Expansion of Children’s Health Insurance Program Linked to Substantial Changes in Practice Decisions of New Pediatricians

The Children’s Health Insurance Program (CHIP), which was established by Congress in 1997, provides health insurance coverage to children whose families earn too much to qualify for Medicaid but who can’t afford private insurance. Following the reauthorization and expansion of CHIP in 2009 the program grew substantially and today, the majority of low-income children in the United States are covered by either Medicaid or CHIP health insurance plans.

Enrollment in CHIP and Medicaid plans has been shown to increase children’s routine and preventive care utilization, reduce ethnic disparities in access to care, and improve care for the chronically ill. Though researchers have looked at these and many other effects of the programs on participants, there has been substantially less research into the impact of these programs on provider behavior.

According to a new study published in Health Economics, the 2009 program expansion had a substantial impact on the practice decisions of new pediatricians: the researchers found newly trained pediatricians were 8 percentage points more likely to subspecialize and as much as 17 percentage points more likely to enter private practice. This may have important implications for provider and specialist access.

“Federal funding for graduate medical education training at Children’s Hospitals has declined, and there is a clear income differential between adult and pediatric specialists, especially with Medicaid reimbursing at lower average levels than Medicare,” explained Schaeffer Center Economist Alice Chen, who was a co-author on the study. “We find that the assurance of reimbursements affects decisions to subspecialize, and this supply-side response should be recognized when assessing the value of a policy.” Chen is also an assistant professor at the Price School of Public Policy.

Chen and her colleagues used a unique data set which tracks residency, fellowship, and first job characteristics for all training physicians in New York from 2002 to 2013 to analyze trends in physician behavior before and after the expansion. They found evidence to suggest that the policy change led to an increase in the number of pediatricians willing to take positions in private practice as well as an increase in sub-specializations:

  • They found the rate at which pediatricians were choosing to go into private practice between 2008 and 2009 increased approximately 40 percent and continued to be substantially higher than the rate for adult generalists through 2013.
  • After the reauthorization and expansion, the rate at which pediatricians were choosing to go into a sub-specialization increased by 12-20 percent (from roughly 40 percent to 45-48 percent), which was a marked difference from the rate of sub-specialization among adult generalists.

In addition, the researchers note there was some evidence to show pediatricians were migrating to less urban areas following the reauthorization of CHIP- a trend not seen in general practitioners.

One concern with insurance expansions is that it is not synonymous with access to care, especially given that public programs tend to reimburse at lower rates. Furthermore, if providers are already at capacity and no new providers are entering the market, then it may be difficult for newly enrolled beneficiaries to find physicians who are willing to take on additional Medicaid patients. These results seem to show that new providers respond to stability in program funding by taking on more financial risk through enrolling in sub specialization programs or accepting positions in private practice.

“Decisions to change program funding may have broader consequences than the immediate issues of patient coverage and access that are often taken into account,” Chen said.  These findings suggest stable program funding has direct implications on new pediatricians’ decisions to enter markets. The political discourse surrounding decisions to fund CHIP and other healthcare reform efforts, “should encompass a wider set of potential consequences than many prior efforts,” writes the researchers.

Co-authors on the paper include Anthony T. Lo Sasso of the University of Illinois-Chicago and Michael R. Richards of Vanderbilt University.