The Impact of Provider Payments on Health Care Utilization of Low-Income Individuals: Evidence from Medicare and Medicaid

Provider payments are the key determinant of insurance generosity within many health insurance programs covering low-income populations. This paper analyzes a large, federally mandated provider payment increase for primary care services provided to low-income elderly and disabled individuals. Using comprehensive administrative data, we leverage variation across beneficiaries and providers in the policy-induced payment increase in difference-in-differences and triple differences research designs. We find the payment increase led to a 6 percent increase in the targeted services for eligible beneficiaries, implying a payment elasticity of 1.2, and decreased the fraction of low-income beneficiaries with no primary care visit in a year by 9 percent. (JEL G22, I11, I13, I18, I38)