Physician Payments and Access to Care: Evidence from Medicaid

We examine how the amount a physician is paid influences who they are willing to see. To do so, we exploit large, exogenous changes in Medicaid reimbursement rates—driven primarily by a federal mandate requiring that states raise Medicaid payments to match Medicare rates for primary care visits—to quantify the impact of physician payments on access to care. We find that increasing Medicaid payments to primary care doctors leads to improvements in access, increased office visits, and better self-reported health among beneficiaries. We find no evidence of negative spillovers to the privately insured. Our results underscore the importance of financial incentives in driving physician behavior.