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The Effect of Medicaid Payment Generosity on Access and Use among Beneficiaries


  • Yu-Chu Shen,

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    • Address correspondence to Yu-Chu Shen, Ph.D., Code GB, Naval Postgraduate School, 555 Dyer Road, Monterey, CA 93943. Yu-Chu Shen is an assistant professor at the Graduate School of Business and Public Policy at the Naval Postgraduate School, and a faculty research fellow at the National Bureau of Economic Research. Stephen Zuckerman, Ph.D., is a principal research associate in the Health Policy Center at the Urban Institute and was the principal investigator for this study. This research was conducted when Dr. Shen was a research associate at the Urban Institute.

  • Stephen Zuckerman


Objective. This study examines the effects of Medicaid payment generosity on access and care for adult and child Medicaid beneficiaries.

Data Source. Three years of the National Surveys of America's Families (1997, 1999, 2002) are linked to the Urban Institute Medicaid capitation rate surveys, the Area Resource File, and the American Hospital Association survey files.

Study Design. In order to identify the effect of payment generosity apart from unmeasured differences across areas, we compare the experiences of Medicaid beneficiaries with groups that should not be affected by Medicaid payment policies. To assure that these groups are comparable to Medicaid beneficiaries, we reweight the data using propensity score methods. We use a difference-in-differences model to assess the effects of Medicaid payment generosity on four categories of access and use measures (continuity of care, preventive care, visits, and perceptions of provider communication and quality of care).

Principal Findings. Higher payments increase the probability of having a usual source of care and the probability of having at least one visit to a doctor and other health professional for Medicaid adults, and produce more positive assessments of the health care received by adults and children. However, payment generosity has no effect on the other measures that we examined, such as the probability of receiving preventive care or the probability of having unmet needs.

Conclusions. Higher payment rates can improve some aspects of access and use for Medicaid beneficiaries, but the effects are not dramatic.