State Variation in Primary Care Physician Supply: Implications for Health Reform Medicaid Expansions

HSC Research Brief No. 19

March 2011

Peter J. Cunningham

The Patient Protection and Affordable Care Act (PPACA) is projected to add roughly 16 million individuals to Medicaid rolls by 2019, representing a surge of over 25 percent. Because a significant share of primary care physicians (PCPs) decline to see new Medicaid patients, concerns have mounted about whether the primary care infrastructure can handle such heightened demand. A new national analysis by the Center for Studying Health System Change (HSC) finds that states with the fewest PCPs per capita -- concentrated mainly in the South and Mountain West -- stand to experience the steepest percentage gains in Medicaid enrollment. Meanwhile, states boasting the most PCPs relative to population -- predominantly in the Northeast -- face comparatively moderate enrollment growth. Furthermore, geographic disparities in PCP willingness to take on new Medicaid patients largely mirror differences in the overall PCP supply rather than regional variation in physicians' attitudes toward treating Medicaid beneficiaries.

The legislation also raises Medicaid payment rates for primary care to Medicare levels for 2013 and 2014 -- a significant increase in payment rates for states with the greatest expected growth in Medicaid enrollment. But while higher payment may bolster access for Medicaid patients, the boost alone is unlikely to resolve more fundamental problems of PCP distribution and overall supply, particularly given the temporary nature of the increase.

State Variation in Primary Care Physician Supply

Nationally, there are about 75 office-based PCPs for every 100,000 people, but states vary widely -- from 53 per 100,000 (Mississippi) to 107 (Massachusetts). Breaking the states into low-, medium- and high-supply groups reveals notable regional patterns (see table).

Low-supply states (fewer than 66 PCPs per 100,000) are overwhelmingly in the South and Mountain West. Medium-supply states (66 to 83 per 100,000) are mainly in the Midwest, whereas high-supply states (more than 83 per 100,000) cluster in the Northeast. This geographic concentration suggests that PCP shortages are driven more by structural workforce distribution issues than by random fluctuation.

A clear socioeconomic gradient accompanies these supply differences. On average, residents in low-supply states earn less, have lower rates of employer-sponsored coverage and rely more heavily on Medicaid. High-supply states tend to be wealthier, with higher rates of private insurance and smaller uninsured populations. In short, lower PCP supply often coincides with broader economic disadvantage and greater public insurance dependence.

Projected Medicaid Enrollment Growth

Estimates drawn from the Urban Institute indicate that Medicaid enrollment under PPACA will jump by roughly 26 percent by 2019. Crucially, this growth is not evenly distributed. Low-PCP-supply states face an average enrollment increase of around 37 percent, compared with about 22 percent in medium-supply states and 18 percent in high-supply states.

Two factors largely explain this disparity. First, many low-supply states had not previously expanded Medicaid eligibility for adults, so PPACA's mandate to cover adults up to 138 percent of the federal poverty level generates a larger proportional expansion. Second, these states typically have higher uninsured rates, meaning more people become newly eligible.

Because low-supply states already have fewer physicians per enrollee, projections of more Medicaid beneficiaries per PCP become steeper in these regions. States such as Texas, Georgia and Nevada -- all in the low-supply group -- face especially pronounced pressure on their existing primary care workforces.

Physicians Accepting New Medicaid Patients

In the HSC Community Tracking Study Physician Survey, about 65 percent of PCPs nationally report that they accept all or most new Medicaid patients. However, acceptance rates also vary geographically. In low-supply states, roughly 60 percent of PCPs are open to new Medicaid patients, compared with about 68 percent in high-supply states.

This difference narrows substantially, however, once Medicaid payment-to-Medicare payment ratios are controlled for. States paying Medicaid rates closer to Medicare rates have higher acceptance rates regardless of supply category. When payment levels are held constant, the gap in acceptance rates between low- and high-supply states virtually disappears. In other words, payment rather than attitude is the primary lever influencing physician willingness to see Medicaid patients.

Even among the most willing physicians, capacity constraints matter. Physicians accepting new Medicaid patients in low-supply states tend to practice in areas with fewer total PCPs, limiting the effective access that beneficiaries experience. High acceptance rates are less meaningful when the underlying supply base is thin.

Implications of the Medicaid Payment Increase

PPACA includes a provision to raise Medicaid payment rates for primary care services to Medicare levels in 2013 and 2014, with the federal government covering the full cost of the increase. Because low-supply states tend to have the widest gap between Medicaid and Medicare payment rates, the percentage increase will be largest in those states -- a potentially significant incentive for additional physicians to accept Medicaid.

Simulation analysis suggests that if payment increases translate into proportional increases in acceptance rates -- a reasonable assumption based on the observed payment-acceptance relationship -- the rate of physicians accepting new Medicaid patients in low-supply states could rise to levels comparable to high-supply states. This narrowing would be a meaningful step toward equalizing access.

However, a higher percentage of willing physicians does not automatically translate into better access if the underlying supply of PCPs remains low. Even with equivalent acceptance rates, the absolute number of Medicaid-participating PCPs in low-supply states would remain well below numbers in high-supply states.

Two additional caveats temper optimism about the payment increase. First, the higher rates are authorized for only two years, and the historical pattern of temporary payment boosts is that they revert once funding lapses, taking acceptance rates with them. Second, the provision covers only evaluation and management services and certain vaccine administration codes. Payments for other primary care services remain at pre-reform Medicaid levels, diluting the overall financial incentive for physicians.

Broader Workforce Implications

Beyond Medicaid-specific concerns, PPACA's coverage expansion introduces approximately 32 million newly insured individuals across both Medicaid and subsidized private insurance. The aggregate demand for primary care services is expected to grow substantially. Research suggests that obtaining insurance significantly increases physician utilization, meaning that millions of previously uninsured individuals will begin competing for already-scarce PCP appointments.

The primary care workforce pipeline is unlikely to keep pace. Medical students have increasingly favored specialty fields, and the production of new PCPs has stagnated. Some provisions in PPACA -- including support for community health centers, workforce training grants and the National Health Service Corps -- aim to address supply, but these investments take years to yield practicing physicians.

States with the fewest PCPs and the greatest projected Medicaid growth may find that competing demands from newly insured private patients further strain an already stretched workforce. In these environments, access barriers for Medicaid beneficiaries may persist or worsen despite payment increases.

Policy Considerations

This analysis underscores several points relevant to policymakers and health system planners:

States with the lowest PCP supply face the highest proportional Medicaid enrollment growth.

Raising Medicaid payment to Medicare levels can materially boost physician acceptance of Medicaid patients, but the two-year sunset undermines long-term gains.

Payment increases alone do not solve the underlying distribution problem; more PCPs are needed in underserved regions regardless of who pays the bill.

Nonphysician providers -- nurse practitioners and physician assistants -- already deliver a sizable share of primary care and could absorb some of the demand growth, but scope-of-practice restrictions vary by state and may limit their impact.

Community health centers, often the safety net of last resort, will face intensified pressure in low-supply states. Additional federal funding channeled to these centers may be one of the more immediate strategies for expanding access.

In sum, while higher Medicaid payment rates represent a constructive step, they represent a partial and temporary fix. Longer-term solutions will require sustained investment in workforce training, strategic deployment of nonphysician providers and targeted incentives to redistribute PCPs toward regions where they are most needed.

Data Source

The analysis draws on data from the 2008 HSC Health Tracking Physician Survey, which collected responses from more than 4,700 physicians, and state-level Medicaid enrollment projections from the Urban Institute's Health Insurance Policy Simulation Model. PCP supply estimates are based on the American Medical Association Masterfile for 2008, restricted to nonfederal, patient-care, office-based physicians in general or family practice, general internal medicine, and general pediatrics.

Notes

1. States are categorized into supply tertiles based on the number of office-based PCPs per 100,000 population: low (fewer than 66), medium (66-83) and high (more than 83).

2. Projected Medicaid enrollment increases are based on Urban Institute estimates that account for state-specific eligibility rules, take-up rates and demographic characteristics.

3. Physician acceptance of new Medicaid patients is measured by self-report in the 2008 HSC physician survey. Acceptance is defined as accepting all or most new Medicaid patients.

4. Medicaid-to-Medicare payment ratios are from an analysis by the Urban Institute published in 2009, covering primary care fees across all states and the District of Columbia.

5. Simulation estimates of the effect of payment increases on physician acceptance rates assume a linear relationship between the Medicaid-to-Medicare payment ratio and the probability of accepting new Medicaid patients, derived from regression analysis of the physician survey data.

6. The analysis focuses on PCPs in office-based settings. It does not account for hospital outpatient departments, emergency rooms or community health centers, which also provide a significant volume of primary care to Medicaid beneficiaries.

7. Because the PPACA Medicaid payment increase is temporary (2013-2014), the simulation results represent a short-term scenario rather than a permanent shift.

This research was supported by the Robert Wood Johnson Foundation.

RESEARCH BRIEFS are published by the Center for Studying Health System Change.

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Sources and Further Reading

Federal budget projections remain central to understanding how Medicaid expansion affects state-level physician supply. The Congressional Budget Office publishes independent analyses of health-care spending and coverage proposals, offering data on how legislative changes ripple through primary care capacity across regions.

Enrollment figures and reimbursement rate details shape whether newly eligible Medicaid beneficiaries actually gain meaningful access to primary care. The Centers for Medicare & Medicaid Services maintains state-by-state program data, including provider participation rates and payment schedules that directly influence physician willingness to accept new patients.

Tracking which states expanded Medicaid and the downstream effects on provider networks requires ongoing, state-level surveillance. The Kaiser Family Foundation produces regularly updated dashboards and policy analyses on Medicaid expansion status, eligibility thresholds, and uninsured rates that inform workforce planning discussions.

Peer-reviewed research connecting insurance coverage expansions to primary care utilization patterns is essential for evaluating reform outcomes. Health Affairs publishes original studies examining physician supply responses to coverage changes, geographic maldistribution, and the real-world access challenges that follow large-scale enrollment shifts.

Understanding how primary care delivery models adapt under increased patient demand requires evidence on quality and access metrics. The Agency for Healthcare Research and Quality funds and disseminates research on primary care workforce adequacy, practice organization, and the relationship between provider supply and patient outcomes in underserved areas.