Harsh Medicine for Medical Education : Medicare reform plans pose both threat and opportunity

Largely lost in the debate over Medicare’s future is the closely related issue of how to pay for the training of future generations of doctors. Since its founding in 1965, Medicare--the federally managed health insurance for the elderly--has heavily subsidized medical education through special payments to medical schools and teaching hospitals for the unusually high costs of what they do. It has helped produce the best medical system in the world.

But now Congress, attempting to save $270 billion in Medicare outlays over the next seven years, is eyeing the $10 billion in annual payments to medical education, considering deep cuts that educators say would undermine training and treatment.

Even before this, medical schools were struggling with the new economics of medicine. Managed care has drastically reduced the number of inpatients and has forced staff cuts. That may be cost-efficient medicine, but it doesn’t necessarily make for good medical training.

UC FACES BIG LOSS: Despite forecasts of large surpluses of doctors after the turn of the century, particularly of specialists, teaching hospitals still fill 25,000 residency positions yearly. Since the nation’s medical schools graduate only 18,000 doctors a year, the remaining 7,000 positions are filled by foreigners.

Thus congressional leaders see room to cut. They are looking at trimming three funding streams: direct graduate medical education, to reimburse hospitals for direct costs of training residents and interns; indirect medical education, for the extra burden of treating the most severely ill, and disproportionate share hospitals, to compensate teaching hospitals for caring for the poor.

Together, the five UC medical centers receive about $150 million a year from these three sources, or 9% of total revenues. The UCLA Medical Center is bracing for a $70-million loss over seven years. Other U.S. teaching centers are in the same boat.

Key Republicans from the states where most doctors are trained--New York, Texas and California--recognize the problem. The Medicare overhaul passed Thursday by the House would set up a new trust fund for medical education, financed partly by ending certain business tax breaks and by Medicare subsidies, but substantially reduced ones. The Senate is yet to act. President Clinton has said he would veto a bill like that approved in the House.

A trust fund would still mean harsh cutbacks, but the idea is welcomed by the Assn. of American Medical Colleges as a step toward creating a broader support base for medical education. It no longer makes sense to put the main burden on one program, Medicare. The schools hope for a small tax on all health insurance premiums, including private insurers, an idea worth considering.

NEED FOR SELF-HEALING: The issue of taxpayer subsidization of foreign doctors is complex. Given the doctor surplus, many in Congress want to end it. But foreign doctors are crucial to staffing many inner-city hospitals--unpopular work places among American physicians--and they cannot be eliminated without a high social cost.

Whatever Congress does, medical schools must heal themselves. They remain too rooted in training doctors for a system based too heavily on fee-for-service and acute hospital care by specialists. Medical leaders must ask whether we still need 125 medical schools and 400 major teaching hospitals. The practice of medicine is rapidly moving away from big hospitals, toward local clinics and general practitioners’ offices.

The great teaching hospitals will always be needed to treat the chronically and desperately ill. But their leaders must now look beyond the old, inefficient economics under which residents are used to staff hospitals. The current fiscal crisis should be a stimulus to action.