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60 EXPLANATIONS AND BACKGROUND significant factor in influencing physician participation, they found the marginal effect of fees to be small: If Medicaid payments were increased to the Medicare level—a difference of $7.38—the proportion of primary care physicians participating fully would increase by only about 7.5 percentage points, from 36.4 to 43.9 percent. Similarly, a Medicaid fee increase of roughly $13 (an increase of nearly 60 percent) would be required to reach the OBRA-89 target of 50 percent of physicians participating fully. . . . In large metropolitan areas, the fee increase needed to reach 50 percent full participation among primary care physicians would be even larger. A fee increase of about $18 would be required to reach this target, bring the Medicaid fee to nearly $39 (an increase of 85 percent), $11 (about 39 percent) above Medicare fees. (22) In light of states’ fiscal stress at that time, and the unlikelihood that states would increase fees to the extent described above, Perloff , Kletke, and Fossett concluded that raising Medicaid fees to improve access to private, office-based physician care would not be a successful strategy.22 The conclusion from another study of a 30 percent fee increase in New York state concurred with Perloff, Kletke, and Fosset’s findings, noting that “a marginal increase in New York State’s low Medicaid fees will not have a positive effect on physician participation levels” (Fanning and de Alteris 1993, 27).23 In most states, a handful of public clinics take care of the vast majority of Medicaid recipients (Brodt, Possley, and Jones 1993). Although Adams’s (1995) study of a fee increase in Tennessee found higher fees lead to increased physician participation, she also discovered a negative association between residential segregation and participation.24 Consistent with a report by the Physician Payment Review Commission in 1992, and studies by Fossett, Peterson, and Ring (1989), Adams suggests that if residential segregation has an important impact on participation, then “policies should focus on expanded support to inner-city hospitals , community health centers, and local public clinics” (Adams 1995, 85).25 It is important to note that in the name of improving access to care, this strategy relies on—and indeed would enhance— our dual-track system of health care.26 Finally, three separate studies based on physician surveys found physician attitudes about Medicaid recipients and the Medicaid MEDICAID’S PERSISTENT AND CONFLICTING GOALS 61 program to be as important as Medicaid fees in influencing physician willingness to participate (Nesbitt et al. 1991; Margolis et al. 1992; Komaromy, Lurie, and Bindman 1995).27 In summary, by the early 1990s there was a general sense of despair that Medicaid could ever achieve its mainstreaming goal. There was a real questioning as to whether fee increases alone could substantially increase physician participation in the program. And there were legitimate suggestions put forth that policymakers should abandon the mainstreaming goal for the Medicaid program altogether. For example, in a commentary on the state of the Medicaid program, Stephen Davidson noted that “for both political and economic reasons, Medicaid can never be what its original planners had hoped, the vehicle for providing the poor with reliable access to mainstream medical care” (Davidson 1993, 43). HOPE IN MEDICAID MANAGED CARE, 1990S In the early 1990s policymakers readily characterized state Medicaid programs as administrative failures. To be sure, most policymakers acknowledged that Medicaid played a crucial role in providing health coverage for millions of Americans. Yet there was broad agreement—among Republican and Democratic officials alike— that Medicaid suffered from serious operational flaws. Medicaid still failed to cover many needy people, and the health care it offered was too often of low quality and provided inefficiently. Numerous studies documented that Medicaid recipients were much less likely than Americans with private health insurance to have a relationship with a primary care doctor or to receive needed preventive care and much more likely to receive their care in hospital emergency room settings or public clinics with long waiting lines (Davidson and Somers 1998; Brodt, Possley, and Jones 1993; CRS 1993). Despite the targeted efforts to increase prenatal care and well-child care coverage in the 1980s, a large proportion of Medicaid women still received no, or only minimal, prenatal care services (Colburn 1991). Many children enrolled in Medicaid were failing to receive needed immunizations (Slovut 1991). Layered atop these concerns about health care access and quality were concerns about Medicaid costs. Although the...

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