NCPA - National Center for Policy Analysis

Why Health Reform's Medicaid Expansion Will Reduce Health Care Access

March 13, 2012

A new paper suggests that a critical part of the Affordable Care Act (ACA) -- its expansion of Medicaid coverage to 16 million more Americans -- may actually reduce those individuals' access to health care, says Avik Roy, a senior fellow in health care policy at the Manhattan Institute for Policy Research.

Roy lays out the reasons:

Medicaid underpays doctors for their expenses.

  • Medicaid's reimbursement rates are around half of those paid by private insurers.
  • Two MIT economists, Jonathan Gruber and David Rodriguez, have found that three-quarters of physicians receive lower fees for serving Medicaid patients than they do for the uninsured, because many people without health insurance are still able to pay out-of-pocket for routine health expenses.

Overall, Medicaid expansions do not lead to more doctor visits.

  • The study's author looked into this problem by examining the State Children's Health Insurance Program (CHIP) which was created by Congress in 1997 as a way of expanding Medicaid to lower-income children who were above the income thresholds of traditional Medicaid.
  • He found that CHIP was "not associated with any change in the aggregate quantity of physician services [consumed]," and concluded that "coverage not necessarily increase physician utilization."

The ACA's Medicaid expansion could worsen physician access.

  • Comparing changes in coverage from 1997-1998 and 2008-2009, 11 percent of children in the lowest income quartile, who were uninsured, gained insurance; however, 13 percent of children in that quartile who had private insurance lost it, while Medicaid/CHIP expanded by 23 percent of children.
  • In the third-lowest and second-lowest quartiles, the proportion of those gaining Medicaid coverage and those losing private coverage were almost identical, suggesting that Medicaid was replacing private coverage in the majority of cases.
  • Those individuals who are subject to the replacement will have poorer access to health care, because Medicaid pays less than private insurance.

Put more simply, health insurance is not the same thing as health care.

Source: Avik Roy, "Why ObamaCare's Medicaid Expansion Will Reduce Health Care Access," The Atlantic, March 9 2012. Chapin White, "A Comparison of Two Approaches to Increasing Access to Care: Expanding Coverage versus Increasing Physician Fees," Health Services Research, February 2012.

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