Physician Fee Policy and Medicaid Program Costs
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.
|Date of creation:||Jul 1997|
|Date of revision:|
|Publication status:||published as Journal of Human Resources, Vol. 32, no. 4 (Fall 1997): 611-634.|
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- 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.
- Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
- Laurence C. Baker & Anne Beeson Royalty, 2000.
"Medicaid Policy, Physician Behavior, and Health Care for the Low-Income Population,"
Journal of Human Resources,
University of Wisconsin Press, vol. 35(3), pages 480-502.
- Laurence Baker & Anne Beeson Royalty, . "Medicaid Policy, Physician Behavior, and Health Care for the Low-Income Population," Working Papers 97003, Stanford University, Department of Economics.
- Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-41, June.
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