The Effects of Public Health Insurance Expansions

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Medicaid patients had shorter office visits after the implementation of SCHIP than before.

In the United States, public health insurance programs cover over 90 million individuals. Changes in the scope of these programs, such as the Medicaid expansions under the recently passed Patient Protection and Affordable Care Act, or in the generosity of these programs, may affect physician behavior.

In The Doctor Might See You Now: the Supply Side Effects of Public Health Insurance Expansions (NBER Working Paper No. 17070), Craig Garthwaite finds that after the 1990s implementation of the State Children's Health Insurance Program (SCHIP) -- a partnership between federal and state governments intended to increase insurance coverage for low-income Americans under the age of 19 - more physicians participated in the program, but their total number of hours spent with patients declined as a result of shorter office visits. Because of the age limit for SCHIP beneficiaries, pediatricians were disproportionately affected by the new insurance program. The program expansion also increased the percentage of pediatricians that reported accepting new Medicaid patients and the amount of revenue that pediatricians received from Medicaid.

Garthwaite finds that there were fewer visits that lasted more than 10 minutes after this public program expansion. The evidence on shorter office visits is consistent with economic models of physician behavior in a system with both public and private payers. For a portion of the physicians who were not previously participating in the public insurance program, the implementation of SCHIP changed the identity of the "marginal patient" from one covered by private insurance to one covered by the lower-reimbursing government program.

The negative effects of reductions in physician labor supply, such those observed in this study, may be particularly important for Medicaid patients because they are covered by a program that is increasingly not accepted by physicians. From 1996 to 2005, for example, the percentage of physicians reporting no practice income from Medicaid patients, which probably indicates no Medicaid patients were served, increased by 13 percent. Over the same time period, the percentage of physicians reporting that they were not accepting new Medicaid patients increased from 19 to 21 percent.

--Lester Picker