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Through the Medicare program, the federal government subsidizes graduate medical education--the training of resident physicians--in amounts that approach $6 billion annually. Those payments are projected to grow to more than $7.5 billion per year in 2000. Given the current concerns about the federal budget in general and the solvency of Medicare in particular, this is an opportune time to reevaluate Medicare's policy regarding graduate medical education (GME).

In response to a request from the House Committee on Ways and Means, this study provides an overview of the changing physician workforce and the effects of Medicare's GME policy on residency training and the teaching hospitals at which such training is based. Since today's residents are tomorrow's fully trained doctors, subsidies for training residents may have important implications for future access to medical care and the cost-effectiveness of that care. The study presents various options for GME policy and explores their implications. In accordance with the Congressional Budget Office's (CBO's) mandate to provide objective, impartial analysis, the study contains no recommendations.

James Baumgardner of CBO's Health and Human Resources Division prepared the study under the direction of Joseph Antos and Linda Bilheimer. Susan Labovich provided computer support, and Julia Matson Jacobsen offered valuable research assistance throughout all stages of the study. Outside CBO, Ruth Hanft provided many useful comments on an early draft. Within CBO, Richard Fernandez, Nancy Gordon, Corinne Manfredi, Alison Martin, Daniel Mont, Constance Rhind, and Roberton Williams contributed helpful advice and assistance.

Leah Mazade edited the study, and Christian Spoor provided editorial and production assistance. Sharon Corbin-Jallow prepared drafts of the manuscript. Kathryn Quattrone prepared the study for publication.
 

June E. O'Neill
Director
September 1995
 
 

SUMMARY

ONE - INTRODUCTION

• Background
• The Physician Workforce
• The Federal Government's Role in Shaping the Physician Workforce

TWO - ECONOMIC FACTORS THAT AFFECT THE CHARACTERISTICS OF THE PHYSICIAN WORKFORCE

• Effects of Medicare GME Subsidies on the Number of Residents
• The Linkage Between the Markets for Residents and for Fully Trained Physicians
• Historical Evidence

THREE - POLICY ISSUES AND QUESTIONS

• Access to Care
• Cost-Effectiveness of Health Care Delivery
• Special Activities of Teaching Hospitals

FOUR - POLICY OPTIONS

• Modify the Current System of GME Financing
• Restructure the System of GME Financing
• End Federal Financing of GME

APPENDIX - Supplementary Tables
 

TABLES
1.	GME Payments as a Fraction of Total Revenues of Teaching Hospitals, 1993
2.	First-Year and Total Residents by FMG Status, 1988, 1990, and 1993
A-1.	Distribution of Fully Trained Physicians Engaged in Patient Care, by Specialty, Selected Years, 1965 Through 1993
A-2.	Fully Trained Physicians Engaged in Patient Care per 1,000 People, by Specialty, Selected Years, 1965 Through 1993
A-3.	Distribution of Residents by Specialty, Selected Years, 1965 Through 1993
A-4.	Residents Engaged in Patient Care per 1,000 People, by Specialty, Selected Years, 1965 Through 1993
FIGURES
1.	Distribution of Fully Trained Physicians Engaged in Patient Care, by Specialty, Selected Years, 1965 Through 1993
2.	Fully Trained Physicians Engaged in Patient Care per 1,000 People, by Specialty, Selected Years, 1965 Through 1993
3.	Typical Patterns of Residency Training, by Specialty
4.	Distribution of Residents by Specialty, Selected Years, 1965 Through 1993
5.	Distribution Among Teaching Hospitals of Marginal Subsidies per Resident from Medicare, 1993
6.	Residents Engaged in Patient Care per 1,000 People, by Specialty, Selected Years, 1965 Through 1993
7.	Relationship of the Ratio of Physician Income to Opportunity Cost and the Number of Physicians per 1,000 People, 1946 Through 1982
BOXES
1.	Medicare's Subsidies for Graduate Medical Education
2.	Factors That May Influence the Number and Types of Residents

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