Microeconomic Analysis Essay
The purpose of this paper to is outline and highlight the demand and supply associated with the need for physicians in today’s marketplace. In a microeconomic analysis, we will dissect the supply of physicians versus the needed demand, the elasticity of needs, total of production pricing, and profit or loss connected with this career choice.
The requirements to become a physician can be timely and quite costly. The process of advanced schooling of physicians in the United States can be a rather time extensive proves that involves a four year degree (undergraduate education), medical school (four more years of schooling) and graduate medical education which is commonly referred to as a residency (http://www.ama-assn.org/ama/pub/education-careers/becoming-physician.page?). Once you have completed these levels of formal education you still have to obtain a license in order to practice medicine. According to the Henry J. Kaiser Family Foundation website there are 893,851 physicians/doctors in the United States. This number is derived of over 425,000 doctors and over 68,800 specialists in numerous fields (Total Active Physicians, 2014).
If the system for bringing you primary care in 2020 were to remain basically the same as it is at this time, there could be a shortfall of around 20,400 physicians. Even though the need for primary care is anticipated to grow through 2020, largely in part due to increases in the life expectancy and population expansion and from increased insurance coverage as the Affordable Care Act (ACA or Obamacare) is brought into the mainstream and everyone is required to have at least a minimal amount of coverage. With more and more people gaining insurance, the need for physicians will exponentially. With regular preventative care, life expectancy will increase as well.
The ACA comprises of numerous reserves and enticements to increase the reserves of and progress the delivery of physicians across the board, as well as convert the current health care delivery system. There has never been a better time to join the growing health care industry as a physician. Clearly at this point in time, there is more of a demand, than there is a supply for physicians. With such a demand in place and with a projected shortage of over 20,000 doctors, it would seem like an easy decision to choose this career path. Only time will tell if the pay will continue as history has shown, but a career in the medical field is still a great investment.
The need for physicians is expected to grow, due to increased life expectancy and a growth of the population. Increased life expectancy and population expansion are anticipated to account for over 80% of the adjustment in need between the years 2010 and 2020. The remainder in the anticipated demand change is due to the assumed enlargement of health insurance with the execution of the Affordable Care Act. This also assumes that states will increase the use of Medicaid. Founded on today’s designs of health care use, the need for physicians is anticipated to expand more quickly than the supply of physicians can currently support. The amount of physicians is anticipated to be raised from over 200,000 Full Time Equivalents in 2010 to over 220,000 Full Time Equivalents by 2020, which is over an 8% increase.
The need for physicians is anticipated to grow by over 28,000, from right at 212,000 Full Time Equivalents in 2010 to over 241,000 in 2020, which is a 14% increase. Without no change in how health care is supplied, the need in the supply of physicians will not be able to meet the demands by 2020, leaving an anticipated shortfall of over 20,400 doctors. Even though this shortfall is not as large as prior studies have found, the shortage of doctors is still quite substantial (Projecting the Supply and Demand for Primary Care Practitioners, 2013).
The hiring of doctors, specialists and surgeons should grow 14 to 18% from 2012 to 2022. This is a lot faster than the average in most other job fields. As discussed earlier, this progress will transpire due to the continued increase of healthcare-related industries. Pay for doctors, specialists and surgeons are in the top pay scale for almost all job fields. In a study by the Medical Group Management Association’s Physician Compensation and Production Survey, the average compensation for doctors in all fields varied with different types of practice or specialty. In 2012, doctors working in the field of primary care averaged an annual compensation of over $220,000 and doctors in medical specialties annual compensation averaged over $395,000 (Bureau of Labor and Statistics, 2014). How much does medical school cost?
In the school year 2013 to 2014, yearly tuition and fees at a public medical school were around $31,700 for instate tuition and over $55,200 for out of state tuition for students. In private colleges or universities, college costs and fees were over $52,000 for instate tuition and over $50,000 for out of state tuition for students. These prices does not include your health insurance, cost of a place to live/boarding, or expenses associated with day to day living. It has been found that the majority of these medical students have to borrow at least some of the money for the expenses required to finance these years of their secondary education. In 2013, the Association of American Medical Colleges (AAMC) found that the average debt for graduating medical students was over $175,000.
This is a very significant amount of debt to start out a career with. However, a medical education and career can be an investment that will eventually pay for itself and allow you to have a very comfortable life. An average salary in family medicine for the same year was $161,000 (Pay for Med School, 2014). With a 10 year fixed rate loan at 6% interest, you would be making a $1,962 per month payment. With a $161,000 annual salary, this will give you $13,416 per month. Making a $1,962 a month loan payment will still leave you with $11,454 before taxes to live on. At the end of the ten year loan repayment this will leave you debt free and above the median income level of households within the United States and in the upper 10% of family income according to www.mybudget360.com.
With the demand increasing for physicians, the price should be decreasing as more physicians are demanded increasing elasticity. With more of a selection available there should be plenty of opportunities to gain employment within this career field. If the law of demand means that the demand will slope down when the price is low, then the demand should be lower due to lower insurance costs associated with healthcare. Because the supply is lower than the demand it will change how much (how many) doctors are produced.
Based on the above findings, I would highly recommend a career as a physician. With a possible median income of $161,000, this will place you in the upper middle class range and can afford a very comfortable lifestyle. Of course, this has to be weighed against your future college plans and the ability to achieve/maintain sufficient grades to be selected for medical school. With a strong work ethic and a will to succeed you should be able to complete the requirements necessary to fulfill your dreams to become a physician.
Bureau of Labor and Statistics. (2014, January 28). Retrieved January 21, 2015, from http://www.bls.gov/ooh/healthcare/physicians-and-surgeons.htm
How Do I Pay for Medical School? – Pay for Med School – Aspiring Docs – Students. (2014, December 28). Retrieved January 25, 2015, from https://www.aamc.org/students/aspiring/paying/283080/pay-med-school.html
http://www.ama-assn.org/ama/pub/education-careers/becoming-physician.page? Projecting the Supply and Demand for Primary Care Practitioners Through 2020. (2013, November 1). Retrieved January 22, 2015, from http://bhpr.hrsa.gov/healthworkforce/supplydemand/usworkforce/primarycare/
Total Professionally Active Physicians. (2014, December 18). Retrieved January 22, 2015, from