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Medicaid physician fees and the quality of medical care of Medicaid patients in the USA


  • Sandra Decker



When enacted in 1965, the original Medicaid legislation sought to finance access to mainstream medical care for the poor. I use data on visits to office-based physicians from the National Ambulatory Medical Care Survey in four years—1989, 1993, 1998 and 2003—to test the extent to which this goal has been achieved. Specifically, I test whether this goal has been achieved more in states that pay higher fees to physicians who treat Medicaid patients compared to states that pay lower fees. By comparing the treatment of Medicaid patients to that of privately-insured patients and by using state fixed effects, I am able to estimate the effects of changes in the generosity of Medicaid physician payment within a state on changes in access to care for Medicaid patients, therefore separating Medicaid’s effect on access to health care from any correlation between the Medicaid fee and other attributes of the state in which a patient lives. Using this method, I examine the effect of Medicaid fees on whether or not an office-based physician accepts Medicaid patients, on the fraction of a physician’s practice that is accounted for by Medicaid, and on the length of visit times with physicians. Results imply that higher Medicaid fees increase the number of private physicians, especially in medical and surgical specialties, who see Medicaid patients. Higher fees also lead to visit times with physicians that are more comparable to visit times with private pay patients. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Sandra Decker, 2007. "Medicaid physician fees and the quality of medical care of Medicaid patients in the USA," Review of Economics of the Household, Springer, vol. 5(1), pages 95-112, March.
  • Handle: RePEc:kap:reveho:v:5:y:2007:i:1:p:95-112 DOI: 10.1007/s11150-007-9000-7

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    References listed on IDEAS

    1. Gray, Bradley, 2001. "Do Medicaid physician fees for prenatal services affect birth outcomes?," Journal of Health Economics, Elsevier, vol. 20(4), pages 571-590, July.
    2. Thomas G. McGuire & Mark V. Pauly, 1991. "Physician Response to Fee Changes with Multiple Payers," Papers 0015, Boston University - Industry Studies Programme.
    3. Mark H. Showalter, 1997. "Physicians' Cost Shifting Behavior: Medicaid Versus Other Patients," Contemporary Economic Policy, Western Economic Association International, vol. 15(2), pages 74-84, April.
    4. Glied, Sherry & Zivin, Joshua Graff, 2002. "How do doctors behave when some (but not all) of their patients are in managed care?," Journal of Health Economics, Elsevier, vol. 21(2), pages 337-353, March.
    5. repec:aph:ajpbhl:1996:86:12:1748-1754_3 is not listed on IDEAS
    6. Long, Stephen H. & Settle, Russell F. & Stuart, Bruce C., 1986. "Reimbursement and access to physicians' services under Medicaid," Journal of Health Economics, Elsevier, vol. 5(3), pages 235-251, September.
    7. Gruber, Jon & Kim, John & Mayzlin, Dina, 1999. "Physician fees and procedure intensity: the case of cesarean delivery," Journal of Health Economics, Elsevier, vol. 18(4), pages 473-490, August.
    8. McGuire, Thomas G. & Pauly, Mark V., 1991. "Physician response to fee changes with multiple payers," Journal of Health Economics, Elsevier, vol. 10(4), pages 385-410.
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    Cited by:

    1. Robert Town & Roger Feldman & John Kralewski, 2011. "Market power and contract form: evidence from physician group practices," International Journal of Health Economics and Management, Springer, vol. 11(2), pages 115-132, June.
    2. Freedman, Seth & Lin, Haizhen & Simon, Kosali, 2015. "Public health insurance expansions and hospital technology adoption," Journal of Public Economics, Elsevier, vol. 121(C), pages 117-131.
    3. de la Mata, D, 2011. "The Effect of Medicaid on Children's Health: A Regression Discontinuity Approach," Health, Econometrics and Data Group (HEDG) Working Papers 11/16, HEDG, c/o Department of Economics, University of York.
    4. Christopher Brunt & Gail Jensen, 2013. "Medicare payment generosity and access to care," Journal of Regulatory Economics, Springer, vol. 44(2), pages 215-236, October.
    5. Thomas G. Koch, 2015. "All Internal in the Family?: Measuring Spillovers from Public Health Insurance," Journal of Human Resources, University of Wisconsin Press, vol. 50(4), pages 959-979.
    6. Christopher Brunt & Gail Jensen, 2010. "Medicare Part B reimbursement and the perceived quality of physician care," International Journal of Health Economics and Management, Springer, vol. 10(2), pages 149-170, June.
    7. Johar, Meliyanni, 2010. "The effect of a public health card program on the supply of health care," Social Science & Medicine, Elsevier, vol. 70(10), pages 1527-1535, May.
    8. Koch, Thomas G., 2013. "Using RD design to understand heterogeneity in health insurance crowd-out," Journal of Health Economics, Elsevier, vol. 32(3), pages 599-611.
    9. Hahn, Youjin, 2013. "The effect of Medicaid physician fees on take-up of public health insurance among children in poverty," Journal of Health Economics, Elsevier, vol. 32(2), pages 452-462.
    10. Sonchak, Lyudmyla, 2015. "Medicaid reimbursement, prenatal care and infant health," Journal of Health Economics, Elsevier, vol. 44(C), pages 10-24.
    11. Thomas Buchmueller & John C. Ham & Lara D. Shore-Sheppard, 2015. "The Medicaid Program," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, volume 1, pages 21-136 National Bureau of Economic Research, Inc.
    12. repec:pri:cheawb:alexander_d_jul13 is not listed on IDEAS
    13. Larry Howard, 2014. "Do the Medicaid and Medicare programs compete for access to health care services? A longitudinal analysis of physician fees, 1998–2004," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 229-250, September.
    14. Christopher Brunt & Gail Jensen, 2014. "Payment generosity and physician acceptance of Medicare and Medicaid patients," International Journal of Health Economics and Management, Springer, vol. 14(4), pages 289-310, December.
    15. Decker, Sandra L. & Lipton, Brandy J., 2015. "Do Medicaid benefit expansions have teeth? The effect of Medicaid adult dental coverage on the use of dental services and oral health," Journal of Health Economics, Elsevier, vol. 44(C), pages 212-225.

    More about this item


    Medicaid; Physician care; Duration of visit; I18;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health


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