How Will Medicaid Enrollees Fare under Obamacare?

In 2014, the nation is expected to start insuring about 32 million uninsured people. About half will enroll in Medicaid directly; and if the Massachusetts precedent is followed, most of the remainder will be in heavily subsidized private plans that pay little more than Medicaid rates.[1]

That raises an important question: How good is Medicaid? Will the people who enroll in it and in private plans that function like Medicaid get more care, or better care, than they would have gotten without health reform? I will begin this series by evaluating the evidence to answer that question. Then, I will propose three alternatives: (1) abolish Medicaid altogether and integrate the beneficiaries into the private health insurance system; (2) allow Medicaid to be a competing health plan, rather than a plan that sequesters poor people; or (3) replace much of Medicaid outpatient spending on the nonelderly, nondisabled with a health stamp program. (For more details, please see my book Priceless: Curing the Healthcare Crisis.)

The 32 million newly insured citizens may not get more healthcare. They may even get less care. Even if they do get more, odds are that low-income families as a group will get less care than if there had never been a health reform bill in the first place. The reason: As we have seen, the same bill that insures 32 million new people also will force middle- and upper-middle-income families to have more generous coverage than they now have. As these more generously insured people attempt to acquire more medical services they will almost certainly out-bid people paying Medicaid rates for doctor services and hospital beds. To make matters worse, the health reform bill did nothing to increase the supply side of the market to meet the increased demand.

The Effects of Underpaying Physicians

On paper Medicaid is attractive. It promises coverage for most medical services with no premium and usually no out-of-pocket payments. But Medicaid pays physicians only about 60 percent as much as private insurers pay, and many Medicaid patients have difficulty finding doctors who will see them. Increasingly, physicians are dropping out of the Medicaid program, declining to see new Medicaid patients or limiting Medicaid patients to a small percentage of their practice.[2] As a result, the patients turn to much costlier settings, such as hospital clinics and emergency rooms.

One study found that children were denied appointments 60 percent of the time when a caller reported Medicaid-CHIP as their coverage. By contrast, only 11 percent were denied an appointment when the caller reported private insurance. Of those who were able to obtain an appointment as Medicaid patients, the average wait was twenty-two days longer than those with private insurance.[3] Another study found that even the uninsured have an easier time making doctors’ appointments than Medicaid enrollees.[4]

Although Medicaid rates for physicians are typically lower than what physicians receive from the private sector in every state,[5] the payment gap varies from one state to the next. New York state pays only about $30 for a comprehensive eye exam for a new patient, while Mississippi reimburses a physician $106 for the same service. Texas and Florida pay $63.55 and $66.90, respectively.

Access to Primary Care

About 30 percent of doctors do not accept any Medicaid patients, and among those who do, many limit the number they will treat. One survey found two-thirds of Medicaid patients were unable to obtain an appointment for urgent outpatient care.6 In three-fourths of the cases, the reason was the provider did not accept Medicaid. Among general practitioners who will accept Medicaid, the lowest figures are 30 percent (Los Angeles), 40 percent (Miami) and 50 percent (Dallas and Houston).[7]

Access to Specialists

People enrolled in Medicaid and CHIP also experience difficulty finding specialists who will treat them for the low fees Medicaid pays.[8] A Government Accountability Office (GAO) report discovered that children enrolled in Medicaid or CHIP were one-third more likely to report problems accessing specialty care than children enrolled private health plans.[9] One survey[10] finds that:

  • In Dallas and Philadelphia, only 8 percent of cardiologists accept Medicaid patients; in Los Angeles, it’s only 11 percent.
  • In both Dallas and New York City, only 14 percent of OB/GYN specialists will see Medicaid patients; the figure is 28 percent in Miami and 33 percent in Denver.

Use of the Emergency Room

According to a recent report, between 1997 and 2007 the total number of annual hospital emergency room (ER) visits doubled, mostly due to the increased frequency of use by adults with Medicaid coverage.[11] Medicaid enrollees account for more than one-fourth of all ER visits in the United States.[12]

Poor access to care is part of the problem. In our next installment, we will look at another aspect: quality of care under Medicaid. Problems with access to care and with quality of care support the case for reforming Medicaid.


  1. Robert Steinbrook, “Healthcare Reform in Massachusetts—Expanding Coverage, Escalating Costs,” New­ England­ Journal­ of­ Medicine­ 358 (2008): 2757–2760, http:// Ben Storrow, “State’s Health-Care Coverage Gets Mixed Grades, Daily Hampshire Gazette, February 8, 2010.
  2. Kevin Sack, “As Medicaid Payments Shrink, Patients Are Abandoned,” New­ York ­Times, March 15, 2010, policy/16medicaid.html.
  3. Joanna Bisgaier and Karen V. Rhodes, “Auditing Access to Specialty Care for Children with Public Insurance,” New­ England­ Journal­ of­ Medicine 364 (2011): 2324–2333.
  4. Brent R. Asplin et al., “Insurance Status and Access to Urgent Ambulatory Care Follow-up Appointments,” Journal ­of ­the­ American­ Medical­ Association 294 (2005): 1248–1254, doi: 10.1001.
  5. John C. Goodman et al., “Medicaid Empire: Why New York Spends So Much on Healthcare for the Poor and Near Poor and How the System Can Be Reformed,” National Center for Policy Analysis, Policy Report No. 284 (2006): 27, http://www
  6. Brent R. Asplin et al., “Insurance Status and Access to Urgent Ambulatory Care Follow-up Appointments,” Journal­ of ­the­ American ­Medical­ Association 294 (2005): 1248–1254. doi: 10.1001/jama.294.10.1248.
  7. Merritt Hawkins & Associates, “2009 Survey of Physician Appointment Wait Times.”
  8. Ron Shinkman, “Kids in Medicaid, CHIP Have Trouble Accessing Specialty Care,” Fierce ­Healthcare, April 6, 2011,
  9. “Medicaid and CHIP Information on Children’s Access to Care,” Government Accountability Office, GAO-10-293R, April 5, 2011,
  10. Merritt Hawkins & Associates, “2009 Survey of Physician Appointment Wait Times.”
  11. Ning Tang, John Stein, Renee Y. Hsia, Judith H Maselli and Ralph Gonzales, “Trends and Characteristics of US Emergency Department Visits, 1997‒2007,” Journal­ of­ the­ American­ Medical Association 304 (2010): 664‒670. doi: 10.1001/jama.2010.1112.
  12. Linda Gorman, “Medicaid Block Grants and Consumer-Directed Healthcare,” National Center for Policy Analysis, Issue Brief No. 102, September 15, 2011.

[Cross-posted at Psychology Today]

John C. Goodman is a Research Fellow at the Independent Institute, President of the Goodman Institute for Public Policy Research, and author of the Independent books, Priceless: Curing the Healthcare Crisis and A Better Choice: Healthcare Solutions for America.
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