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Physician Fee Policy and Medicaid Program Costs

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  • Jonathan Gruber
  • Kathleen Adams
  • Joseph P. Newhouse

Abstract

We investigate the hypothesis that increasing access for the indigent to physician offices shifts care from hospital outpatient settings and lowers Medicaid costs (the so-called offset effect'). To evaluate this hypothesis we exploit a large increase in physician fees in the Tennessee Medicaid program, using Georgia as a control. We find that beneficiaries shifted care from clinics to offices, but that there was little or no shifting from hospital outpatient departments or emergency rooms. Thus, we find no offset effect in outpatient expenditures. Inpatient admissions and expenditures fell, reducing overall program spending eight percent. Because the inpatient reduction did not occur in ambulatory-care-sensitive diagnoses, however, we cannot demonstrate a causal relationship with the fee change.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6087.

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Date of creation: Jul 1997
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Publication status: published as Journal of Human Resources, Vol. 32, no. 4 (Fall 1997): 611-634.
Handle: RePEc:nbr:nberwo:6087

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  1. Long, Stephen H. & Settle, Russell F. & Stuart, Bruce C., 1986. "Reimbursement and access to physicians' services under Medicaid," Journal of Health Economics, Elsevier, Elsevier, vol. 5(3), pages 235-251, September.
  2. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 6(3), pages 3-21, Summer.
  3. Laurence Baker & Anne Beeson Royalty, . "Medicaid Policy, Physician Behavior, and Health Care for the Low-Income Population," Working Papers, Stanford University, Department of Economics 97003, Stanford University, Department of Economics.
  4. Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 622-41, June.
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Cited by:
  1. Youjin Hahn, 2012. "The Effect of Medicaid Physician Fees on Take-up of Public Health Insurance among Children in Poverty," Development Research Unit Working Paper Series, Monash University, Department of Economics 29-12, Monash University, Department of Economics.
  2. Janet Currie & Jonathan Gruber, 1997. "The Technology of Birth: Health Insurance, Medical Interventions, and Infant Health," NBER Working Papers 5985, National Bureau of Economic Research, Inc.
  3. Jonathan Gruber, 2003. "Medicaid," NBER Chapters, National Bureau of Economic Research, Inc, in: Means-Tested Transfer Programs in the United States, pages 15-78 National Bureau of Economic Research, Inc.
  4. Jonathan Gruber, 1997. "Health Insurance for Poor Women and Children in the U.S.: Lessons from the Past Decade," NBER Chapters, National Bureau of Economic Research, Inc, in: Tax Policy and the Economy, Volume 11, pages 169-211 National Bureau of Economic Research, Inc.
  5. Craig L. Garthwaite, 2011. "The Doctor Might See You Now: The Supply Side Effects of Public Health Insurance Expansions," NBER Working Papers 17070, National Bureau of Economic Research, Inc.
  6. Thomas C. Buchmueller & Sean Orzol & Lara D. Shore-Sheppard, 2013. "The Effect of Medicaid Payment Rates on Access to Dental Care Among Children," NBER Working Papers 19218, National Bureau of Economic Research, Inc.
  7. Winnie Yip & Karen Eggleston, 2001. "Provider payment reform in China: the case of hospital reimbursement in Hainan province," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 10(4), pages 325-339.
  8. Jonathan Gruber, 1997. "Policy Watch: Medicaid and Uninsured Women and Children," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 11(4), pages 199-208, Fall.

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