The short history of government intervention in stimulating or retarding the supply of physicians and other health professionals has been checkered at best. Evolution of the profession from the proprietary schools of the 19th century through the Flexner influenced growth of science- based practice and the modern university medical school relied in large part on the natural ebb and flow of society and the marketplace to right size the supply.
Fast forward to the mid 20th century where the growth of employer based insurance and passage of government sponsored medical care coverage through Medicare and Medicaid provided new sources of revenue and different economic incentives. Government support for expanded physician education and training also grew as the demand increased.
As that century progressed the cost of providing medical services grew and the health of our population declined. Even as life expectancy increased through the advancements of science & technology, our reliance on medicine as a sick care system has fostered lifestyles and behaviors that have lead to an increasingly unhealthy population. The prevalence of obesity and chronic illness amplify that health does not happen in a doctor’s office. The rising cost of health care was becoming unaffordable for individuals & unsustainable for society.
In 1997, Congress capped the number of interns & residents that the government would pay to subsidize the training of through the Medicare and Medicaid programs. Insurance companies, transitioning from non-profit mutual companies to publicly traded for profit entities also denied responsibility to fund this public good. Teaching hospitals met the growing demand and lack of explicit revenue by exercising its redistributive black box and shifting the costs for training as well as the increasing costs of uncompensated care, to its decreasing percentage of privately covered patients.