Don’t Believe The Hype: Medicaid Expansion Won’t Overwhelm The U.S. Health Care System

One concern consistently raised by Obamacare skeptics is the effect that the law’s optional Medicaid expansion will have on the limited supply of physicians in the United States. Some argue that a rush of newly insured low-income Americans into the health care system will overwhelm physicians, forcing them to work unsustainable hours. But a new study conducted by researchers at the Government Accountability Office (GAO) and the Center for Studying Health System Change suggests otherwise. Researchers point out that the creation of the Children’s Health Insurance Program (CHIP) in 1997 — which was a similar expansion of a health entitlement program — didn’t lead to such negative consequences, and even had the exact opposite effect in certain cases.

The “demand-driven” model of health care consumption theory assumes that greater access to care will lead to greater consumption of health care services, forcing doctors to work longer hours to meet the increased demand. But, according to report authors Fang He and Chapin White, that’s not what happened with CHIP. The new study concluded that CHIP’s implementation actually led to pediatricians working significantly less hours in states that had the most robust CHIP programs, with a 5 percent increase in the enrolled pool correlating with a 14 percent reduction in hours worked:

“These findings are clearly inconsistent with the hypothesis that physicians will work longer hours to accommodate an influx of demand following a coverage expansion,” He and White wrote. “What is less clear is whether the association we find is causal and, if so, why pediatricians would actually work fewer hours in response to a coverage expansion.”

They speculate that there could be two reasons: CHIP reduced average reimburse rates for pediatricians that led them to reduce their hours; or, the shorter hours are a reaction to the managed-care nature of CHIP and its gatekeeper mechanisms.

Assumptions that healthcare is a demand-driven model in which physicians provide the volume of service patients demand “rest on very shaky ground,” the report stated. In contrast, a supply-driven model includes physicians treating patients with a variety of insurance arrangements and tailoring their practices to the financial incentives those arrangements create. The researchers cite a 2009 finding that reimbursement for an office visit for a child on private insurance was $81 compared to $47 for a child enrolled in Medicaid or CHIP. […]

The data is not conclusive, and the methodology is imperfect. But the study does demonstrate a point that often gets overlooked in health care policy debates: Massive systemic changes do not occur in a vacuum, and the assumption that current health care trends will proceed in perpetuity despite ongoing policy changes is a flawed one.

For instance, as the report’s authors point out, doctors and providers may make significant structural changes in reaction to new health policies. While there’s some evidence that the lower payments from low-income assistance models like Medicaid and CHIP may dissuade doctors from accepting those patients, it’s by no means a clear-cut case. An equally feasible scenario is that doctors, acknowledging the reality of an expanded patient pool that must rely on such programs, facilitate care for those patients in a way that serves them while lowering doctors’ burden. This can be accomplished through a variety of methods, including innovation in health care delivery through better care coordination, case management, and the use of skilled practitioners — rather than physicians — to address lower-risk and common medical problems.

In fact, there’s evidence that this may be exactly what is occurring in American health care. A January Health Affairs study found that the dreaded “doctor shortage” that many health care policy experts have predicted will be exacerbated by Obamacare may not actually happen, as doctors increasingly join large practices where they share staff and office space, and physician assistants and nurse practitioners take on larger roles by conducting routine care services. It’s no coincidence that Obamacare encourages many of these same delivery system reforms through the development of Accountable Care Organizations (ACOs) that coordinate patient care between hospitals, nurses, general practitioners, and physicians. Medical colleges have taken note of these reforms and are even teaching their students “how to work more effectively with other health professionals,” with a special emphasis on “teamwork among doctors, nurses, nurse practitioners, social workers, health aides and physician assistants.”

The long-term consequences of systemic and cultural changes like these are almost impossible to predict because they have never really been tried before. That’s why organizations like the Congressional Budget Office (CBO) can’t include potential savings from these new innovations in their projections — they don’t have a baseline to use. But that’s also why speculation over Obamacare’s consequences that are based solely on current trends should be approached with skepticism, as past experience demonstrates that the health care industry is more determined to be a force that facilitates policy change, rather than a passive participant that is swept up by it.