assistants. This program won’t be eliminated, but its $1.5 million in annual funding will be split in half, with $750,000 going to the new program, which will only serve doctors.

The new program is focused on primary care doctors, including those focusing on family medicine, pediatrics, internal medicine. and obstetrics and gynecology. In addition, state officials would be allowed to add other specialties if the state has a shortage.

The new initiative also includes an incentive for practices that hire doctors in the program: They won’t have to pay state income tax on all of the income the practice receives from New Jersey Family Care, the state’s Medicaid insurance program for low-income residents.

Applicants will be given greater weight if they attended high school, college, medical school or a medical residency program in New Jersey. The doctors selected for the program can also work part-time, but they will see the amount of debt forgiveness cut by half.

New Jersey Council of Teaching Hospitals President and CEO Deborah Briggs noted that 77 percent of New Jersey medical residents who went to high school or college in New Jersey choose to practice in the state, while only 34 percent of those from other states choose to practice in New Jersey.

Chelsea Brower, a fourth-year student at Rutgers New Jersey Medical School in Newark, said the new loan redemption program would help her to stay near her family in Mountain Lakes. Without it, she said she would be more likely to practice primary care “in other states with higher salaries for family physicians doing what I want to do,” which is to serve urban, low-income patients.

Claudine Leone, lobbyist for the New Jersey Academy of Family Physicians, said the benefit of including practices that are just outside of low-income municipalities is that these practices tend to be in a stronger position to hire new doctors, since their patients include a mix of low-income patients and those with higher-paying private insurance.

While nearly half of those who participated in the current loan-forgiveness program in its first 15 years were doctors, that percentage has fallen to one-third in recent years from 2007 to 2012. Leone attributed this change to the growing financial difficulty that medical practices have encountered in the low-income municipalities eligible for the program.

“It’s been hard for primary care medical practices to continue to accept new patients into Medicaid,” Leone said, adding that this has contributed to them hiring fewer doctors.

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