By Catherine Rampell, New York Times, Dec. 14/15, 2013

[....] It turns out that the real bottleneck is at the post-med-school step: residencies, those supervised, intensive, hazing-like, on-the-job training programs that doctors are required to go through before they can practice on their own.

There has been little growth in residency slots; they totaled 113,000 in 2011-12, from 96,000 a decade earlier. Exactly why residencies have not increased faster is a subject of great debate in the health care industry.

Hospitals, doctors and med students usually give the same explanation: Congress is too stingy. After all Congress, through Medicare, subsidizes the vast majority of residency slots, at $10.1 billion annually, or an average of $112,642 per resident per year. Congress froze the number of subsidized positions in 1997, and hospitals argue that the best way to train more doctors is for Congress to open the spigot and fund more jobs.

Obviously Washington is not keen on doling out more money for anything right now, especially not for Medicare. But there’s a bigger problem with that argument: It’s not clear that hospitals actually need taxpayer money to pay for more residents, because those residents might actually be turning a profit for those hospitals right now. It’s hard to know, though, because hospital accounting is so opaque [....]

For further details on the Medicare program, see:

How Medicare Subsidizes Doctor Training
By Catherine Rampell, Economix blog @ nytimes.com, Dec. 17, 2013

My Economic View column on Sunday looked at medical residencies, the biggest bottleneck in the supply chain for doctors. Most of this “graduate medical education” training is subsidized by Medicare, for somewhat strange historical reasons sustained by both legislative inertia and the stakeholders who benefit from it. Here’s some detail about how the subsidies work [....]