The debt ceiling: How could it affect HCPs?

By Jules Murtha | Fact-checked by Barbara Bekiesz
Published February 1, 2023

Key Takeaways

  • Reports of the US government reaching its debt limit have raised concerns as to how this could impact healthcare professionals (HCPs).

  • The debt limit refers to the maximum amount of money that the US government is permitted to borrow to finance existing legal obligations. To prevent the government from defaulting on its debts, spending cuts on Medicare, Medicaid, and student loan debt are being considered.

  • HCPs should consider becoming financially literate to prepare for potential changes to student loan debt forgiveness.

The January 19 announcement that the US government reached its debt limit has raised concerns over this issue’s potential impact on healthcare.

If Congress decides to default, the US could face “catastrophic economic consequences,” according to the US Department of the Treasury.[]

But if Congress doesn’t default, healthcare programs may see major funding cuts as part of efforts to help pay back the national debt. This could also impact President Biden’s plans to forgive student loan debt. Here are some ways in which the debt limit could impact healthcare and HCPs.

What is the debt ceiling?

On January 19, 2023, US Treasury Secretary Janet L. Yellen told Congress that the US government had reached its debt limit of $31.381 trillion.[]

In an attempt to prevent the government from defaulting on its obligations, the Department of the Treasury has the authority to implement what are known as extraordinary measures.[] Congress can also decide whether to raise the debt limit.

Congress has faced this decision before. According to an article published by the Bipartisan Policy Center, the government has raised the debt limit six times since 2017.[] By doing so, the US has avoided defaulting on its debts, an action that could possibly trigger a national financial crisis.

The Department of the Treasury defines the debt ceiling as the total sum of money that the government is allowed to borrow to pay its debts, saying the government uses this money to “meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.”

The debt ceiling cannot be used to authorize new purchases; rather, it only permits the government to finance existing legal obligations put in place by former presidents and Congress.

So, how does the debt limit problem affect healthcare?

Medicare as bargaining chip

When the US government has reached its debt limit in the past, Democrats and Republicans have used the situation to broker legislative leverage. It’s no different this time around.

According to an article published by Kaiser Health News (KHN), the GOP has promised to vote to raise the limit if Democrats agree to cut significant funding from Medicare and Medicaid programs.[]

This comes at a time when many HCPs, including nurses, doctors, and more, are dealing with the strain related to caring for a growing number of patients insured through Medicare and Medicaid and those with serious illnesses.

“I think [Republican legislators] know it’s really a touchy subject,” Victoria Knight, a journalist at, told KHN. “There are a lot of Medicare beneficiaries that don’t want the age increase. ... There’s some talk of increasing the age to 67 rather than 65. Last week in a press conference, [House Speaker Kevin] McCarthy said, ‘We’re Republicans; we’ll protect Medicare and Social Security,’ so they know people are talking about this.”

While Congress works out the details, other reporters are less concerned with the overall threat of default.

"We’ve been here before. We haven’t actually crossed the line before. So we’ll see what happens."

CNN journalist Tami Luhby to KHN

How student loans fit in

In addition to potential changes in Medicare and Medicaid programs, HCPs may be curious as to how the debt ceiling accounts for student loans—especially if they have any.

Some sources claim that the Biden administration’s decision to extend a pause on federal loan payments plays a significant role in the government’s inability to pay its debts. A federal court blocked the loan forgiveness plan, and the case is now before the Supreme Court.

An article published by Politico states that the latest extension is set to expire 60 days after the Supreme Court decides on the case—unless the administration finds a way to provide debt relief.[]

If litigation has not yet been concluded, however, the extension will expire 60 days after June 30, 2023.

This could amount to nearly $5 billion per month that the US government might have used to pay its existing legal obligations, the Politico authors wrote.

Financial literacy recommended

In the meantime, it may be wise for doctors to explore ways to reduce their medical school debt, according to an article published by the Association of American Medical Colleges (AAMC).[] This may require them to become financially literate.

"The smarter students are about finances, the better they’ll be at managing debt."

Ken Budd, AAMC

The AAMC author suggested that physicians research loan forgiveness programs, such as those available by working for the government or nonprofit organizations, as a way to help reduce medical school debt.

What this means for you

As the US government has hit its debt limit, Congress is debating whether to raise the debt ceiling or let the government default on its debts, which could spark a financial crisis. Issues important to HCPs include the proposed cuts to Medicare and Medicaid, as well as the suspension of President Biden’s student loan forgiveness program. Physicians may want to explore ways to lower their own student debt by looking into other avenues for loan forgiveness.

Read Next: What Biden’s student loan forgiveness plan means for doctors
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