Medicare and Residency

Interestingly, Medicare also pays for residency education. Residents are the poorly paid workhorses that do the day-to-day work in hospitals and clinics. Although governmental subsidy of post-graduate training is not unexpected, the fact that Medicare covers it surprises me. Taxes collected for Medicare pay residency programs to train future generations of physicians. In 2008, 2.7 billion dollars were paid as resident salary and benefits, and 5.7 billion dollars were paid to teaching hospitals for indirect costs. Because funding has remained fairly constant, the number of residents trained is constant. However, we're reaching a point where there aren't enough doctors; patients are getting older, health insurance is expanding, but there simply aren't enough providers to see everyone. Furthermore, we can't increase the supply of doctors because Medicare doesn't have the money to do so. Even if medical schools increase enrollment (which they are), the physician supply will be limited by residency spots which, in turn, is limited by Medicare's budget. This is a strange and perhaps unwieldy system, but it seems to be here to stay.