Government-funded Physician Training: Are the Taxpayers Getting their Money's Worth?

May 14, 2014
By Doug Gavel, HKS Communications

The U.S. federal government spends nearly $16 billion dollars every year subsidizing the cost of training the next generation of physicians. But are the taxpayers getting their monies worth, and what are the impacts upon the nation's health care system? Those are two of the questions behind a new research article co-authored by Harvard Kennedy School Professor Amitabh Chandra and published in the New England Journal of Medicine.

"The Economics of Graduate Medical Education" examines the costs and benefits of the federal government's role in financing graduate medical education (GME), through both direct medical education (DME) and indirect medical education (IME).

"The conventional wisdom is that increasing GME funding is key to addressing any physician shortages, will lead to the production of more residents, and reduces the financial burden imposed by becoming a physician," the authors write. "This wisdom results in advocacy for increasing DME funding."

The authors find, however, that residents essentially pay for their own training, and GME funds are "treated as general monies going to their institutions [and are] often used in ways that are difficult to trace, assess, and justify."

Addressing the problem may require creative solutions, the authors argue.

"If the policy goal of federal funding for GME training is to alleviate physicians’ indebtedness or to encourage more medical school graduates to go into primary care practice, other strategies may be more effective — such as offering selective loan forgiveness or vouchers to offset tuition for trainees who opt for careers in primary care," the authors conclude. "Such strategies directly benefit the recipient physician instead of the training institution."

Amitabh Chandra is an economist, a professor of public policy and director of health policy research at the Harvard Kennedy School of Government, where he also director of PhD admissions and area chair for Social and Urban Policy. His research focuses on productivity and cost-growth in healthcare, medical malpractice, and racial disparities in healthcare.

Print print | Email email
Amitabh Chandra, professor of public policy

Amitabh Chandra, professor of public policy

"If the policy goal of federal funding for GME training is to alleviate physicians’ indebtedness or to encourage more medical school graduates to go into primary care practice, other strategies may be more effective," the authors conclude.