This paper focuses on the efficiency of federal subsidies in meeting stated public goals and gives two reasons for doing so. First, specific data on subsidies for the education function of medical schools are available. Second, Congress is now considering the entire package of federal health manpower legislation. It is difficult to escape the conclusion that the current means of public support are both inefficient and expensive methods of meeting public needs. This paper concentrates on three objectives that constitute the most commonly stated justifications for public support: increasing the production of doctors; improving their geographic and specialty distribution; and increasing the enrollments of low-income and minority students. The estimates of the cost of subsidies to medical and dental education are both so high that they strongly indicate the present subsidy system is wasteful. At the minimum, they suggest that Congress and state legislatures should at least begin to consider other mechanisms for meeting the social goals that underlie public support for medical education. These include not only broad shifts in emphasis away from high cost manpower to lower cost mid-level health workers, but also include changes in the amounts, and more particularly, the type of subsidies granted to medical education. (Author/PG)