Medical residency loan program considered

A bill that would create a loan repayment program for medical residents was considered by the Health and Human Services Committee Feb. 20.

LB196, introduced by Lincoln Sen. Kathy Campbell, would amend the Rural Health Systems and Professional Incentive Act by creating a resident loan repayment program. Campbell said the program would serve as an incentive to medical residents to practice their specialties in designated shortage areas in Nebraska.

Under the bill, a qualified applicant must be enrolled or accepted in an approved medical specialty residency program in Nebraska and agree to one year of full-time practice in a designated health profession shortage area. The medical resident also would be required to accept Medicaid patients in his or her practice.

Loan repayment would be limited to $40,000 per each year of residency, not to exceed $120,000 per recipient. A resident who did not adhere to the terms of the act would be required to repay the state 150 percent of the outstanding loan principal at an 8 percent annual interest rate from the date of default.

Campbell said adding residents to the state’s health care provider incentive program would help Nebraska create a stronger health care system.

“[The] chief goal is to create an incentive for health professionals to practice in shortage areas,” she said.

Rowen Zetterman of the Nebraska Medical Association testified in support of the bill, saying a loan program would make Nebraska more competitive when recruiting medical residents. The ability to begin tackling student loan debt while in residency translates to a significant savings in interest over time, he said.

“Most people don’t start paying back during residency because they can’t afford it,” Zetterman said, “so the total just increases.”

The bill also would increase the financial assistance limits of two existing programs under the act.

Limits on student loans would increase from $20,000 to $30,000 per year, not to exceed $120,000 for medical, dental or doctoral-level mental health students. Limits on loan repayment for physicians, dentists and psychologists would increase from $20,000 to $30,000 per year of full-time practice in a designated health profession shortage area, not to exceed $90,000 per recipient.

Loan repayment limits would increase from $10,000 to $15,000 per year, not to exceed $45,000 per recipient, for physician assistants, nurse practitioners, pharmacists, physical therapists, occupational therapists and mental health practitioners.

Justin Shirk, a third year dental student at the University of Nebraska Medical Center, testified in support of raising the limits on current incentive programs. Dentists graduate with an average of $200,000 in debt, he said, and the average cost of purchasing a practice is $300,000 to $500,000.

In addition, he said, opening a rural practice is not lucrative because the patient populations often are self-employed and without dental insurance.

“My classmates and I are looking at some pretty staggering [amounts] of indebtedness,” Shirk said. “Having this bill in place would make a rural practice more attractive.”

No one testified in opposition to the bill and the committee took no immediate action on it.