MEDICAID EXPANSION & ECONOMIC SHORTAGES

 

(May 2013) Economists and medical professionals have understood for some time that shortages exist within Arkansas’ health care system.  But the bipartisan group of state lawmakers that expanded Arkansas’ Medicaid rolls by an estimated quarter-million recipients (250,000) ignored this issue in three public acts1 that expanded the program.  The unintended economic consequence2 is that existing Arkansas medical shortages will worsen.

 

Policymakers in other states considering Medicaid expansion should be aware of this issue.

 

Arkansas Medical Shortages: A Long-Term Problem

 

A 2009 Foundation public forum on increasing access to medical insurance in Arkansas featured state officials who acknowledged shortages, especially in rural areas.  Medical professional distributed literature identifying Health Professional Shortage Areas (HPSA)3 in Arkansas.  Forum participants also discussed “alternative systems of delivering medical care”4 as a response to the long-term problem of shortages.

 

The issue of shortages has gained greater visibility in recent years:

 

·                     A 2011 study by the Univ. of Arkansas Medical Services Center for Rural Health found a shortage of more than 500 primary-care physicians, with the number expected to grow.

 

·                     A 2013 study by the Arkansas Center for Health Improvement also notes the state has a shortage of primary-care physicians.

 

Arkansas Policymakers Silent on Shortages

 

Under the expansion, uninsured Arkansans will obtain insurance through the federal Patient Protection and Affordable Care Act and federal Medicaid funds, which will allow them to purchase insurance from non-profit and private insurers. The three acts that expand Arkansas’ Medicaid rolls total nearly 50 pages, including amendments.  But they do not include an explicit statement of intent that the purpose is to reduce medical shortages. Rather, the “purpose” of the Arkansas legislation was defined as follows:

 

(1)  Improve access to quality health care;

(2) Attract insurance carriers and enhance competition in the Arkansas insurance marketplace;  

(3) Promote individually-owned health insurance;  

(4) Strengthen personal responsibility through cost-sharing;

(5) Improve continuity of coverage;

(6) Reduce the size of the state-administered Medicaid program;

(7) Encourage appropriate care, including early intervention, prevention, and wellness;  

(8) Increase quality and delivery system efficiencies;  

(9) Facilitate Arkansas's continued payment innovation, delivery system reform, and market-driven improvements;  

(10) Discourage over-utilization; and  

(11) Reduce waste, fraud, and abuse.

 

Conclusion: Addressing the Problem of Shortages

An economic shortage exists when the supply of a good or service is less than demand at the existing price. The demand curve for Arkansas medical services will shift to the right as a result of Medicaid expansion. Expanding the number of primary-care physicians and other medical professionals, would cause the supply curve to shift, ceteris parabus as would measures that increase productivity.  The 2009 Foundation forum examined several proposals to shift the supply curve, i.e., expand supply. One proposal would expand the use of advanced nurse practitioners and midwives in Arkansas.

 

The proposal was tabled for further study in the recently-concluded legislative session.

 

--Greg Kaza


1  PA 1496, 1497 and 1498 of 2013.  Arkansas Republicans controlled the state General Assembly for the first time since Reconstruction in the late 19th century, and sponsored the latter two measures. 

2  Frederic Bastiat (1801-1850), a French economist and federal legislator is among those noting the relationship between the short-term “seen” and long-term “unseen” in economics.

3  HPSAs are designated by the U.S. Department of Health and Human Services as having shortages of primary medical care, dental or mental health providers and may be geographic (a county or service area), demographic (low income population) or institutional (comprehensive health center, federally qualified health center or other public facility). Recent data (January 2013) shows shortages have increased in Arkansas since the 2009 Foundation forum. HHS, Health Resources and Services Administration http://www.hrsa.gov/shortage/

4  A 2008 Foundation study noted two alternative systems are advanced nurse practitioners and midwives.