How Much Did You Pay To Train Your Doctor?

One thing that I love about being an insurance agent is that even after 25 years I learn something new every day.  Today I learned that a the residency programs to train many of our doctors is subsidized by Medicare.

Many doctors justify their high prices with, “It cost me tons of money to go to medical school.”  That may be a true statement but they did not pay for all their training.  If they participated in the National Residency Matching Program after they graduated from medical school but before they were licensed to practice medicine independently, we tax payers subsidized their training through our Medicare taxes.

In 2012 we tax payers helped pay the training expenses for 323,643 new doctors by subsidizing their residency programs.  It is important to remember that not every individual who starts a residency program will finish it and become an independent physician.  Residency is tough and takes a long time.  A typical doctor will spend 3-7 years in residency, depending on which field of medicine he wants to pursue.


According to the Department of Health and Human Services, the United States already has a shortage of doctors.  According to them, there are over 15,000 fewer primary-care doctors than are required.  The areas that are most under-served are rural areas.

The Association of American Medical Colleges anticipates that shortage to grow to over 130,000 by 2025.


In 2011 Medicare spent over $120,000,000 to support the residency programs of 855 resident doctors.  That money was used to provide salary and benefits to the learning doctors as well as pay for their malpractice insurance.  It was also used for expenses for their training.


I must admit that I was being misled.  Until I read the Bloomberg article, “Doctor Shortage May Swell To 130,000 With U.S. Cap,” I did not know that many doctor’s training was paid by Medicare.  I thought I knew a lot about Medicare but this revelation only highlights how little I really know.

As I ponder this article, several thoughts come to my mind.  Among the more positive ones are:

  • Young people who elect to pursue a career in medicine, still have to pay for their under-graduate training.  Pre-med and Medical school is not cheap.  When they graduate, if they had to rely on college loans, they are buried in debt that has to be repaid.  They need a higher income for several years just to repay their loans and live a comfortable life-style.
  • Residency is not easy.  Young people are often over-worked and over-stressed during their residency training.
  • The young people who are in residency programs represent some of the best and brightest minds in our nation.
  • The shortage of doctors in the United States is a real problem and not just one that is made-up for political reasons.

However, when I considered the other side, other questions came to mind.

  • Can a doctor really justify the high charges with, “I had to pay for my medical training?”  It appears to me that he only had to pay for his college training, like I had to.  If he was in one of these residency programs, tax-payers paid for at least half of his training and provided the money to pay him a salary while he was training.
  • Why is the cost of training doctors buried in the Medicare budget?  I understand that in a program that pays several billions of dollars in benefits each year, $120 million dollars is nothing.  However, since it is not used directly for the benefit of Medicare beneficiaries, why is it not paid out of a different fund?