Increasingly, graduate medical education (residency training) is being proposed as a policy instrument to reform the traditional manpower problems of distribution of physicians. This article suggests why graduate medical education has become the latest policy device in the decades-old effort to rectify physician imbalances, and it discusses the potential for reform contained in this approach. It then presents a number of problems that will probably hinder the effective implementation of such policy and concludes that future federal policy directives are uncertain.