• Chapin White’s response to Avik Roy

    I asked Chapin White to comment on Avik Roy’s post about his work. In reply, Chapin sent me the following by email and authorized me to post it.

    The author of the recent Atlantic blog post did not contact me while writing the piece, and I found that it missed several key points.

    1. The Atlantic blog misrepresents the ACA in two key ways.

    a. It represents low provider payment rates in Medicaid as a major problem with the program. It ignores the fact that the ACA begins to address this problem by increasing primary care physician fees in Medicaid beginning next year (sec. 1202). This feature of the ACA is pointed out in the third sentence of the HSR article.

    b. The blog claims that the Medicaid expansion in the ACA will mainly impact people in the lower-middle income group (i.e. not the lowest). In fact, the Medicaid expansion in the ACA will occur more or less exclusively among childless adults with very low incomes (below 138 percent of the federal poverty level). The crowdout phenomenon, which drives much of the discussion in the Atlantic blog, is smallest when coverage is expanded to people in the lowest income groups.

    2. The Atlantic blog also misrepresents the paper’s findings:

    a. The paper finds that the effects of CHIP expansions on indicators of access are mixed. Non-cost related access problems (e.g. waiting for appointments) appear to go up in one of the four income groups, whereas the share of children having 1 or more ER visits in a year appears to go down for the lowest of the four income groups. This mixed finding does not support the blogger’s contention that “[the ACA’s] expansion of Medicaid coverage … may actually reduce those individuals’ access to health care.”

    b. The evidence in the HSR paper suggests that CHIP did not change aggregate physician utilization one way or the other (i.e. the point estimate is near 0), but the HSR paper points out that “the results on doctor visits are not precisely estimated due to the variability in the underlying measure.” The Atlantic blog incorrectly characterizes the HSR paper as finding that “physician utilization was lower in the states with the largest CHIP expansions.”

    Here are the last three paragraphs from the HSR piece—these properly summarize my take on the paper and its findings:

    “In general, these findings argue strongly against the idea that the effect of expanding coverage on utilization can be deduced simply from the reduction in patient cost sharing. The nature of the coverage—for example, does the coverage consist of a tightly managed product? does the coverage pay providers generously?—appears to be critical.

    “From a federal budgetary perspective, these results are good news— if we extrapolate from the results in this article, the expansions of public coverage called for in PPACA will not have any effect on aggregate utilization of physician services. From the enrollee’s perspective, the results are mixed—the benefits of expanded public coverage may lie primarily in improved financial protection, rather than a sheer increase in services received. These findings also support the idea that public health insurance plans can have spillover effects on children who do not themselves gain coverage, and that those spillover effects can either increase utilization (if the public plan’s reimbursement environment is made more generous) or reduce utilization (if coverage is expanded without making reimbursement more generous).

    “As it is conventionally understood, our policy options are either to expand coverage and increase health spending or to leave coverage gaps and hold the line on spending. That dilemma is false. Coverage expansions by themselves do not necessarily spur increases or decreases in overall utilization—what does appear to matter is the nature of the coverage and the generosity of provider reimbursements in the public program. The policy questions that we should be focusing on are as follows: (1) the degree to which we want the rationing of medical services to occur based on out-of-pocket costs and the ability to pay versus nonprice factors such as queuing, and (2) the degree to which we want our financing of the health care system to be redistributive. Expanding public coverage clearly moves in the direction of redistributive financing. Depending on how we choose to set reimbursement levels in our public programs, expansion coverage may or may not move in the direction of increased utilization and increased system spending.”

    An ungated pdf of Chapin’s paper is here.

    @afrakt

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    • Thanks for providing a link to the paper.

      Chapin White claims

      “It ignores the fact that the ACA begins to address this problem by increasing primary care physician fees in Medicaid beginning next year (sec. 1202). This feature of the ACA is pointed out in the third sentence of the HSR article.”

      OK, let’s see what the paper says. When I read the third sentence of the paper, it says,

      “A second approach is embodied in the requirement that states increase their Medicaid physician fee schedules, so that they are no lower than Medicare’s.”

      So that looks good. But then, just two sentences later, it says,

      “The increase in fees is a much more limited provision—it applies
      only to so-called evaluation and management services provided by primary care physicians, and it only applies to services provided in 2013 or 2014.”

      Hmmm — so, according to White’s paper, it seems as though ACA *doesn’t* really address the issue of excessively low payments to providers. Can you explain what’s going on here?

    • Theodore,

      My response to Austin’s post can be found here—not sure why he didn’t post it himself:

      http://www.forbes.com/sites/aroy/2012/03/13/why-we-should-worry-about-massively-expanding-medicaid/

      I make the point about PPACA’s temporary Medicaid reimbursement rate spike, and several others.