Do the Poor Benefit From More Generous Medicaid Physician Payments?∗

This paper examines how changes in Medicaid physician payments affect provision of care to both Medicaid patients and the uninsured. I find that payment increases generate an increase in supply of care to Medicaid patients but a more than offsetting decrease in supply to the uninsured. Using survey data, I additionally show that physicians encourage their uninsured patients to enroll in Medicaid. Finally, I demonstrate that when Medicaid eligibility is high, physicians are less likely to substitute between caring for Medicaid patients and treating the uninsured. Because higher eligibility magnifies the Medicaid supply response to a payment change, my results suggest that payment increases should be coupled with eligibility expansions in order to improve access to care among the poor. ∗I am indebted to my advisers Marianne Bertrand, David Meltzer, Matthew Notowidigdo, and Emily Oster for their generous guidance. I also thank Steven Levitt, Willard Manning, Jessica Pan, Tomas Philipson, Matthew Plosser, Kosali Simon, and Heidi Williams for their helpful comments. Financial support from the Agency for Health Care Research and Quality T32 National Research Service Award Fellowship is gratefully acknowledged. †Booth School of Business, University of Chicago, email: [email protected]