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The Costs and Returns to Medical Education



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The Costs and Returns to Medical Education By Nicholas Roth UC Berkeley Abstract By treating medical school tuition payments and the opportunity costs of foregone wages as investments in human capital I calculate the internal rates of return and the net present values of those investments across a range of medical specialties I calculate these values under two different sets of assumptions I also use two different discount rates to calculate net present values Radiation oncologists radiologists and orthopedic surgeons enjoy the greatest returns on their investments while rheumatologists general pediatricians and endocrinologists experience the lowest returns I also find physician median earnings to be very good predictors of net present values It is not clear whether physicians experience increasing decreasing or steady returns to scale for investments in additional years of residency training An analysis of physicians who sub specialize may help to answer this question Special thanks to Professor Ron Lee Harrison Dekker at the UC Berkeley Data Lab the Research and Data Department at AAMC in particular Program Specialist Lauren Johnson and especially to my father Robert J Roth M D for his invaluable insight and assistance 2 Introduction Health care policy in the United States continues to divide and provoke us With the passage of the Patient Protection and Affordable Care Act on March 23 2010 President Obama enacted massive social legislation to dramatically change the health care market By 2019 it is projected that the percentage of U S citizens possessing health insurance will increase by ten to 95 in total i It seems logical to think that we may need more doctors to accompany this anticipated rise in health care demand Expanding the health care labor supply however does not seem to be an inexpensive quick or easy process There are many things to consider when we think about trying to increase the supply of doctors In making sense of the health care labor market



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