The United States faces a projected shortage of up to 124,000 physicians by 2034, according to the Association of American Medical Colleges. Nursing shortages are equally dire. Yet this crisis isn't primarily about too few people wanting to become healthcare workers.

It's about policies that actively constrain supply. Decades-old funding caps, fragmented licensing systems, and restrictive immigration rules create artificial bottlenecks that prevent qualified professionals from entering or moving within the healthcare workforce.

Understanding these policy mechanisms matters because they represent solvable problems. Unlike demographic shifts or changing disease patterns, these are choices we've made—and choices we could unmake. The question is whether we have the political will to do so.

In 1997, Congress froze Medicare funding for residency positions at approximately 100,000 slots. The reasoning seemed sensible at the time—concerns about physician oversupply and healthcare costs. But medical school enrollment has increased by over 30% since then, while residency slots have barely budged.

This creates a brutal bottleneck. Each year, thousands of qualified medical school graduates fail to match into residency programs. Without completing residency, they cannot practice medicine in the United States—regardless of their training, debt, or desire to serve.

The economic logic behind the freeze has proven flawed. Rather than preventing oversupply, the cap has contributed to worsening shortages, particularly in primary care and rural areas. Meanwhile, the cost of training physicians has shifted increasingly to hospitals themselves, creating uneven geographic distribution.

Several congressional bills have proposed lifting or gradually expanding the caps. The Resident Physician Shortage Reduction Act would add 14,000 positions over seven years. Yet these measures have stalled repeatedly, caught in broader debates about healthcare spending and reform priorities.

Takeaway

When supply constraints are embedded in policy rather than market conditions, the usual economic signals—rising wages, unmet demand—fail to trigger corrective responses. Workforce policy requires periodic reassessment as conditions change.

A physician licensed in California cannot simply move to Arizona and begin practicing. They must navigate a separate application process, pay additional fees, and often wait months for approval. This system treats medical competence as somehow varying by state line.

The administrative burden is substantial. Physicians report spending an average of 20 hours per license application, with fees ranging from hundreds to thousands of dollars. For those working in telehealth or border regions, maintaining multiple licenses becomes a costly necessity.

Several initiatives have attempted to address this fragmentation. The Interstate Medical Licensure Compact now includes 43 states, offering an expedited pathway for physicians to obtain licenses in participating states. Nursing has its own compact covering 41 states. But adoption remains incomplete, and the compacts coexist with traditional licensing rather than replacing it.

The COVID-19 pandemic demonstrated what's possible when licensing barriers are temporarily suspended. Emergency waivers allowed providers to practice across state lines, dramatically expanding access to care. Many of those flexibilities have since expired, returning to the pre-pandemic status quo.

Takeaway

Professional licensing ostensibly protects patients, but when barriers exceed what's necessary for safety, they function as protection for incumbent providers instead—limiting competition and restricting access.

International medical graduates comprise roughly 25% of the U.S. physician workforce. They disproportionately serve in primary care, rural areas, and underserved communities—precisely where shortages are most acute. Yet immigration policy treats them as an afterthought.

The J-1 visa waiver program, which allows international medical graduates to remain in the U.S. if they serve in shortage areas, is capped at 30 physicians per state per year. States like California, with populations exceeding 39 million, receive the same allocation as Wyoming, with under 600,000 residents.

H-1B visa backlogs create additional uncertainty. Physicians from certain countries face wait times measured in decades for permanent residency, leaving them in prolonged professional limbo. Many eventually leave for countries with more welcoming immigration systems.

The pandemic highlighted these contradictions starkly. Healthcare systems struggling with workforce shortages simultaneously watched visa restrictions prevent qualified international graduates from joining the front lines. Temporary policy changes helped, but systemic reforms remain elusive.

Takeaway

Immigration policy shapes healthcare workforce capacity in ways that rarely enter public debate. Restrictions designed for other purposes can have outsized effects on sectors heavily dependent on international talent.

Healthcare workforce shortages are often discussed as inevitable consequences of aging populations and changing care demands. This framing obscures the role of deliberate policy choices that artificially constrain supply.

Residency caps, licensing fragmentation, and immigration restrictions each represent tractable problems with identifiable solutions. None require revolutionary change—just updating policies designed for different eras and circumstances.

The barrier isn't technical complexity. It's political inertia and the entrenched interests that benefit from current arrangements. Recognizing workforce shortages as policy failures, not natural phenomena, is the first step toward meaningful reform.