The United States healthcare system stands at a critical juncture. A bipartisan group of lawmakers has introduced the Resident Physician Shortage Reduction Act of 2025, proposing to create 14,000 additional Medicare-funded physician training positions over seven years, starting in 2026. This legislative effort represents more than just numbers on paper—it’s a response to what healthcare experts warn could become one of the most severe physician shortages in American history, with potentially devastating consequences for rural and underserved communities.
The Scale of the Crisis
The Association of American Medical Colleges (AAMC) has painted a sobering picture of America’s healthcare future. The United States will face a shortage of between 13,500 and 86,000 physicians by 2036, according to AAMC projections published in March 2024. This enormous range reflects the uncertainty inherent in predicting complex healthcare workforce dynamics, but even the lower estimate represents a crisis of significant proportions.
The physician shortage isn’t merely a future concern—it’s already manifesting across the country. According to the State of the Primary Care Workforce, 2024, 66.5% of primary care Health Professional Shortage Areas (HPSAs) are in rural areas. This statistic underscores why the Resident Physician Shortage Reduction Act specifically prioritizes hospitals in rural areas and those serving populations with healthcare workforce shortages.
The Root of the Problem: Medicare Funding Caps
To understand why legislative intervention is necessary, one must examine the historical context of medical education funding. The cap on Medicare funding was set at each hospital’s resident count in the cost report period ending on or before December 31, 1996. This seemingly bureaucratic detail has had profound consequences: Congress imposed a cap on the number of Medicare-funded residency slots for medical school graduates in 1997, fixing the geographical distribution of funding for residency training across the United States.
The 1997 Medicare cap effectively froze the number of residency positions at a time when America’s population was significantly smaller and older. Nearly three decades later, the population has grown substantially, aged considerably, and developed increasingly complex healthcare needs, yet the training infrastructure remains largely constrained by those 1996 numbers.
Current data reveals the limitations of this system. Medicare data show that in 2018, 70 percent of hospitals were over one or both caps on Medicare-funded residents, and 20 percent of hospitals were under one or both caps. This suggests that while some hospitals have found ways to train additional residents using non-Medicare funding, the majority are constrained by the federal caps.
Rural America: The Forgotten Frontier
The physician shortage crisis hits rural communities particularly hard. Rural counties are more likely to face shortages of primary care doctors, dentists, mental health care providers, and even hospitals, according to Department of Agriculture data. Mississippi, especially rural areas, face severe physician shortages and is among the most medically underserved states within the United States, highlighting how geographic disparities compound the national shortage.
The proposed legislation’s emphasis on rural hospitals reflects this reality. Rural communities often struggle with a perfect storm of challenges: lower population density makes medical practices less financially viable, limited infrastructure complicates healthcare delivery, and medical professionals frequently prefer to practice in urban areas with better amenities and professional opportunities.
Previous Legislative Efforts and Incremental Progress
The current bill represents a revival of similar legislation from previous years. The Resident Physician Shortage Reduction Act of 2023 (H.R. 2389/S. 1302) proposed the same framework but failed to advance through Congress. The 2025 version, sponsored by Representatives Terri Sewell (D-Ala.) and Brian Fitzpatrick (R-Pa.) in the House, maintains the same core structure while updating the timeline. Section 126 of the Consolidated Appropriations Act (CAA), 2021, makes available an additional 1,000 FTE resident cap slots phased in at a rate of no more than 200 slots per year beginning in fiscal year 2023. While this represented progress, the modest scale of the increase—1,000 positions over five years—pales in comparison to the projected shortfall of potentially 86,000 physicians.
The healthcare community has consistently advocated for more substantial increases. The AHA supports the bipartisan Resident Physician Shortage Reduction Act of 2021 (H.R.2256/S.834), which adds 14,000 Medicare-funded residency slots over the next seven years, demonstrating sustained institutional support for the current proposal.
The Economic and Social Implications
The physician shortage extends far beyond healthcare delivery—it represents a significant economic and social challenge. Healthcare systems are being forced to rely increasingly on expensive temporary staffing solutions, driving up costs across the system. Rural hospitals, already operating on thin margins, face the dual pressure of physician shortages and financial constraints, leading to service reductions or closures that further compound access problems.
The shortage also has profound implications for health equity. Communities that are already medically underserved—often rural, low-income, or minority populations—bear a disproportionate burden of the shortage. This creates a vicious cycle where areas with the greatest health needs have the fewest resources to address them.
Training Infrastructure and Implementation Challenges
Creating 14,000 new residency positions isn’t simply a matter of congressional appropriation. It requires substantial infrastructure development, including clinical training sites, faculty recruitment, and administrative capacity. Teaching hospitals must demonstrate their ability to provide comprehensive training experiences while maintaining quality patient care.
The proposed legislation would add 2,000 total residency slots per year between 2026 and 2032, with specific targeting requirements. The bill prioritizes rural hospitals, new medical schools, and HPSAs, with a cap of 75 new positions per hospital. Healthcare institutions need time to develop new programs, recruit qualified faculty, and establish the clinical partnerships necessary for effective residency training. The legislation’s focus on hospitals in underserved areas also aims to create training opportunities where physicians are most likely to establish permanent practices.
A Necessary but Insufficient Step
The Resident Physician Shortage Reduction Act represents a significant step toward addressing America’s physician shortage, but it’s important to recognize its limitations. Even if fully implemented, 14,000 additional positions may not fully address the AAMC’s projected shortage range of 13,500 to 86,000 physicians. Moreover, the legislation addresses only one aspect of the complex physician workforce challenge.
Other factors contributing to the shortage include medical school capacity, student debt levels that discourage primary care specialization, and systemic issues in healthcare delivery that contribute to physician burnout and early retirement. The success of this legislation will depend not only on its passage but on its integration with broader healthcare workforce development strategies.
The bipartisan introduction of the Resident Physician Shortage Reduction Act signals recognition of a looming crisis that could fundamentally alter healthcare access in America. The proposed 14,000 additional training positions represent the largest expansion of medical education capacity in decades, with particular attention to the rural communities that have been disproportionately affected by physician shortages.
However, this legislation should be viewed as the beginning, not the end, of comprehensive workforce planning. The complexity of training physicians, the regional disparities in healthcare access, and the evolving nature of medical practice all suggest that sustained, multifaceted efforts will be necessary to ensure adequate physician supply for America’s future healthcare needs.
The ultimate success of this initiative will be measured not in the number of residency positions created, but in improved healthcare access for the millions of Americans who currently face barriers to receiving quality medical care. For rural communities, underserved populations, and the healthcare system as a whole, the stakes could not be higher.
Sources
- Association of American Medical Colleges (AAMC) workforce projections
- U.S. Government Accountability Office – “Physician Workforce: Caps on Medicare-Funded Graduate Medical Education at Teaching Hospitals” (GAO-21-391)
- Centers for Medicare & Medicaid Services – Direct Graduate Medical Education (DGME) documentation
- American Hospital Association – “Fact Sheet: Increased Graduate Medical Education Needed to Preserve Access to Care” (2022)
- Rural Health Information Hub – “Rural Healthcare Workforce Overview” (2025)
- Department of Agriculture rural healthcare data (2022)
- National Rural Health Association publications (2025)
- Congressional Research Service reports on Medicare GME payments
- Niskanen Center analysis – “Federal policy misallocates American doctors” (2023)
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