The Centers for Medicare and Medicaid Services fund graduate medical education (GME) in the U.S. through payroll taxes -- to the tune of $9.5 billion per year. Only a portion of that actually goes to paying house staff salaries, though. The rest, academic medical centers have traditionally been free to spend more or less as they wish -- with virtually no accountability or auditing of where the money goes. The result: universities spend large chunks of GME funding on other areas completely unrelated to the intended purpose of training tomorrow's doctors.
The justification for this policy of internal "cross-subsidies" has always been the expressed need for flexibility due to the complex and increasingly difficult financial pressures endured by today's academic medical systems. Despite periodic efforts by Congress or other bodies at reform or discipline, the GME funding scheme has changed little over decades. However, in the new deficit-hawkish, budget slashing political environment, GME's immunity to change may be waning. John Inglehart explains further in the May 3 New England Journal of Medicine.
The scariest proposed change for GME administrators and health system CEOs is the idea of placing $3.5 billion of the ~$10 billion total outlay at risk in "incentive payments" each year, contingent on GME programs meeting government's objectives and metrics. (Some of these objectives would center on making tomorrow's physicians more team-oriented, guideline-obeying, and generally compliant with the Obama administration's long-term vision of a more centralized, expertocracy-directed health care system.)
GME's main political defender, the American Association of Medical Colleges, has stood strong in defense of the existing GME funding scheme for years, but seems to recognize that change is in the air and has signaled a willingness to discuss reform -- probably fearing that wicked funding cuts might be the alternative to negotiating.
Another proposal that periodically comes up is having all the payers involved -- governmental and private insurers -- explictly pay for GME funding in some new, more-transparent arrangement. To which the private insurers have answered, in effect, "Aren't we already doing this by paying academic medical centers higher reimbursement rates than we do community hospitals?"
Since the current GME funding system's opacity and "flexibility" means in many cases academic systems use it as a de facto discretionary account -- one they have become accustomed to using to finance non-GME endeavors -- some of them are likely to be losers if measures of accountability and review are incorporated into a new funding scheme. Let the political games begin!
Inglehart JK. Financing Graduate Medical Education — Mounting Pressure for Reform. N Engl J Med 2012;366:1562-1563.