Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Primary Care Doctor Shortage
Transcript
- Lucas: So we've spent the last 20 episodes looking at how falling birth rates hit specific industries — toys, pet food, hospitals. But today I want to zoom in on something that sits underneath all of those: the primary care doctor pipeline. Luna: Because fewer kids means fewer future doctors? Lucas: Exactly. And the timing is brutal. It takes at least 10 years to train a primary care physician — 4 years of med school, 3 years of residency, often a fellowship. The doctors we'll need in 2036 are deciding whether to apply to medical school right now. And there are simply fewer 18-year-olds in the cohort. Luna: Let me guess — the Association of American Medical Colleges has a number for this. Lucas: They do. Their 2024 workforce projection estimated a shortage of 20,000 to 40,000 primary care physicians by 2036. That's the headline number. But what's interesting is that falling birth rates are both a cause and an accelerant. Luna: Walk me through the cause part first. Lucas: Sure. The number of U.S. births peaked in 2007 at about 4.3 million. By 2024, it was down to around 3.6 million. That's about a 16 percent drop. Those late-2000s babies are the ones who would be applying to med school right now, or entering college pre-med tracks. Luna: So the pool of potential applicants is already shrinking. Lucas: Right. And medical school enrollment hasn't shrunk with it — it's actually grown, because we opened new schools and expanded class sizes in response to the 2010s doctor shortage panic. So you've got more seats and fewer applicants. That sounds like a good thing, but the quality compression can be real, and more importantly, the bottleneck further down the pipeline hasn't loosened at all. Luna: The residency slots. Funded by Medicare. Lucas: Bingo. Congress capped Medicare-funded residency slots in 1997. There have been small increases since — about 1,000 new slots in 2021, another 200 in 2023 — but we're still producing roughly the same number of residency positions each year. In 2025, about 42,000 residency spots for 50,000 applicants. So the bottleneck isn't at the front door of med school. It's at the residency match. Luna: And fewer births means fewer people even getting to that bottleneck. Lucas: Yes. But here's the accelerant part. An aging population needs more primary care, not less. People over 65 see a primary care doctor roughly 4 times per year on average. People under 18 see one about 1.5 times. So as the population gets older and smaller, demand per capita goes up, even as supply per capita struggles to keep pace. Luna: That's a classic demographic double hit. Lucas: It is. And it gets worse when you look at rural areas, because birth rates have fallen faster in rural counties than in urban ones. The rural population is older, sicker, and has fewer primary care doctors per capita to begin with. Luna: So what's the playbook? Other countries have dealt with this. Japan's birth rate has been below replacement since the 1970s. Lucas: Japan is the key case study. They've had low fertility for so long that they're now facing a crisis where entire rural towns can't find a single doctor. Their response has been aggressive government intervention. Starting around 2016, they began subsidizing medical school tuition for students who commit to practicing in rural primary care for at least 9 years after residency. Luna: And does it work? Lucas: Early data from a 2024 study in Health Affairs showed that retention rates among those subsidized doctors were about 74 percent after 9 years. Not perfect, but much better than the 30 percent retention rate for doctors who moved to rural areas without any contractual obligation. So the subsidy itself seems to create a psychological anchor — you feel you owe the community something. Luna: That's fascinating. But Japan also has a national health system. The U.S. has a fragmented mix. Would a tuition subsidy work here? Lucas: There's a pilot. The National Health Service Corps already offers loan repayment for primary care doctors who work in underserved areas. In 2024, they had about 1,800 clinicians in the program. But that's a drop in the bucket — we need an estimated 10,000 more primary care providers in rural areas alone. The scale just isn't there. Luna: So falling birth rates are making a bad situation worse, and the policy response so far is too small. Lucas: That's the nutshell. But I want to add one more layer. There's a substitution effect happening. Nurse practitioners and physician assistants are picking up more primary care. In 2025, about 30 percent of primary care visits in the U.S. were handled by non-physician clinicians, up from 18 percent in 2015. Luna: That's a big shift. But is it a good substitute? Studies show similar outcomes for routine care, but complex cases still benefit from a physician's broader training. Lucas: Right. And the training pipeline for nurse practitioners is shorter — 2 to 3 years — but it also depends on the same demographic pool. Fewer young people means fewer entering nursing as well. So substitution isn't a magic bullet. Luna: And telemedicine? That was the big hope during COVID. Lucas: Telemedicine can extend a doctor's reach, but it doesn't solve the supply problem. If you have 100 doctors for a population of 100,000, telemedicine lets those 100 doctors see more patients — but it doesn't create more doctors. And there's evidence from a 2023 JAMA study that telemedicine visits actually increase total demand because they lower the friction of making an appointment. So you end up with more visits per patient, not just the same visits distributed differently. Luna: So the only real lever is to increase the number of doctors per capita, which means either training more or importing more. Lucas: Importing is a big part of the current system. About 25 percent of U.S. primary care physicians are international medical graduates — doctors trained outside the U.S. But that pipeline is also at risk. Many of the countries those doctors come from — India, Pakistan, the Philippines — are themselves facing doctor shortages as their own birth rates drop. India's fertility rate fell below replacement in 2021. So the global pool of willing emigrant doctors is shrinking. Luna: That's a really underappreciated feedback loop. Lucas: It is. And it connects directly to something we talked about in episode 77, on investment banking. A declining population means fewer young workers in every profession, but medicine has an especially long lead time. You can't just hire a doctor off the shelf. Luna: We've been walking through a lot of numbers and policies, and honestly, it's the kind of analysis that makes something click in a way a headline never does. If listening to us has made something click for you too, and you want to help us keep this show ad-free and independent, one of the most helpful things you can do is support us at buy me a coffee dot com slash fexingo. It truly makes a difference. Lucas: Totally. We don't run ads, we don't do sponsorships, and that's intentional. The listener support is what keeps us free to chase these threads without having to sell anything. So if you've gotten value from episodes like this one, that's the link. And now back to the doctor shortage. Lucas: So where does that leave us? Let me lay out the most likely scenario for the next decade. Birth rates continue to drift down. The U.S. fertility rate in 2025 was about 1.62, well below replacement. That means fewer 18-year-olds each year, which means a smaller pool for med school. Residency slots stay roughly flat because Congress doesn't act. International medical graduate supply declines as source countries tighten their own borders. Luna: That's a recipe for a worsening shortage. Lucas: It is. But there are a few wild cards. One is scope of practice laws. In 2025, about half of U.S. states allowed nurse practitioners to practice independently without a physician's supervision. If that number rises to, say, 40 states by 2030, that could meaningfully close the gap. Another wild card is ai driven clinical decision support — if AI can handle triage and routine diagnosis, it might let one doctor manage a panel of patients that's 30 percent larger. Luna: But AI doesn't replace the human relationship, especially in primary care. That continuity is a big part of why outcomes are better. Lucas: True. And the evidence on AI improving primary care outcomes is still thin. A 2025 trial from Stanford found that ai assisted triage reduced wait times by 12 percent but didn't change patient satisfaction or diagnostic accuracy. So it's helpful but not transformative. Luna: I want to go back to Japan one more time. You mentioned the tuition subsidy. Did they do anything else? Lucas: Yes, they also reformed their residency system. Starting in 2024, they created a quota system that requires a certain percentage of residency slots to be filled by doctors who commit to rural practice. That's a more direct lever than just tuition subsidy. And it's controversial — some doctors feel it's coercive. But the alternative is entire prefectures without a single family doctor. Luna: Would that work in the U.S.? A quota system seems politically difficult. Lucas: Extremely difficult. The American Medical Association has historically opposed any form of directed placement. But the political calculus might shift as the shortage becomes more acute. If you're a rural voter in 2030 and you can't get a primary care appointment within 60 days, you're going to demand something from your representatives. Luna: So the pressure builds from the bottom up. Lucas: Exactly. And that's where demographics and politics intersect. Falling birth rates don't just reshape markets — they reshape constituencies. An older, rural population votes at higher rates and has more political power per capita. So the demand for primary care is going to become a louder political issue, even as the supply gets tighter. Luna: And that might be the most important takeaway. The shortage isn't just a healthcare problem. It's a political problem that demographic change will force to the surface. Lucas: Right. And the solutions — tuition subsidies, scope of practice expansion, immigration reform — all require political will that's currently absent. But demographics don't wait for politics. The 18-year-olds who aren't being born today are the doctors we won't have in 2040. Luna: So the question is: will we adapt proactively, or only after the crisis is visible in every waiting room? Lucas: That's the question. And I think the answer will be different in different states. Some will move early, like Japan did. Others will wait until the problem is impossible to ignore. And that variation is itself an interesting economic experiment we'll get to watch unfold. Luna: Alright, we will be watching. Thanks for walking through that, Lucas. That was a dense 10 minutes. Lucas: Glad to do it. Next episode we're going to look at a completely different angle — how falling birth rates are reshaping the legal profession. That should be a fun one. Luna: See you then.