David R. Henderson  

The Doctor Might See You Now: Here Comes Rationing

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Education: Economic vs. Academ... Bill Niskanen, RIP...
In The Doctor Might See You Now: the Supply Side Effects of Public Health Insurance Expansions (NBER Working Paper No. 17070), Craig Garthwaite finds that after the 1990s implementation of the State Children's Health Insurance Program (SCHIP)--a partnership between federal and state governments intended to increase insurance coverage for low-income Americans under the age of 19--more physicians participated in the program, but their total number of hours spent with patients declined as a result of shorter office visits. Because of the age limit for SCHIP beneficiaries, pediatricians were disproportionately affected by the new insurance program. The program expansion also increased the percentage of pediatricians that reported accepting new Medicaid patients and the amount of revenue that pediatricians received from Medicaid.

Garthwaite finds that there were fewer visits that lasted more than 10 minutes after this public program expansion. The evidence on shorter office visits is consistent with economic models of physician behavior in a system with both public and private payers. For a portion of the physicians who were not previously participating in the public insurance program, the implementation of SCHIP changed the identity of the "marginal patient" from one covered by private insurance to one covered by the lower-reimbursing government program.

The negative effects of reductions in physician labor supply, such those observed in this study, may be particularly important for Medicaid patients because they are covered by a program that is increasingly not accepted by physicians. From 1996 to 2005, for example, the percentage of physicians reporting no practice income from Medicaid patients, which probably indicates no Medicaid patients were served, increased by 13 percent. Over the same time period, the percentage of physicians reporting that they were not accepting new Medicaid patients increased from 19 to 21 percent. [Italics mine.]


This is from the October 2011 NBER Digest.


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COMMENTS (5 to date)
David N. Welton writes:

For some children, "might see you" sure beats "will not see you even if you are ill, because your parents have no money".

Shayne Cook writes:

Dr. Henderson:

A question ...

Would the Canadian system be improved if it were modified to allow non-public supported medical treatment centers, i.e., Canadians could elect - with exclusively their own money - to get treatment and bypass the public system?

I understand they can do that now by going 'south of the border'. I have Canadian relatives who do that. But I'm curious as to your thoughts on such a 'hybrid' system of (mostly)-public/(allowed)-private.

David R. Henderson writes:

@Shayne Cook,
Yes, it would. Canada has one of the most extreme systems in the world, in the sense of not allowing people to spend their own money on most medical care. Even U.K. doesn't do that.

Shayne Cook writes:

Thank you, David.

Mark Little writes:

I think I am as concerned about supplier incentives and the threat medical rationing as anyone. But we should not overlook the demand side--in this case, the role of patient heterogeneity and the shift in patient composition and patient behavior produced by the policy.

Good medical service requires patients who are good consumers. I can sympathize with a physician faced with an uncommunicative patient or parent, who provides uninformative answers to questions. Ten minutes can become a long time when there seems nothing to talk about.

It is simply not clear to what extent this result reflects a change in physician incentives or a change in the distribution of patient/parent ability to assist with care.

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