Since the Affordable Care Act, doctors in Medicaid expansion states have been paying higher liability insurance premiums and bearing more medical liability costs. Can policymakers reverse this trend without sacrificing access to healthcare?
When Congress passed the Affordable Care Act (ACA) in 2010, many states expanded access to Medicaid, a public program that provides healthcare for people with limited income and resources. But with greater access to healthcare, are there potential consequences for the quality of care people receive?
The Fox School’s Martin Grace, Joseph E. Boettner Professor of Risk, and Jingshu Luo, PhD ’20 and an assistant professor of risk management and insurance at University of Mississippi, conducted several analyses on how Medicaid’s expansion impacted medical malpractice.
The political concerns are that increased access could lead to higher demand for doctors before new physicians could be trained. This would leave newly insured people with insufficient healthcare opportunities.
“The number of people on Medicaid went up dramatically,” says Grace about the period following the ACA. “But the number of doctors stayed about the same.”
Grace and Luo’s papers study two sides of the same coin: costs due to medical malpractice and prices of medical liability insurance.
Their first paper, “Medicaid expansion, tort reforms, and medical liability costs,” finds that insurers, doctors and hospitals in Medicaid expansion states paid higher medical liability costs than those in non-expansion states in the years following the ACA.
The researchers analyzed a series of state tort reforms aiming to protect doctors and insurers in medical malpractice cases. Tort reforms refer to changes to the justice system that limit the compensation victims receive. Damage cap reforms, for example, limit how much healthcare providers are responsible for compensating plaintiffs.
The researchers wanted to know: Did the tort reforms impact costs or prices of medical liability insurance in Medicaid expansion states?
“It turned out not so much,” says Grace. “Most tort reforms seemed to have little influence on medical malpractice payouts.”
The caps only affect the largest jury verdicts, when medical errors result in severe damage payouts. But for smaller errors, these tort reforms have no impact.
“What we are actually seeing is more frequent losses,” says Grace.
In other words, the tort reforms’ lack of impact suggests that increasing medical malpractice costs were driven not by the severity of mistakes but by a higher frequency of small mistakes.
Their second paper, “Does Public Health Insurance Expansion Influence Medical Liability Insurance Prices?,” analyzes the impact of Medicaid expansion on medical liability insurance prices.
“The first paper says the medical liability costs go up, so we wanted to see what that meant in terms of insurance pricing,” says Grace.
They find that the price of medical malpractice liability insurance increased in states that adopted Medicaid expansion.
A deeper look into the data strengthens the case for Grace and Luo’s hypothesis that Medicaid expansion was responsible for this change. The insurance price for surgeons and general practitioners increased, while the price for OB-GYNs remained the same.
”We think that because Medicaid had already expanded in the past to cover pregnancy, it just didn’t have the same effect on OB-GYN doctors as it did other doctors,” says Grace.
For greater specificity, the researchers narrow their analysis to the county level and compare bordering counties on state lines with different Medicaid policies. For example, consider a place like Kansas City (located on the border of Missouri and Kansas), where doctors in both states serve identical communities but may have different state policies regarding Medicaid expansion. Even there, they find dramatic differences in medical liability insurance prices on either side of the border.
Nobody wants to see an increase in medical malpractice, so does this mean there is a problem with Medicaid expansion? Perhaps, but it is not so simple. Rather than looking at Medicaid expansion in a vacuum, it may be wiser to look at other ACA policies that are shaping doctors’ behavior.
For years, Congress has been in a cycle of cutting and then reinstating reimbursements to Medicaid doctors. “Congress often says we are spending too much on Medicaid, and we want to cut reimbursements to doctors,” says Grace. “So we do that. Then we see fewer doctors treating Medicaid patients. So we undo it.”
Instead, Grace suggests that policymakers focus on increasing the number of healthcare providers serving Medicaid patients, which is one of the lowest-paying career paths that doctors can take. Boosting reimbursement rates is one way to encourage doctors to serve this population. Other measures, such as eliminating licensure policies that prevent doctors from practicing across state lines, can help, too. These interventions, which offer doctors fair compensation and a manageable client load, have the potential to reduce medical errors without sacrificing healthcare access.
Policymakers should be concerned about the spike in medical malpractice. Insurers, hospitals, doctors and most of all, patients have a lot to lose when doctors make avoidable errors. Evidence suggests that policy exacerbated this problem. Reason stands it might be the solution, too.