Although Health Reform did little to reduce the cost of health care, it did make significant strides to expand access to care. For low-income individuals, the increased access comes along two dimensions: expanded Medicaid eligibility and increased physician fees. Specifically, Health Reform required to
- Make all individuals with incomes below 138% of the Federal Poverty Line (FPL) eligible for Medicaid, and
- Increase their Medicaid physician fee schedules, so that they are no lower than Medicare’s for evaluation and management services provided by primary care physicians.
Whereas the first provision is permanent, the second provision is to be in effect only for 2013 and 2014.
Which one will have a bigger effect? According to a paper by White (2012), paying doctors more improves access.
To examine this question in more detail, the author examines the expansion of children’s health insurance through the CHIP program in the 2000s.
The effect of CHIP on physician utilization depends on three key factors:
- lower levels of patient cost sharing among enrollees,
- the expanded use of managed care tools, and
- a reduction in the average fees that physicians receive.
The authors use a difference-in-difference strategy and data from the NHIS to examine the effect of CHIP expansions and changes to the Medicare fee schedule. The observe the following:
- CHIP reduced the level of cost sharing that low- and middle-income children faced. However,we do not observe a corresponding increase in aggregate physician utilization.
- Among low-income children, increasing Medicaid fees appears to improve access to care. Increasing Medicaid fees also appears to have positive spillover effects on physician utilization among higher-income children.
This could indicate that low-income individuals not eligible for Medicaid may be able to gain access to the care they need through other state and local health insurance programs. However, in all these programs, there may be a long wait to get a physician appointment. Increasing physician fees, however, may increase the likelihood physicians treat these patients and may also increase the supply of physician labor as well, increasing the number of appointment slots available.
A number of confounding factors could explain this finding. For instance, physician fee increases may be endogenous. In times where access to care is low due to reasons other than the fee schedule and also be the times when policymakers increase fees; thus the observed relationship between physician fee increases and utilization may be just a regression to the mean.
- White, C. (2012), A Comparison of Two Approaches to Increasing Access to Care: Expanding Coverage versus Increasing Physician Fees. Health Services Research. doi: 10.1111/j.1475-6773.2011.01378.x