How Medicare Is Causing a Doctor Shortage

By 2030, Medicare numbers are projected to increase by 10,000 a day. With an expected shortage of doctors, what can Medicare do to ensure there are enough doctors to care for them?

This article will explore the shortage of doctors, the causes, funding, and how Medicare can address the problem.

Doctor shortage

The Association of American Medical Colleges (AAMC) has been warning of a shortage of doctors for years. Their sixth annual report, released in June 2020, estimated that by 2033 the U.S. will be short of 54,100 to 139,000 doctors.

Looking closer, primary care physicians will account for 21,400 to 55,200, specialists 17,100 to 28,700, and medical specialists 9,300 to 17,800. These estimates are based on the growing population size, the number of current physicians retiring, and the number of available training positions for new physicians.

retired doctor

The AAMC’s 2020 Physician Specialty Report identified 938,980 active physicians. When you consider that 45% of physicians are 55 or older, Some 423,000 physicians will be approaching retirement age within the next decade.

The problem is that doctor shortages aren’t just in the future — we’re facing shortages now. Depending on where you live in the United States, certain areas are federally designated as Health Professionals Shortage Areas (HPSA).

As of August 2021, nearly 7,300 of these districts lack primary care services. More specifically, more than 15,000 suppliers are required to adequately reach the 83 million people living in these HPSAs.

There is also a need to increase mental health care in the 5,812 HPSAs covering 124 million people. It will take more than 6,400 suppliers to close this gap. Likewise, rural areas tend to have more defects than urban areas.

While the Medicare Payments Advisory Committee reports that most Medicare beneficiaries are currently able to access care, some gaps remain. According to a 2020 survey, 38% of Medicare beneficiaries had difficulty finding a new primary care physician in the past 12 months. Another 20% had difficulty finding an expert.

Graduate Medical Education and Physician Training

After completing their undergraduate education, potential physicians enter medical school or osteopathy. Once they graduate, they’re technically doctors with an MD or MD, but they can’t legally practice medicine yet. They must first complete a graduate medical education in primary care or their chosen specialty.

Graduate Medical Education

Graduate Medical Education (GME) refers to residency and fellowship programs. Many states allow doctors to obtain medical licenses if they have only completed a one-year residency.

Residency is the bottleneck to becoming a practicing physician. Regardless of how many students graduate from medical school, the number of residency positions determines the number of physicians entering the workforce in any given year.

According to the National Resident Matching Program, there are 38,106 vacancies across all majors in 2021, with 48,700 applicants competing for these positions.

Depending on the major, the length of residency varies from three to seven years. Board certification requires completion of a residency program. However, not completing a residency program can make it more difficult to obtain affordable malpractice insurance and limit employment options at established institutions.

At the current match rate, approximately 38,000 residents enter the residency program each year. In the best-case scenario, 380,000 doctors could enter the workforce over the next decade. This number will vary based on the number of years of training required for a given residency program and the number of physicians who complete the training.

Graduate Medical Education Funding

Unlike medical students who pay to attend school, every residency position is a paid position. However, it’s important to understand that GME funding is more than a stipend to residents or fellows.

GME funding is divided into two parts: Direct GME (DGME) and Indirect Medical Education (IME). The former pays resident salaries, teacher supervision, certification fees, administrative fees, and institutional management fees. The latter addresses the additional costs that come with running a teaching hospital.

While hospitals and training institutions also cover these costs, most funding for graduate medical education comes from the federal government, including:

  • Centers for Medicare and Medicaid Services
  • Ministry of Defense
  • Department of Veterans Affairs
  • Management of health resources and services (including the Children’s Hospital GME Payment Plan and the Teaching Health Center GME Payment Plan)

Of these sources, Medicare contributes about 85 percent of federal funding.

Medicare and Doctor Shortages

While Medicare provides more money than any other source, many have criticized the program for not doing enough.

In 1997, the Balanced Budget Act set a cap on the number of residents supported by Medicare, at approximately 90,000 per year. Therefore, there is no existing residency program that could add more residencies to their hospitals other than those available in 1996.

The cap would dampen Medicare spending but hinder residency programs from adapting to future physician shortages. This does not mean that there have been no new residency places since 1996. Existing programs can add positions through other funding sources, state, private, or others.

New Medicare-funded GME positions can also be added to hospitals that do not have a pre-existing residency program or to newly constructed hospitals. Since the Balanced Budget Act of 1997, the total number of resident positions has increased by 27%.

Over the years, multiple laws have been proposed to increase the number of capped Medicare positions. Unfortunately, it took almost 25 years to succeed.

The Omnibus Appropriations Act of 2021 (HR 133) created 1,000 new Medicare-funded GME positions in rural and urban teaching hospitals. Still, this is not enough to offset the current and projected shortage of doctors.

Focusing on areas of health professional shortages, the Centers for Medicare and Medicaid Services has increased funding for 1,000 new Medicare-funded residency positions in its Fiscal Year (FY) 2022 Inpatient Anticipated Payment System (IPPS) final rule. Starting in 2023, 200 places will be added each year. They are designed to provide relief to underserved rural communities.

Ways to Curb the Physician Shortage

The shortage of doctors is not going away anytime soon, it will take years of training to go away. Increasing physician burnout rates as high as 44% also threaten the time physicians spend in clinical practice.

There is no easy solution. Medicare could expand its cap on residency coverage or remove it entirely to generate more GME opportunities. Ultimately, patients will benefit by having access to more doctors, but this may reduce the amount of dollars in Medicare trust funds used for direct patient care, which is your Part A benefit.

Other federal and state agencies may contribute a higher percentage, but this may redirect funding from other areas of need. Alternatively, professional medical institutions can make donations to residency programs.

It is also possible to allow private entities to fund residency programs, but care needs to be taken to avoid potential conflicts of interest.

Improving the efficiency of the U.S. health care system and finding ways to reduce provider burnout could keep doctors working longer. Not only will this reduce the number of physicians leaving clinics each year, but it will also slow the projected shortage of physicians.


Medicare, the primary source of funding for U.S. residents, currently limits the number of residents it covers. If Medicare doesn’t act, there could be a shortage of doctors when the aging population needs them most.

VigorTip words

The way the medical education system works may not be relevant to your daily life until you need a doctor but can’t find one. To advocate for healthcare for yourself and your loved ones, learn more about these issues and get involved in supporting solutions.