No, healthcare capacity will not increase to meet rising demand due to Medicaid expansion

April 2nd, 2019 by NCTP Feed Categories: Feed, News No Responses
  • Medicaid expansion advocates claim the state’s healthcare industry will expand in response to greater demand from expansion
  • Evidence from other states tells us otherwise
  • State restrictions like CON laws and scope of practice regulations also legally limit the industry’s ability to expand supply to meet demand

 

In a February Winston-Salem Journal article, Wake Forest University law and public policy professor Mark Hall was asked to evaluate some claims about Medicaid expansion released by Sen. Phil Berger’s office.

For one claim in particular, Hall’s response seems a bit suspect, and warrants further investigation. Specifically, Berger claimed that Medicaid coverage “doesn’t necessarily mean access to health care,” and that expanding the already crowded program by 25 percent would place access for traditional enrollees at risk.

Hall responded to this claim by saying “This assumes that medical resources are fixed. However, new funding would be used to create new jobs, and thus expanded capacity, in healthcare delivery.”

Basic economics tells us indeed that in a freely adjusting market, an increase in demand for a good or service would be met (over time) with an increase in supply in response.

But Medicaid, and our health care system more generally, is far from a freely adjusting market. Medicaid is a third-party payer system in which the government sets and caps reimbursement rates for providers. Prices aren’t allowed to freely adjust to the spike in demand, which eliminates the incentive for additional providers to increase supply.

More specifically, is there any evidence to back up Hall’s claims that the “new funding” from Medicaid expansion would lead to an increase in the supply of healthcare services?

 

Evidence from Expansion States

Because of low reimbursement rates, a limited number of doctors are willing to treat Medicaid patients.

According to a 2012 survey conducted and reported by the Commonwealth Foundation and Kaiser Family Foundation, only 52 percent of physicians nationwide were accepting new Medicaid patients.[i]

Medicaid expansion as provided for in Obamacare added millions to the Medicaid rolls. With a very limited number of doctors opening their doors to Medicaid patients however, there was a high risk of doctor shortages for enrollees.

In recognition of these conditions, the Affordable Care Act allowed for a two-year increase in the Medicaid reimbursement rate, which expired at the end of 2014. The increased rates however, were not enough to entice more doctors to become Medicaid providers.

According to a 2018 JAMA study, “the payment increase had no association with PCP (primary care physician) participation in Medicaid or Medicaid service volume.”[ii]  This, despite a 25 percent increase in the Medicaid share of patients from 2012 to 2015.

The Commonwealth/Kaiser study further found “The share of providers accepting new Medicaid patients does not differ among physicians working in states that expanded their Medicaid program versus those that did not.”

Moreover, a Health Affairs study found “no association” between the “Medicaid ‘fee bump’ and physician-reported measures of participation in Medicaid.”[iii]

Finally, a study co-authored by Stanford and Harvard professors found that “the Medicaid expansion has little impact on physician supply on the extensive margin,” meaning there was no detectable increase in doctors accepting new Medicaid patients after expansion.[iv]

The bottom line: research has shown that Medicaid expansion did not spur an increase in physicians treating Medicaid patients.

 

Further Evidence: Wait Times

A failure for supply to keep pace with demand can be reflected in a number of ways, most notably increased wait times.

A 2017 study published in the New England Journal of Medicine found that Medicaid expansion was “also associated with longer wait times for appointments, which suggests that challenges in access to care persist.”[v]

2014 USA Today article looked at the impact in Reno from Nevada’s Medicaid expansion.

The article notes that “many new enrollees have been frustrated by the lack of providers willing to see them,” and that “(p)hysicians and clinics that treat the poor say they’ve been overwhelmed by new patients.”

Chuck Duarte, the state’s former Medicaid chief and director of the region’s largest community health center, noted, “We are struggling to keep up with demand for care.”

A Kauffman Foundation study found longer wait times for community health centers in expansion states, concluding that expansion states were “more likely to report increased wait times for appointments.”[vi]

Anecdotal evidence for longer wait times exists as well. In California, according to this NPR report, “patient advocates say the Medicaid expansion has exacerbated longstanding shortages in specialty care.”

 

Government Restrictions Limit Supply Capacity

Further restricting the ability of North Carolina’s healthcare industry to expand in response to Medicaid expansion’s increase in demand for services are our state’s scope of practice restrictions and Certificate of Need laws.

With a shortage of doctors available to treat the sizeable number of new Medicaid enrollees, some of the services could be administered by registered nurses and physician assistants.

Unfortunately, however, North Carolina scope of practice laws prevent that from happening.

Current North Carolina law restricts the scope of care that registered nurse practitioners, advanced practice registered nurses, and physician assistants can provide, while also requiring a certain level of supervision by a licensed physician.

With a shortage of licensed physicians treating Medicaid patients – especially in rural areas – laws restricting the ability of highly-trained medical care providers to provide much-needed care would only exacerbate Medicaid enrollees’ access to care.

Also adding to this problem are North Carolina’s antiquated Certificate of Need (CON) laws. These laws require medical providers to first get permission from the state government to open new facilities, expand current facilities or add medical devices.

Some medical providers desiring to expand capacity, therefore, can be denied by the state’s CON laws. Still others will be discouraged to even attempt to engage in the very costly process of acquiring state permission.

These restrictions serve as yet another reminder of the inability for North Carolina’s healthcare industry to expand to meet rising demand from the swelling ranks of Medicaid patients.

 

Conclusion

Existing doctor shortages – exacerbated by a growing number of doctors choosing early retirement –  and state government restrictions on medical facilities and scope of care point to a potentially hazardous lack of access to care for Medicaid enrollees in the event North Carolina chooses to expand its program.

Evidence from other states that chose to expand Medicaid also suggests that supply growth has been virtually nonexistent, which has contributed to growing concerns about longer wait times and lack of access to care for Medicaid patients.

It is mere wishful thinking for Hall and other Medicaid expansion advocates to believe North Carolina’s healthcare industry can just expand its capacity in order to meet the significant spike in demand that would occur as a result of Medicaid expansion.

There is simply no way to avoid the reality that Medicaid coverage will not mean access to care.

 

 

[i] The Commonwealth Fund and Kaiser Family Foundation. “Experiences and Attitudes Among Primary Care Providers Under the First Year of ACA Coverage Expansion.” Issue Brief, June 2015. Accessed online March 26, 2019 at: https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_issue_brief_2015_jun_1823_kaiser_commonwealth_primary_care_survey_ib.pdf
[ii] Andrew W. Mulcahy, PhD, MPPTadeja Gracner, PhDKenneth Finegold, PhD. “Associations Between the Patient Protection and Affordable Care Act Medicaid Primary Care Payment Increase and Physician Participation in Medicaid.” JAMA Internal Medicine. August 2018. Accessed online March 26, 2019 at: https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2687526
[iii] Sandra Decker, “No Association Found Between the Medicaid Primary Care Fee Bump and Physician-Reported Participation in Medicaid.” Health Affairs, Volume 37, Issue 7. Accessed online March 26, 2019 at: https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2018.0078?journalCode=hlthaff
[iv] Monice Bhole and Vilsa Curto, “Early ACA Medicaid Expansions: Impacts on Enrollment and Access.” December 2017. Accessed online March 26, 2019 at: file:///C:/Users/bbalfour/Downloads/EarlyACAMedicaidExpansionsImpactsO_preview.pdf
[v] Sarah Miller, PhD; and Laura Wherry, PhD. “Health and Access to Care During the First 2 Years of the ACA Medicaid Expansions.” The New England Journal of Medicine. March 9, 2017. Accessed online March 5, 2019 at: https://www.nejm.org/do.i/full/10.1056/NEJMsa1612890
[vi] Peter Shin, Jessica Sharac, Julia Zur, Sara Rosenbaum, and Julia Paradise. “Health Center Patient Trends, Enrollment Activities, and Service Capacity: Recent Experience in Medicaid Expansion and Non-Expansion States.” Kaiser Family Foundation. Accessed online March 26 at: https://www.kff.org/medicaid/issue-brief/health-center-patient-trends-enrollment-activities-and-service-capacity-recent-experience-in-medicaid-expansion-and-non-expansion-states/