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Title: The Cost of Primary Care Doctors
Resulting in 1 citation.
1. Glied, Sherry A.
Prabhu, Ashwin
Edelman, Norman H.
The Cost of Primary Care Doctors
NBER Working Paper 14568, National Bureau of Economic Research, December 2008.
Cohort(s): NLSY79
Publisher: National Bureau of Economic Research (NBER)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); College Graduates; High School Transcripts; Human Capital; Human Capital Theory; Labor Force Participation; Socioeconomic Background; Socioeconomic Status (SES); Training, Occupational

This study uses a human capital model to estimate the societal cost of producing a physician service. Physician human capital consists of the underlying human capital (productivity) of those who become physicians and the job-specific investments (physician training) added to this underlying capital. The value of physicians' underlying human capital is estimated by forecasting an age-earnings profile for doctors based on the characteristics in youth of NLSY cohort participants who subsequently became doctors. Published estimates are used to measure the total cost (wherever paid) of investments in physician training. These data are combined to compute the societal cost per primary care physician visit. The estimated societal cost per primary care physician visit is much higher than the average co-payment per primary care service and generally higher than the current Medicare compensation rate per service unit. The private return to primary care physician training is relatively low, in the range of 7-9%. At current levels of supply, the marginal social costs of primary care visits appear to be equal to or greater than marginal social benefits.

We conduct these analyses using the 1979 National Longitudinal Survey of Youth (NLSY79). The NLSY79 is a nationally representative survey of 12,686 men and women, which contains extensive information about the characteristics of sampled youth in their late teens (ages 14-22). The survey tracked these youth annually through 1994 and biennially since then. The NLSY79 collects an extensive array of information, including family socioeconomic characteristics, respondent background, occupational information, and annual income. The study also contains information about respondent aptitudes and achievements measured before they made choices about future occupations. The aptitude and achievement measures we use are the Armed Forces Qualification Test (AFQT) and High School GPA. The AFQT is a measure of trainability and is a majo r criterion for armed forces enlistment. The AFQT score is derived from select sections of the Armed Services Vocational Aptitude Battery (ASVAB), using a methodology developed by the U.S. Department of Defense. Of the entire sample, a total of 11, 914 youths (94%) completed the AFQT test. We compute high school GPAs from data gathered during a High School Transcript Survey conducted as part of the NLSY79 during 1980-1983. Transcript information was collected for respondents who were 17 years of age or older (at the time of the survey) and who had finished or were expected to finish high school in the US. Credits and final grades were collected for up to 64 courses, across all 4 years of high school. We used this information to compute a high school GPA. Of the NLSY79 sample, 8,778 (70%) of respondents provided complete transcript information. We compare future physicians to other college completers (since both physicians and non-physicians make comparable investments in college-level education). We also limit the sample to men who work full time (35 hours a week or more), since we will use data on physicians who are full time labor force participants.

Bibliography Citation
Glied, Sherry A., Ashwin Prabhu and Norman H. Edelman. "The Cost of Primary Care Doctors." NBER Working Paper 14568, National Bureau of Economic Research, December 2008.