Medicare Graduate Medical Education Funding is Not Addressing the Primary Care Shortage: We Need a Radically Different Approach

A growing body of evidence shows that areas with robust primary care systems tend to have better outcomes and lower per capita costs than areas that rely more on specialists. Over the past several decades, the US medical education system has produced an increasingly specialized physician workforce without any strategic direction toward achieving a socially desirable mix of primary care physicians (PCPs) and specialists. At the same time, health care reforms, such as patient-centered medical homes and Accountable Care Organizations (ACOs), rely more on PCPs and other providers who are equipped to coordinate their own care with the care of specialists. Demographic trends signal a growing need for such coordination as the population ages and patients with multiple chronic conditions become more prevalent. Despite these trends, physicians in training tend not to select primary care or related specialties, making it difficult to achieve reforms that rely on an adequate supply of PCPs. In this paper, we examine the ways Medicare pays for physician and hospital services and subsidizes graduate medical education (GME) in teaching hospitals. Looking at Medicare’s role through the lens of the medical education marketplace, we conclude that Medicare’s GME subsidies have relatively little effect on specialty mix. Medicare’s physician payment policies, however, through their effect on widening the gap between PCPs’ and specialists’ incomes, skew the choices made by doctors when selecting residency positions and entering into medical practice and are therefore an important determinant of the PCP/specialist mix in the US. The next section provides an overview of how medical education is structured and financed in the US. We then present an informal model of the market for GME services, followed by an analysis of how the income gap between primary care and specialist doctors affects physician specialty mix in the US. An examination of how Medicare influences the decisions of both consumers and suppliers of GME services is followed by a discussion of policy options and a concluding section that summarizes Medicare’s important role in medical specialty determination in the US.

Bruce Steinwald, Paul Ginsburg, Caitlin, Brandt, Sobin Lee, and Kavita Patel

Brookings

December 2018

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