How Did Medicaid Expansion Affect The Provider Labor Market?

One provision of the Affordable Care Act was to expand Medicaid eligibility for a greater number of low-income patients. The resulting increase in demand for care was largely explored, but the effect of the 2014 Medicaid expansion on the physician and advanced practitioner labor market has not been well researched by economists. Using pooled cross-sectional data from the 2010 - 2018 American Community Surveys, this paper examines whether the Medicaid expansion has caused notable changes in physician, physician assistant, and nurse practitioner hours, compensation, and overall employment. The literature shows that practices that employ nurse practitioners are far more likely to accept Medicaid patients due to the lower wage rates of nurse practitioners that offset lower reimbursement rates for Medicaid patients. This study finds that the weekly hours worked by nurse practitioners increased significantly in states that have implemented Medicaid expansion, whereas physicians and physician assistants saw no change in their hours or earnings. Further, Medicaid expansion led to no significant change in the overall employment of each type of provider in states. Thus, the response of the health care system to the Medicaid expansion is in line with the profit maximizing input allocation.

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