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Kaiser's medical school rolls out free tuition for first 5 classes

Data: Association of American Medical Colleges; Chart: Naema Ahmed/Axios

Kaiser Permanente's new School of Medicine will cover all tuition and health insurance costs for each student in its first 5 graduating classes.

The big picture: More than a quarter of medical school students graduated with no debt in 2017, up from 15% in 2010. The number of debt-free doctors — one of the highest-paying professions — could rise further if other institutions follow the lead set by Kaiser and NYU's medical school.

By the numbers: 1 year of tuition at Kaiser's medical school, which will have active students by next summer, costs about $55,000. Kaiser's health coverage costs about $6,500 per year.

  • Covering those costs for 4 years for the first 5 classes, each of which will enroll 48 students, means Kaiser will be shelling out roughly $60 million from its own coffers. (Kaiser will not cover students' estimated $34,500 in annual living expenses.)
  • That's basically a rounding error for Kaiser, which owns health plans, hospitals and doctors' clinics and collected $80 billion of revenue in 2018. The multiyear project also represents just 3% of Kaiser's $1.9 billion operating income in 2018.
  • The school will be funded through Kaiser's "community benefits" program, which not-for-profit health care organizations build as a way to justify tax exemptions.

What they're saying: The rationale for free med school is that it will encourage more minority and low-income students to enter medicine, where the average debt per graduate who borrows is $192,000, and it will hopefully push more people to choose lower-paying medical specialties over the highest-paying ones.

  • "We don't want debt to influence students' career choices," said Mark Schuster, dean and CEO of Kaiser's medical school. "We would like it so students can follow their heart and go into the work environment that feels right for them."
  • Schuster said the school will offer "substantial financial aid" after the first 5 classes, and that the real "innovation" isn't the full rides: "It's everything else we're doing to design an educational approach that will turn out phenomenal physicians."

Yes, but: After NYU announced its free tuition last year for all current and future medical students, economists and policymakers warned the move would merely subsidize education costs for an already-affluent group, and it would not guarantee disadvantaged students get chosen over others.