> Here's a purely economic argument: if there is an expected profit from self-funding but it is less than that from receiving the Medicare funding, and there is a perception that the Medicare funding only exists because the argument has successfully been made that self-funding is not profitable, then making the smaller profit from self funding would put at risk the possibility of receiving the larger profit through Medicare funding, and administrators might determine it is not worth the risk.
No, that doesn't add up. Hospitals only receive $80,000 per resident from Medicare. If residency programs were profitable at level P, they could increase them from N residents to M residents, where (80000 + P)N < P M[0].
Furthermore, hospitals that currently don't receive any money from Medicare would simply expand self-funded programs, because they wouldn't be losing anything by doing so[1].
There's also no way that hospitals would be doing so much to preserve a mere $80,000 stipend, because increasing the number of physicians is in their best interest - it allows them to decrease their expenses (physician salaries) in the long run.
> That's all speculation, just like your purely economic argument is just speculation.
No, it's not speculation; it's exactly what hospitals, government employees, elected officials, and industry analysts have pretty much all been saying for decades. And it's supported by the actual evidence at hand, including all of the financial figures that they publish.
[0] Of course this doesn't work if P is a decreasing function of either N or M, which is the entire point - it is decreasing, and in fact, is already negative for the current value of N.
[1] Except, of course, if P is negative - which it is.