A Workman Is Worthy of his Hire

Apparently doctors consider themselves workmen, too. Having paid for their own educations and insurance, they resent being dragooned into working below their rate.

Decker finds a positive correlation between Medicaid reimbursement rates and how many providers accept Medicare. In Wyoming and Alaska – largely rural states that pay Medicaid providers about 50 percent more than Medicare reimburses – the vast majority of providers accept Medicaid. In New Jersey – where reimbursement is the lowest – only about 30 percent say they’ll take new patients.

Why is this important? Part of the new health care law is expanding Medicaid. In states with lower reimbursement rates, however, more private doctors simply refuse to play along.

Which states would those be?

As Avik Roy pointed out a few weeks ago, states with Democratic governors actually tend to have lower reimbursement rates.

What? Why?

Faced with crunched budgets, some have chosen to cut provider payment rather than reduce services.

So, faced with crunched budgets, the states have chosen to cut the doctors' pay per Medicaid client. They are shocked to find that doctors are unwilling to accept such clients when they could work for people who pay the full rate.

This is what the death spiral looks like. Expand social welfare, and costs rise. Costs rising leads to budget cuts. Budget cuts lead to fewer doctors being willing to participate in the social welfare system. This results in political pressure on the politicians to force the doctors to participate...

...and that's surely the next step here. Expect it when you see it.

By the way, what does it mean for the health care law if the Republican states refuse to fund the exchanges, and the Democratic states can't afford to pay doctors for the Medicaid expansion?