Supply-side effects from public insurance expansions: Evidence from physician labor markets

Effects of the Affordable Care Act Medicaid Expansion on the Compensation of New Primary Care Physicians

BACKGROUND

It is well-documented that the Affordable Care Act Medicaid expansion increased health care utilization by low-income Americans. Emerging studies also found that the expansion changed the geographical distribution of new physicians. However, the effect of the expansion on physician compensation has not been studied.

OBJECTIVES

We aimed to assess how the Medicaid expansion affected the compensation of new primary care physicians (PCPs) and whether the effect differed by specialty, gender, and geography.

RESEARCH DESIGN

We used a quasiexperimental difference-in-differences design to assess changes in compensation for new PCPs from before to after the Medicaid expansion in states that expanded Medicaid compared with states that did not expand.

SUBJECTS

Our study included 2003 new PCPs who responded to the Survey of Residents Completing Training in New York between 2009 and 2018.

MEASURES

Our primary outcome was respondents' self-reported starting salary for their first year of practice. Our secondary outcomes were respondents' self-reported additional anticipated income and incentives they received for accepting the job offer.

RESULTS

We found that starting salaries for new PCPs, especially new general internists and family physicians, grew faster in expansion states than in nonexpansion states. In addition, we found that the expansion was associated with a statistically significant increase in receiving additional anticipated income as part of the compensation package for new PCPs practicing in rural areas.

Is Primary Care A Substitute or Complement for Other Medical Care? Evidence from Medicaid

It is widely believed that Medicaid reimbursement for primary care is too low and that these low fees adversely affect access to healthcare for Medicaid recipients. In this article, we exploit changes in Medicaid physician fees for primary care to study the response of primary care visits and services that are complements/substitutes with primary care, including emergency department, hospitalization, prescription drugs, and imaging. Results from our study indicate that higher Medicaid fees for primary care have modest effects. Among non-blind and non-disabled adults, we find that a 25% (or $10) increase in Medicaid fees for primary care is associated with approximately a 5% of a standard deviation increase in the number of primary care visits. For the same group, we also find that the fee increase is associated with an increase in the probability of having any primary care visits of approximately 3 percentage points. For children, changes in Medicaid fees are not significantly related to the number of primary care visits. In terms of other types of care, we find some evidence that Medicaid fees for primary care are associated with prescription drug use, and no evidence that primary care fees are associated with the use of emergency department, inpatient services, or imaging. Overall, our evidence provides, at best, limited support for the large effects of Medicaid fees on service provision sometimes asserted in policy discussions.