Medicaid Payment Increases and Physician Labor Supply
Hannah Neprash, PhD
Division of Health Policy & Management
School of Public Health, University of Minnesota
Abstract: The Affordable Care Act (ACA) greatly increased access to insurance, partially through state Medicaid expansions. In conjunction with this insurance expansion, the ACA increased Medicaid reimbursement for primary care services to national Medicare levels for two years (2013-2014), with the goal of incentivizing physicians to treat more Medicaid patients. The policy change affected physicians differently, based on their state’s generosity of Medicaid reimbursement, relative to Medicare rates, prior to the policy change. I use this natural experiment to test whether primary care physicians respond to Medicaid payment increases by changing their Medicaid participation decision and labor supply, as predicted by a mixed-economy model. To do so, I rely on a new database of claims and electronic health record data compiled by athenahealth, Inc., a national provider of electronic health records, medical billing, and practice management services. As predicted, I find evidence that physicians increased their total labor supply in response to the Medicaid payment increase. I find little change in Medicaid program participation, except among physicians in states that continued the payment increase beyond 2014. This suggests that the temporary Medicaid primary care payment increase may not have had the intended effect of increasing access to physician services for Medicaid beneficiaries, though a more permanent increase may be more successful.
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