Medicaid and access to child health care in Chicago.

Journal of Health Politics, Policy and Law

Medicaid and Access to Child Health Care in Chicago James W. Fossett University at Albany, SUNY Janet 0. Perloff University at Albany, SUNY Phillip R. Kletke American Medical Association John A. Peterson University of I IIinois

Abstract In this article we examine how increasing the reimbursement of physicians and expanding Medicaid eligibility affect access to care for children in Cook County, Illinois, which overlies Chicago. Using Medicaid claims and other data at the zip-code level, we compare the places where Medicaid children live with the places where all the physicians who treat children and those who accept Medicaid patients have their practices. Our findings suggest that the recent changes in legislation are unlikely to benefit extremely poor children, who are more likely to live in depressed inner-city areas, where there are few physicians. “Near-poor’’children whose homes are dispersed throughout the county, who are now eligible for Medicaid as a result of the recent changes, are likely to see improvements in their access to care. Further changes in policy, aimed at enhancing the capacity of institutions providing care, could improve access for the children of the inner city.

If recent history is any guide, health care for poor children is a cause without political enemies. Recent legislation has dramatically expanded Medicaid eligibility for children to the point where all children under six from families with incomes below 133 percent of the poverty level are now eligible for Medicaid-funded pediatric care, and all poor children under eighteen must be eligible for Medicaid by the year 2000 (American We would like to acknowledge help in a variety of ways from Mary Ring of the Illinois Department of Public Health and Roberta Hardy, Mike Sizemore, and Larry Blakeney from the Illinois Department of Public Aid; also for helpful comments on an earlier draft from Sam Flint. Arden Handler, Kate Vedder, and Jim Morone. Earlier versions of this paper were presented at the annual meetings of the American Public Health Association and the Association for Public Policy Analysis and Management. The views and opinions in this paper are solely those of the authors and should not be attributed to any other individual or organization. Journal of Health Politics, Policv and Law, Vol. 17, No. 2, Summer 1992. Copyright 0 1992 by Duke University.

Published by Duke University Press


274 Journal of Health Politics, Policy and Law

Academy of Pediatrics 1990; New York Times 1990). As eligibility has expanded, more efforts have been made to make pediatric care available to Medicaid-eligible children and to increase payments to physicians. The Omnibus Budget and Reconciliation Act of 1989 (OBRA89) directed the Physician Payment Review Commission to examine the adequacy of both physician reimbursement and access to care for Medicaid patients and required states to demonstrate that their reimbursement levels for obstetric and pediatric care are sufficient to provide Medicaid patients with a level of access comparable to that for the population as a whole (American Academy of Pediatrics 1990). As a result, a number of states have adopted substantial increases in Medicaid physician fees for both pediatric and obstetric care, and the commission has recommended that Medicaid payments be raised to those of Medicare (Physician Payment Review Commission 1991 ) . In this article we examine the adequacy of access to private, officebased pediatric care in Cook County, Illinois, which overlies Chicago, for children who have always been eligible for Medicaid and those who became qualified under the recent legislation; and we evaluate the likely effects of these policy changes. Our argument is optimistic in some ways and pessimistic in others. Expansions in eligibility may improve access to care for “near-poor” children. Most of these children live in areas outside Chicago’s inner city that are adequately supplied with office-based pediatricians and other physicians able to provide care to children. Some of these physicians already accept Medicaid patients, and the economics of pediatric practice allow pediatricians to accept more at modest cost. Expansions of eligibility, particularly if coupled with increases in physician reimbursement, should make office-based care more accessible to children of working-poor families living in these areas who may have deferred care to avoid out-of-pocket expenses. In contrast, are the children in Chicago’s inner city, who are at higher risk for a wide variety of health problems. As in many American cities, demographic and economic changes in Chicago have dramatically worsened the economic status of a large number of children, particularly blacks and Hispanics, who live in extremely poor families concentrated in poor inner-city areas. The overwhelming majority of children in these areas are already eligible for Medicaid, even if they are not enrolled, and recent expansions will make eligibility effectively universal. Access to office; based care in inner-city areas is well below prevailing professional norms. Medicaid participation by the limited number of inner-city pediatricians is low, and although there are numerous pediatricians with offices in the



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areas around inner-city hospitals, they do not provide sufficient care to compensate for the deficit. The difficulties of attracting more physicians to practice in inner-city areas by increasing Medicaid fees suggest that additional support should be focused on such institutional providers as community health centers, local health departments, and hospital outpatient clinics. Because they are located in low-income areas, institutions have been major providers of pediatric care in the inner city. As in many other cities, however, this sector in Chicago has been adversely affected by reductions in Medicaid reimbursement, in federal grants for operating support, National Health Service Corps (NHSC) physicians, and services to specialized populations, in addition to changes in the larger health care system. Many community health centers and community hospitals have closed, and the level of service at many remaining institutions has deteriorated as they run out of money and lose NHSC physicians. While support for both specially targeted programs and Medicaid has increased appreciably in recent years following changes in federal policy, the increases may fall short of enabling institutions to expand their services and provide care to the large number of newly eligible inner-city children. The Economic Status, Location, and Health of Children

American children have become increasingly poor over the last twenty years. By contrast with elderly Americans, whose poverty rate was roughly cut in half between 1970 and 1987, poverty rates among children under eighteen increased by roughly one-third, from 15 to 21 percent, over this same period (Select Committee on Children, Youth, and Families 1989). The increase in child poverty has been highest in the large urbanized states in the Northeast and Midwest. Out-migration of middleand working-class populations and jobs over the last thirty years in such cities as New York and Chicago (see Kasarda 1985) has increased the concentration of minority children in urban areas and caused poverty rates among central-city minority children to increase sharply (Testa 1990). There is also evidence of increasing economic disparity among lowerincome children. Duncan and Rodgers (1989) report a sharp increase in the persistence and severity of poverty among younger black women with children between the late 1960s and mid- 1980s, in contrast to older black women and white women of all ages. Young black women with children have become increasingly concentrated at the very bottom of the income




scale over the last twenty years, in spite of the fact that the overall poverty rate among black single mothers with children has remained relatively constant over this period (Duncan and Rodgers 1989). The family income differential between black and white children, particularly among children recently born to younger women, may be widening over time. These increased numbers of extremely poor black and Hispanic children are concentrated in depressed inner-city areas. As compared to onethird of poor white children, over 70 percent of all poor black children and almost 60 percent of poor Hispanic children live in central-city census tracts where more than 20 percent of the population is poor (Select Committee on Children, Youth, and Families 1989). The percentage of black female-headed households living in areas where over 40 percent of the population was poor increased by more than 30 percent between 1970and 1980 (McLanahan and Garfinckel 1989), and the fraction of poor urban children under six living in high-poverty areas increased from 54 percent in 1975 to 61 percent in 1987 (National Center for Children in Poverty 1990). Because they have extremely low incomes (many of them have no income other than welfare payments) and are discriminated against because of their race and family composition, younger black and Hispanic female heads of households are limited to the cheapest available housing and have little access to housing outside ghetto areas. These changes in the economic status of extremely poor children and the places where they live have concentrated children at greatest risk for a wide variety of health problems in depressed inner-city areas. Much evidence suggests that the incidence and severity of many childhood diseases and disabilities are most pronounced among poor children. Poor infants, particularly those born to black mothers living in poor neighborhoods, are more likely to have a low weight for their gestational age at birth than more prosperous children and are more likely to die during their first year of life, particularly in the postneonatal period (Collins and David 1990). Poor children are also at higher risk for childhood diseases and accidents than more prosperous children. Disease and injury among poor children are both more frequent and more severe when they occur (Wise and Meyers 1988; Starfield 1982; Miller et al. 1989). Finally, poor Children appear to be at greater risk for psychosocial or developmental difficulties stemming from high levels of family stress, maternal depression, and inadequate social support (Parker et al. 1988). This lack of environmental support and oversight may also contribute to higher accident rates, poor diet, and failure to seek care for minor ailments before they become serious (Wise and Meyers 1988).



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The available evidence, in short, is all consistent with the argument that the poorest , sickest children are increasingly concentrated in singleparent families living in depressed inner-city areas , particularly in the large urbanized states of the Northeast and the Midwest. Given the tendency for physicians to locate in upper-income areas (Kletke and Marder 1987; Kindig et al. 1987; Knapp and Blohowiak 1989), this concentration of children most at risk for a wide variety of health problems in extremely poor areas tells us that the sickest children are increasingly concentrated in areas where access to care is most problematic. Poor Children in Chicago: Location and Health

Chicago is frequently cited as a prototype of these trends in family status, poverty, location, and health. Chicago’s proportion of births to unmarried mothers is among the highest in the country. Seventy percent of the black children born in the Chicago area in 1984 were born to unmarried mothers, and almost half of all black children in the city lived with their mothers only. Sixty-two percent of black children in such families were in households below the poverty level , compared to about one-third of similarly situated white children (United Way of Chicago 1988). Poor households in Chicago have become increasingly concentrated in poor areas over the last twenty years. The percentage of the city’s poor living in areas with more than 40 percent of the population below the poverty level doubled between 1970 and 1980 (Wilson 1987; Nathan and Adams 1989), and the size of these areas increased by more than 50 percent (Greene 1988). Measuring the location of currently and potentially Medicaid-eligible children in a fashion that permits comparison of their relative access to pediatric care requires the use of zip codes as the spatial unit of analysis. Zip codes are not ideal for the analysis of either physician or population location, since they are larger and more heterogeneous than census tracts and are defined without reference to racial and ethnic neighborhood boundaries. They are, however, the only subcity unit for which data on the location of children, pediatricians, other child health providers, and Medicaid-participating providers are available.I Given available data , the 1 . To prevent extreme values for physician-to-population ratios and other measures of access in Chicago’s central business district and other commercial areas that contain large numbers of physicians but few residents, “point zips” and smaller zip codes were aggregated with contiguous or overlying zips until the combined population exceeded 25,000. This aggregation produced a total of exactly one hundred zip codes or aggregations in Cook County, with fifty located wholly or primarily inside Chicago and fifty in suburban Cook County. These aggregations are larger than the seventy-seven Chicago community areas, which are aggregations of census tracts




location of extremely poor children can best be identified by the location of children whose families are recipients of Aid to Families with Dependent Children (AFDC). AFDC children constitute the overwhelming bulk of children who were Medicaid-eligible prior to the recent eligibility expansions. Their location also provides a usable proxy for the location of the city’s poorest children. The AFDC maximum payment in Illinois over the mid-1980s was less than half the poverty level (National Center for Children in Poverty 1990) and over 90 percent of AFDC families had no nonwelfare income over this period (Illinois Department of Public Aid 1987).2 Poor children, particularly blacks and Hispanics, were concentrated in certain locations over the mid-1980s. Table 1 displays data on the percentage of non-AFDC children and AFDC children of different racial and ethnic groups who resided in zip codes where varying proportions of children were AFDC recipients. Almost half the black AFDC children and one-quarter of Hispanic AFDC children resided in ten zip codes, where over half the children were AFDC recipients. By contrast, only 13 percent of the white AFDC children and 5 percent of non-AFDC children lived in these areas. These zip codes, located in two large clusters on the city’s South and West sides, with one isolated zip code on the city’s far South Side, closely overlap the areas identified by Wilson and others as severely depressed on the basis of more comprehensive data on unemployment, household composition, and welfare dependence (Wilson 1987; United Way of Chicago 1988). Chicago’s measurable child health problems are concentrated in these areas. As shown in Table 2, these zip codes contained less than one quarter of the city’s children, but the community areas contained in whole or in part in these zip codes account for three-quarters of the city’s postneonatal deaths, 70 percent of the births to teenagers, 65 percent of the reported measles and sexually transmitted disease cases, and 60 percent of the low-weight births. Postneonatal mortality and teen birth rates in these roughly corresponding to established neighborhood boundaries and which are widely used by Chicago service agencies for data collection and program operation. For a fuller discussion of the use of zip codes and a description of the aggregation methodology, see Kletke and Marder 1987. 2. These data may understate the concentration of extremely poor children. For purposes of AFDC enrollment, a teenage mother receiving AFDC is counted as the adult head of a household, not as an adolescent. The same mother is. however, counted as an adolescent in the demographic data used as a denominator, causing the percentage of the child population on AFDC in a given zip to be undercounted by the number of AFDC-enrolled teenage mothers. There is also evidence that a significant number of children, particularly Hispanics, in poor areas are eligible for AFDC but are not enrolled. We lack the data to correct for these problems, but complete data would only increase the concentration of extremely poor children in areas we identify as depressed.



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Table 1 Location of Residencesof Children in Cook County, by Area, AFDC Status, and Race, 1985

Residential Areas by Percentage of ChildrenonAFDC

Number of Zip Codes inArea

Percentage of Cook County Children Living in Residential Area NonAFDC

All AFDC

White AFDC

Black AFDC

Areas with less than 10 percent AFDC Suburbs 45 46.9 City 14 11.4 Subtotal 59 58.3

3.4 1.4 4.8

18.4 6.9 25.3

1.5 0.3 1.8

1.7 1.3 3.O

Hispanic AFDC

Areas with 10-25 percent AFDC Suburbs 3 City 13 Subtota1 16

3.3 16.4 19.7

2.8 11.5 14.3

4.3 34.6 38.9

2.8 6.3 9.1

1.5 22.8 24.3

Areas with 25-50 percent AFDC Suburbs 2 City 13 Subtotal 15

1.6 15.2 16.8

3.5 35.8 39.3

2.8 19.9 22.7

3.5 36.0 39.5

0.6 48.2 48.8

Areas with over 50 percent AFDC Suburbs 0 City 10

0 5.3

0 42.2

0 13.2

0 49.6

0 24.0

100.1 100.0 34,2 13 243,708

100.1 40,515

Total (percent) County total

100

100.1 100.6 1,056,475 3 18,436

Source. Unpublished Illinois Department of Public Aid statewide zip-code listing by county for AABD and AFDC cases active in June 1985. Note. Some zip codes have been aggregated. See text for details. Totals may not sum to 100 percent due to rounding.

areas were three times those in the balance of the city, and the rate of lowweight births was more than 50 percent higher. Homicide rates and the rate at which potential years of life are lost, measures heavily influenced by child mortality, are markedly higher than those in the city as a whole. To the extent that the income profile of disease in Chicago follows that reported elsewhere, children are markedly sicker in these zip codes than elsewhere. These areas contain high concentrations of low-income households and family circumstances correlated with child health problems. Almost 60 percent of the city’s poor and over half of the black femaleheaded households with children reside in these areas. Given the high rate of births to younger mothers, these areas are also likely to contain a




Table 2 Social Conditions and Child Health in Chicago's Ten Poorest Zip Codes and in the Rest of the City, 1984-1988 Percentage in Each Category in Poorest Zip Codes Population under 6 Population under 18 Below poverty level in 1986a Black female-headed households with children, 1980 Low birth-weight birthsa Postneonatal deaths a Births to teenage mothersa Measles cases a Reported sexually transmitted disease cases a Homicides per 1 ,OOO populationa Years of potential life lost per 1 ,O00 population a

24.0 23.9 57.6

51 .O 60.7 75.7 70.7

Rates In Poorest Zip Codes

In Balance of City or Entire City

50.5%

22.1%

20.6% 13.3% 9.4% 28.1%

3.7% 8.1% 2.8% 10.1%

36.8

23.1 b

9,501

7,629b

64.8

65.2

Sources. Unpublished data from Urban Decision Systems; Chicago Department of Health; and research staff of Northern Illinois Planning Commission; 1980 Census of Population. a. Includes all community areas included in whole or in part in zip codes 60609, 60612, 60621.60622,60624,60627,60636,60637,60644.60653. b. Rate for city as whole; includes poorest zips. c. Postneonatal deaths are per 1 ,OOO live births; homicide rates are per 1 .OOO total population; all other rates are percentages of the appropriate base, e . g . , 28. I percent of births in the poorest zip codes are to teenage mothers.

disproportionate number of children with teenage mothers. The housing occupied by poor single-parent households is more dilapidated than that of more prosperous groups (Fossett and Orfield 1987), suggesting that lead exposure and accident rates may be higher than elsewhere, and there is evidence that children from these areas are likely to have stunted growth (Miller et al. 1989). While crack use in Chicago has not reached the epidemic levels reported in other cities, there is considerable informal evidence of high levels of prepartum use of heroin and cocaine, and most of Chicago's pediatric AIDS cases are concentrated in these areas. To compare the locations of extremely poor children and children in near-poor families who have recently become Medicaid-eligible or are potential candidates for further eligibility expansions, regression analysis



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based on 1980 census data was used to develop estimates of the poverty status of the 1987 population in each zip code.3 Separate estimates were developed for the proportion of the population in each zip code below the poverty level, between 100 and 150 percent of the poverty level, and between 150 and 200 percent of poverty. Since these estimates cannot be disaggregated by age, they are only rough approximations of the location of children affected by recent or contemplated eligibility expansions, but there is no reason to suspect that more precise estimates would yield appreciably different results. Residential dispersion sharply increases with income among newly or potentially eligible children. Table 3 compares the location of 1985 AFDC children with our estimates of the location of households with incomes up to 200 percent of the poverty level. Near-poor households are much more evenly dispersed between city and suburbs and between upper- and lower-income areas than are AFDC children or the city’s poor population. Forty-eight percent of the households with incomes between 150 and 200 percent of the poverty level live in areas where less than 10 percent of the children are AFDC recipients, compared to less than one-fifth of the poor population and less than 5 percent of the AFDC children. By contrast, only 11 percent of these households are located in the most depressed zip codes, compared to over one-quarter of the poor and 40 percent of the AFDC children. The poorest and sickest children in Chicago, in short, most of whom are already Medicaid-eligible through their enrollment in AFDC , are concentrated in extremely poor areas, while more prosperous, healthier children are more suburbanized and more dispersed throughout the city. We now turn to an assessment of the level of pediatric care available to each of these groups. Locationof Child Health Care Providers

The relative geographic distributions of physicians and Medicaid clients are of particular importance because they indicate the maximum level of access that can be provided to Medicaid patients (at least, in the short run) through manipulating Medicaid eligibility and physician reimbursement. Primary care physicians such as pediatricians draw the bulk of their patients from the area surrounding their practice (Kletke and Marder 1987), and demand for care from lower-income groups is more elastic 3. For a detailed description of the estimating methodology, see Fossett et al. 1990.




Table 3 Location of All AFDC Children and Income Groups in Cook County, 1985-1987

Residential Areas, by Percentage of Children on AFDC

Percentage of All AFDC Children in County ( 1985)

Percentage of Estimated Poverty Population in County ( 1987)

Percentage of Estimated Population between 100-150 Percent Poverty in County ( 1987)

Percentage of Estimated Population between 150-200 Percent Poverty in County ( 1987)

Areas with less than 10 percent AFDC Suburbs City

3.4 1.4

10.7 6.2

18.3 7.3

38.8 9.2

Subtotal

4.8

16.9

25.6

48.0

1.8 18.5

2.2 20.6

16.5

20.3

22.8

20.3

I .4 32.8

1.4 30.6

2. I 19.2

39.3

34.2

32.0

21.3

0 42.2

0 28.6

0 19.5

0 11.2

100.6

100.0

99.9

100.8

Areas with 10-25 percent AFDC Suburbs 2.8 City 11.5 Subtotal

14.3

Areas with 25-50 percent AFDC Suburbs 3.5 City 35.8 Subtotal Over 50 percent AFDC Suburbs City Total

3.8

Unpublished Illinois Department of Public Aid zip-code listing by county for AABD and AFDC cases active in June 1985.

Source.

Note. Totals may not sum to I 0 0 percent due to rounding.

with respect to distance and travel time than among upper-income groups (Dutton 1986; Acton 1976). Raising Medicaid reimbursement will thus have its largest effect on access by providing physicians who currently accept few or no Medicaid patients and who practice in areas accessible to large numbers of Medicaid recipients with an incentive to accept more. If there are few physicians available to Medicaid recipients, access may still remain inadequate, even if all accessible physicians increase the number of Medicaid patients they accept in response to higher Medicaid fees. Published by Duke University Press


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Table 4 Location of Practices of Private, Off ice-based Pediatricians, Family and General Practitioners, and Obstetricians/Gynecologists, by Zip-Code Type, Cook County, 1987

Pediatricians

Zip-Code Type Central business district (n= 1) Pediatric hospital center (n= 17)” Residential (n= 82) Total

N

3.1% 41.8% 54.7% 99.6% b 749

Family and General Obstetricians/ Practitioners Gynecologists 1.7% 25.5% 72.7% 99.9%b 1,139

6.4% 40.8% 52.6% 99.8%b 642

Source. Unpublished American Medical Association physician masterfile. a. Includes zip codes containing Level I11 perinatal center or with total of more than three pediatric residents. b. Totals do not sum to 100 percent due to rounding.

Table 4 compares the practice locations of private, office-based pediatricians and family and general practitioners, who can also provide care to children, with those of obstetricians and gynecologists, whose practices are among the most hospital-oriented of primary care specialists. The physician counts on which this table is based exclude physicians of any specialty on the staffs of community health centers and other nonprofit clinic^.^ Zip codes have been divided into Chicago’s central business district (the Loop), areas containing hospitals which are major centers of pediatric care ,5 and primarily residential areas. These findings parallel those of other studies (Kletke and Marder 1987; Knapp and Blohowiak 1989).Office-based pediatricians are less centered 4. A caution is in order about the definition used later in this article as a measure of officebased care and as a denominator to calculate Medicaid participation rates. The AMA Masterfile category of office-based pediatricians is used throughout this paper, but this category may not exhaust the number of physicians who provide office-based care or who can bill Medicaid for care in an office setting. The most numerous group of potential participants excluded here are pediatricians who are counted in the Masterfile as hospital-based. There are approximately one hundred twenty of these pediatricians, some of whom are hospital employees and some of whom have offices in a hospital but otherwise function as office-based physicians. Under Illinois Department of Public Aid billing procedures, such physicians who are hospital employees bill under the hospital’s provider number for care to Medicaid patients and are not counted in these data, while physicians with offices in hospitals who are otherwise administratively independent of the hospital may bill under their own numbers and appear in these data. Since we are unable to distinguish hospital-based pediatricians along these lines, we have excluded them from the figures reported here and from the denominator used to calculate participation rates. We may hence be understating the availability of pediatric care and overstating participation both for the county as a whole and in the areas around hospitals. 5 . Zip codes have been designated as sites of major pediatric hospital centers if they contain hospitals which are designated as Level 111 perinatal centers or if hospitals in the zip code have more than three pediatric residents among them.




in the central business district than obstetricians and gynecologists, but are concentrated around hospitals in much greater numbers than family or general practitioners, who are broadly dispersed across residential areas. While pediatric patients are rarely hospitalized, hospital locations are desirable for pediatricians for a number of reasons. Pediatric subspecialists such as neonatologists and pediatric oncologists or cardiologists are likely to cluster around hospitals with specialized units, which attract patients from broader markets than the immediate area. Less-specialized pediatricians are also likely to find hospital maternity wards and emergency rooms a major source of new patients. Their location around centers of hospital perinatal or pediatric care, which have large numbers of births, is understandable .6 Many hospitals, particularly in suburban areas, also offer subsidized rents in nearby office buildings to many physicians, including pediatricians, as a way to attract inpatient admission^.^ These practice subsidies may cause more pediatricians to locate around these hospitals than would otherwise be the case. Family and general practitioners, by contrast, do not specialize in providing care to any particular age group and could find sufficient patients without being in a central location, either downtown or close to a hospital. Table 5 indicates the level of access implied by this distribution of private office-based physicians. Since children can receive care from family or general practitioners as well as pediatricians, the table displays the average number of children per office-based pediatrician and per child health provider, as defined by the American Academy of Pediatrics (AAP) standard (office-based pediatricians and one-quarter of the family and general practitioners), in residential and hospital zips with varying proportions of children receiving AFDC. The AAP's rule of thumb is that an area is underserved if there are more than 2,500 children per child health provider.* These data indicate considerable disparities in access to care between 6. We would like to thank Arthur Kohrman. M.D..of LaRabida Hospital and the University of Chicago for suggesting this explanation. 7. Thanks to Sam Flint of the American Academy of Pediatrics for bringing this development to our attention. 8. The AAP's underservice standard is based on national estimates of the number of physicians required to provide three visits per year for each child under twenty-one. It takes no explicit account of differences in physician productivity or the health status, need for care, or age structure of the child population (infants and younger children require more care than adolescents), or other factors which may be associated with greater or lesser need for pediatric care among a given population. It nonetheless represents the only professionally endorsed standard for judging the adequacy of pediatric supply (Budetti et al. 1982). AAP staff report that there has been considerable debate for some time about modifications in this standard, but there has been no consensus about the appropriate magnitude of changes.



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Table 5 Average Number of Children per Private, Office-based Pediatrician and Child Health Provider, by Location of Practice, Cook County, 1987

Children per Private, Office-based Pediatrician

Location

Children per Private, Office-based Child Health Provider a

147.3

122.9

Pediatric hospital center zip codes with less than 10 percent AFDC 10-25 percent AFDC 25-50 percent AFDC over 50 percent AFDC

936.1 1,050.2 1,37 1.8 485.9

610.7 768.9 1,085.8 447.5

Residential zip codes with less than 10 percent AFDC 10-25 percent AFDC 25-50 percent AFDC over 50 percent AFDC

3,059.5 5,933.9 5,469.2 5,887.3

3,229.3 2,759.1 3,457.9 4,4 18.0

County average

3,473.9

2,832.9

Central business district zip codes

Sources. Unpublished American Medical Association physician mastertile; unpublished data from Urban Decision Systems. a. Child health providers defined as pediatricians plus one-fourth of family and general practitioners.

prosperous and poor areas. There are almost twice as many children per office-based pediatrician in inner-city residential areas as in the most prosperous areas; and 60 percent more children per child health provider in the poorest zip codes than in the best served residential areas.9 While the large numbers of child health providers in the areas around inner-city hospitals might be expected to offset some of the disparities among residential 9. Some comment about the apparent underservice in prosperous residential areas (by the AAP’s standard of 2,500 children per provider) is in order. There are a number of reasons for believing this underservice to be more apparent than real. The AAP’s standard is derived from national estimates of the number of pediatric visits required for the child population as a whole, which take no account of differences in need. Since prosperous children are appreciably healthier than poor children, a higher patient-to-physician ratio in more prosperous areas may reflect a lower level of need rather than underservice. Second, for reasons discussed in the text, children from more prosperous areas have better access to care outside their immediate area. Finally, three-quarters of the community areas in the zip codes we have labeled as distressed are classified as health manpower shortage areas by the Department of Health and Human Services, while none of the more prosperous suburban areas are so classified.




areas, access may be more unequal than the data suggest. Of the seventeen zip codes which contain major pediatric centers, only two-one around the University of Illinois Hospital, Cook County Hospital, and Rush Presbyterian St. Luke’s Hospital on the city’s West Side, and one around the University of Chicago on the South Side-are located in depressed areas. Many private office-based physicians around these hospitals may not provide care to lower-income inner-city residents. The University of Chicago is a prestigious center for pediatric care, which may attract more patients from outside the immediate area for specialized treatment than other hospitals. Larger fractions of the office-based physicians in this area may be subspecialists who see patients primarily on referral. In addition, this zip code contains a large prosperous community (Hyde Park), composed primarily of university employees and professionals, surrounded by an extremely depressed area. While we are unable to distinguish child health providers practicing in Hyde Park from those in the surrounding area, it seems highly likely that a significant number primarily treat members of the university community. The other inner-city zip code with a hospital, on the city’s West Side, contains one large hospital (Rush Presbyterian St. Luke’s) which treats few Medicaid or self-pay patients, and houses the offices of physicians participating in a health maintenance organization (HMO) affiliated with the hospital, and which had few Medicaid patients over this period. While we are unable to separate HMO physicians from those who draw more of their patients from the surrounding area, including them clearly overstates the availability of care to inner-city residents. In addition, the logistics of arranging for care outside the immediate area of their homes may be considerably easier for more prosperous households than for inner-city residents Appreciable numbers of lowincome households lack phones and cars, so many inner-city residents would be unable to reach areas outside their neighborhood easily. A recent study of Chicago inner-city maternity patients, for example, indicates that over 40 percent lacked a phone, making it difficult for them to make appointments with private physicians who do not take walk-in appointments (Kelly et al. forthcoming). Over 90 percent of households in more prosperous areas have access to cars, compared to 52 percent of households in inner-city residential areas. Given the importance of proximity to care for lower-income households, it seems likely that inner-city families are more dependent than suburban families on whatever pediatric care is available in their immediate neighborhood. In summary, the available evidence points to a considerable under-



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supply of private office-based child health physicians in the most depressed areas with the most severe child health problems. Many of these areas would be underserved even if Medicaid participation were universal among pediatricians; or, put another way, the ability to improve access to care for Medicaid-eligible children in these areas is limited by the supply of physicians. Achieving adequate access to care in these areas requires more physicians, not merely increased participation by physicians already in place. Healthier children in near-poor households, by contrast, live in areas better supplied with child health providers. Previous research indicates that out-of-pocket expenses for child health care are relatively high among low-income households without Medicaid coverage (Newacheck and Halfon 1986) and that demand for children’s health care is higher among households with Medicaid coverage than among uncovered households with comparable incomes (Rosenbach 1989). Expanding Medicaid eligibility to these marginally poor families would eliminate out-of-pocket expenses for pediatric care and reduce the amount of care foregone for financial reasons, thereby increasing utilization. Access to care among this group is most likely to be influenced by the willingness of pediatricians to accept Medicaid patients. We now turn to an examination of this question. Child Health Provider Participationin Medicaid

Historically, pediatricians have been found to participate in Medicaid at a higher level than other primary care specialists (Sloan et al. 1978). Pediatricians have lower practice costs than other specialists and higher practice volumes, which allows them to charge low fees per visit and still recover their costs. This low fee structure reduces the “marginal opportunity cost,” that is, the revenue foregone in seeing a Medicaid patient rather than a private one. Given their large practice volumes, pediatricians can also more easily cross-subsidize these losses by increasing charges to their remaining patients without severely impairing their competitive position. These practice features should also make the participation of pediatricians more sensitive than that of other specialists to modest increases in Medicaid reimbursement relative to prevailing charges. Given low pediatrician fees, even a small increase translates into a large percentage of prevailing charges and reduces the already low opportunity cost of Medicaid patients. Recent evidence suggests, however, that pediatrician participation in Medicaid has declined over the last several years. A major panel survey of pediatricians found that the number who limited




Table 6 Average Percentage of Private, Off ice-based Pediatriciansand Family and General Practitioners Participating in Medicaid, by Location of Practice, Cook County, 1986

Participating Pediatricians

Participating Family / General Practitioners


87.0

73.7


35.4 44.1 52.5 48.1

34.0 48.1 83.5 48.9


33.2 55.6 76.1 61.9

37.3 48.7 79.2 91.4

County average

44.9

50.0

Location

Sources. Unpublished data from the Illinois Department of Public Aid; unpublished American

Medical Association physician masterfile.

the number of Medicaid patients they accepted increased sharply between the late 1970s and early 1980s (Perloff et al. 1987a). A separate survey of board-certified pediatricians found that while three-quarters accepted at least some Medicaid patients, only 56 percent accepted all new Medicaid patients (Yudkowsky et al. 1990). Table 6 displays the percentage of Cook County pediatricians participating in Medicaid in 1986.1° The table also indicates the percentage of family and general practitioners accepting Medicaid patients. These data indicate that, on average, less than half the pediatricians in Cook County participated in Medicaid. While participation is higher in more depressed areas than in more prosperous areas, only about three-fifths of the limited number of pediatricians in the most depressed residential areas accepted appreciable numbers of Medicaid patients. Participation by family and general practitioners is only slightly higher overall, but is considerably higher-over 90 percent-in extremely depressed inner-city areas. 10. Participation is defined here as billing for more than twenty Medicaid patients in 1986. This limitation follows earlier studies (Held et al. 1982: Fossett and Peterson 1989) in defining as nonparticipants physicians who have only sporadic contact with the program.



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Table 7 Average Number of AFDC Children per Private, Office-based Medicaid-participating Pediatrician a nd ChiId HeaIth Provider, by Location of Practice, Cook County, 1986

AFDC Children per Participating Pediatrician

Location

AFDC Children per Participating Child Health Provider a

63.4

53.6


139.6 176.3 1,287.2 731.1

93.9 878.1 855.8 668.4


116.7 1,344.5 2,990.5 7,796.5

173.9 1,365.0 1,331.5 4,667.7

County average

1,389.2

887.2


Sources. Unpublished data from Illinois Department of Public Aid; unpublished Illinois Department of Public Aid zip-code listing by county for AABD and AFDC cases active in 1985.

a. Child health providers include Medicaid-participating pediatricians plus one-quarter of Medicaid-participating family and general practitioners.

The combination of limited supply and limited participation in Medicaid among pediatricians translates into large disparities in access to pediatric care for poor children in more and less prosperous areas. Table 7 displays average numbers of AFDC children per Medicaid-participating pediatrician and per Medicaid-participating child health provider. While we lack data on the number of Medicaid pediatric patients seen by family and general practitioners, we follow American Academy of Pediatrics conventions in assuming that the number of such patients is equivalent to the caseload of one-quarter of the physicians.” The number of AFDC 11. The realism of this assumption is unclear. The average family and general practitioner in inner-city zip codes who accepted Medicaid patients saw over 1,200 Medicaid patients in 1986. While some proportion of these patients certainly represents AFDC mothers, other adults covered by Medicaid such as general assistance and supplemental security income recipients and Medicare “cross-over’’ patients for whom Medicaid pays the 20 percent of charges not covered by Medicare, the assumption made here that these patients account for three-quarters of all Medic-




children per participating pediatrician in depressed inner-city areas is sixty-five times that in the most prosperous areas in Cook County, with the average population-to-provider ratio being over three times the AAP’s standard for underservice. This disparity is reduced when all child health providers are considered, but the average ratio of AFDC children to participating child health provider in inner-city areas is almost twice the AAP’s underservice standard and more than twenty-five times larger than that in the most prosperous residential areas. There are a number of possible explanations for the low level of Medicaid participation by pediatricians. Perhaps the simplest is that nonparticipating pediatricians are treating non-AFDC children and collecting out-of-pocket fees. Pediatricians may prefer the higher fees they can collect from poor or near-poor children with working parents to the greater certainty of payment of a lower fee under Medicaid.” A second, not entirely contradictory explanation is that nonparticipating pediatricians are located in neighborhoods within zip codes that differ in racial or ethnic composition from those where the bulk of Medicaid children reside. Chicago contains few areas which are integrated by race or ethnicity (Orfield 1985), and boundaries between racial and ethnic groups within inner-city areas, particularly between blacks and Hispanics, are sharp and broadly recognized. The two groups are extremely segregated residentiallyblacks had a lower probability of residential contact with Hispanics than with whites (Massey and Denton 1987)-and patronize different service establishments-including, it might be hypothesized, physicians. Pediatricians practicing in predominantly Hispanic areas may see few, if any, black Medicaid children. While these explanations are not mutually exclusive, they have different implications for policymakers’ ability to improve access to care in inner-city areas. To the extent that pediatrician nonparticipation is driven by price discrimination between patients, raising Medicaid fees should improve access by making Medicaid patients more financially attractive. However, if participation is influenced by physician location relative to racial or ethnic “turf,” raising fees will be less effective, since parents will continue to patronize physicians in “their” neighborhoods. aid patients seen by family and general practitioners is arbitrary. While patients under fifteen accounted for only 15 percent of all visits to family and general practitioners in 1985 (American Academy of Family Physicians 1987) a share which might be expected to be even lower in urban areas (Budetti et al. 19821, we are unable to judge if this same age division holds for Medicaid patients . 12. We are indebted to Kathryn Vedder. M.D.. for suggesting this explanation.



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Policy Consequences

These findings suggest that expansions of Medicaid eligibility, particularly if coupled with increases in Medicaid reimbursement, will improve the accessibility of care for newly eligible near-poor children, but will have little effect on the availability of care for poorer, sicker inner-city children. A variety of evidence suggests that the current access problems of nearpoor children are largely financial. They frequently lack health insurance coverage or are covered under their parents’ policies for hospitalization or other major medical expenses only. Medicaid’s “first dollar” coverage for physician care should reduce the financial burden of seeking care and result in increased utilization. These children appear to experience few other barriers to care. They largely reside outside the inner-city in areas that are adequately supplied with child health providers and appear to have few problems reaching care outside their immediate neighborhoods. The willingness of pediatricians outside the inner city to accept these children as patients also seems to be driven largely by money. While only a limited number currently accept Medicaid children as patients, there appear to be few nonfinancial obstacles to expanded participation. Newly eligible Medicaid children are more likely than previously eligible children to be white and to reside in stable, two-parent households, making them socially acceptable patients, and their numbers are small in most areas relative to the number of self-pay patients, which should reduce physicians’ fears of being “inundated” if they expand the number of Medicaid patients they accept. Increased Medicaid reimbursement would reduce the opportunity cost of treating Medicaid children, making it financially feasible for pediatricians to expand the Medicaid portion of their practice. While prevailing charges in more prosperous areas are likely to be appreciably higher than those in the inner city, the routine nature of most children’s health problems and the low fees of pediatricians relative to those of other specialists suggest that the disparity between Medicaid fees and prevailing charges could be reduced dramatically at relatively low absolute cost. Expanding eligibility and increasing reimbursement is less likely to improve the availability of care to poorer inner-city children, many of whom are already eligible for Medicaid. These children are generally sicker than newly eligible children and have more complex health needs arising from the adverse conditions of their mothers’ pregnancies and the risk factors found in their difficult home environments. They also have considerable access problems, other than the ability to pay for care. There is little care in




their immediate neighborhoods, and arranging for care elsewhere is complicated by their lack of access to phones and cars and by racial or ethnic neighborhood boundaries. High levels of stress and maternal depression and a lack of social support in the home environments of many children reduce the likelihood that care will be sought when needed, further worsening their health problems. Expansions in Medicaid eligibility and reimbursement are unlikely to have much effect on this complex of problems. While expanding eligibility to near-poor children will make eligibility near universal in inner-city areas, it will do little to correct the undersupply of child health providers in these areas. Raising Medicaid fees may increase the supply of care from the private office-based pediatricians in inner-city areas who currently do not accept Medicaid children, but only to the extent that their current failure to treat these patients is driven by price discrimination rather than by noneconomic considerations. Even if Medicaid reimbursement were raised to a level where pediatrician participation became universal, inner-city areas would still be undersupplied with care, by professional standards. Further improvements in access in inner-city areas will occur only to the extent that additional physicians are motivated to establish practices in these areas, which is a much more difficult task than increasing the attractiveness of Medicaid patients to physicians already in place. Such areas have many drawbacks, apart from the low fees paid to treat Medicaid patients. Inner-city practice has little professional prestige, and patients are frequently seen as more difficult to treat because of language difficulties, missed appointments, an unwillingness to comply with treatment, and-if apparently misguidedly-a greater willingness to sue for malpractice (Garner et al. 1979; Jones and Hamburger 1976; Perloff et al. 1987b; Institute of Medicine 1989).Wages, crime, and insurance rates are also higher in these areas than elsewhere. Recent evidence indicates that board-certified pediatricians would require that the percentage of their charges covered by Medicaid fees be increased from 53 to 89 percent, an increase of two-thirds, before they would accept all Medicaid patients for care (Yudkowsky et al. 1990). Given the additional costs associated with inner-city practice, the level of Medicaid fees required to attract additional pediatricians to these areas is likely to be well above prevailing charges. A more effective means of improving the supply of pediatric care in the inner city would be to expand support for institutional providers already in place in these areas. Such institutions as inner-city hospitals and academic medical centers, community health centers, and local public health



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clinics already provide considerable care to inner-city Medicaid children and represent a substantial foundation on which to expand primary health care capacity in the inner city. Care from these facilities has been found to expand the availability of care rather than displacing care from private physicians (Fossett et al. 1991; Fossett et al. 1989), and to reduce hospitalization rates and lengths of stay (Rosenbaum 1986; Geiger 1984; Ginzberg and Ostow 1985). Institutional providers also furnish a more direct means of providing Medicaid children and their parents with access to nonmedical services for the social and behavioral problems which affect children’s health than office-based providers can. Given the large number of pediatric health problems of behavioral origin, expanding the number of physicians available to treat Medicaid children is not likely to improve dramatically the health of inner-city children. While there is ample evidence of the effectiveness of improved access to medical care in improving children’s health (Starfield 1985),the difficulties of many inner-city mothers in using available care and providing adequate nutrition, support, and oversight to their children suggest that additional services are required before improvements in medical care can have their maximum potential impact on children’s health. Private, office-based physicians have few incentives to learn about the availability of such services or refer patients to them. Institutional settings, by contrast, provide “one-stop” access to services and to medical care. Federal and state support for inner-city institutions declined over the 1980s. Many state Medicaid programs reduced payments to outpatient clinics and community health centers (Cohen 1989; Lewis-Idema 1989). Reagan administration actions during the early 1980s sharply reduced funding for operating grants under the Maternal and Child Health Block Grant and the Migrant and Community Health Center programs and all but eliminated the National Health Service Corps Scholarship program, which had provided a ready source of affordable physicians for inner-city institutions. A number of other categorical programs which financed care to specialized populations were also cut, in some cases sharply. Federal support for medical education has also been reduced, worsening the financial position of many academic medical centers (Perloff 1992). Recent budgets have increased operating funding for maternal and child health centers and community health centers and slowed the rate of decline in NHSC placements, but the overall level of federal support for inner-city institutional providers, particularly when inflation is considered, is below that of the late 1970s (Fossett et al. 1990).




These reductions in support, together with larger changes in the health care market, have seriously eroded institutional capacity in many cities (Davis et al. 1987). In Chicago, for example, the largest community health center and several community hospitals have closed over the last five years, and several other hospitals are expected to close in the near future. Nationally, over two hundred community health centers have closed since 1980 (Geiger 1984). The loss of NHSC placements has caused a vacancy rate of over 25 percent for physician positions in community health centers nationwide, further reducing treatment capacity at remaining centers. This vacancy rate will increase as current NHSC physicians complete their service obligations and are not replaced (U. S. General Accounting Office 1990). Over half the medical staffs of community health centers in 1989 were NHSC physicians (Physician Payment Review Commission 1991), so the potential loss of capacity is considerable. The outlook for additional federal or state support to expand inner-city institutional capacity is uncertain at best. Increased support for NHSC placements or expanded grants for maternal and child health agencies or community health centers may be precluded by caps on discretionary spending through 1995 enacted in the Budget Enforcement Act of 1990 (Congressional Budget Office 1991). These caps, which limit domestic and other discretionary spending separately through 1993 and all discretionary spending thereafter, generally allow domestic spending to increase at the rate of consumer inflation. Recent community health center appropriations have generally kept pace with this rate (Physician Payment Review Commission 1991). Since institutional providers’ costs increase at higher rates than consumer prices, the support that institutions would need to expand will have to come at the expense of other programs. In the current budget environment, the odds of such growth must be rated as minimal. The other major possibility for expanded support of inner-city institutions lies in the use of federally qualified health centers (FQHCs), a new provider status created by OBRA89 and refined by OBRA90 (Volpe and Breyel 1991). Community health centers are automatically qualified as FQHCs, and other entities may qualify for “look-alike” status. OBRA89 required states to reimburse community health centers and other FQHCs for 100 percent of the costs of providing care, simplified Medicaid billing arrangements, and expanded the range of nonmedical services for which these entities can be reimbursed. FQHCs can also contract with other agencies for provision of services, which are also eligible for reimbursement at cost.



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Whether these changes will provide sufficient revenue to offset earlier losses and enable these facilities to expand the level of service they provide to the large number of newly eligible Medicaid children is very much an open question. Medicaid revenues are tied to the provision of care by a particular provider to a particular patient and generally cannot be used to recruit the provider or provide an office, equipment, or a support staff. Community health centers can now recover these expenses from Medicaid as part of the cost of providing care, but the initial funds to expand capacity must come from elsewhere. This inability to use Medicaid funds to pay the up-front costs of development may lessen the ability of these providers to expand their level of service. The availability of FQHC status for other institutional providers, particularly local health departments and hospital outpatient facilities, is more problematic. Historically, these agencies have provided considerable care to Medicaid-eligible and other poor children and may be larger providers of Medicaid pediatric care than community health centers in many cities. Their eligibility for “look-alike” FQHC status, however, may be jeopardized by the fact that they are not organized or governed in the same fashion as community health centers. Recent dramatic increases in Medicaid expenditures may cause Health Care Financing Administration officials in the U.S. Department of Health and Human Services to interpret regulations narrowly and resist extending FQHC status to agencies other than cammunity health centers because of the potential increases in cost. This situation is further complicated for many local health departments by their inability to “retain” the revenue from increased Medicaid fees. Such revenue in many cities reverts to the general fund and is reallocated through the normal budget process rather than being earmarked for health activities. These considerations suggest the need for new policies to increase the capacity of institutions in the inner city. Policymakers should consider statutory or regulatory changes that allow waivers of FQHC organizational or governance requirements for inner-city institutions other than community health centers. There should be additional support for the recruitment of new personnel or the retention of NHSC physicians past their period of obligation. The Department of Health and Human Services has made such grants in the past (Physician Payment Review Commission 1991), and further support may be required to prevent a sharp decline in institutional capacity just when the demand for pediatric care increases sharply.




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Medicaid payments and access to care.

Effects of MEDICARE and MEDICAID on access to and quality of health care.

Child health and access to health care in France: Evidence on the role of family income.

Effect of Medicaid payment levels on access to obstetrical care.

Primary care arrangements and access to care among African-American women in three Chicago communities.

Access to Care for Disabled Children Under Medicaid.

Effect of Medicaid Expansions on Health Insurance Coverage and Access to Care among Low-Income Adults with Behavioral Health Conditions.

Access to health care: UNY Care and universal health insurance.

Transportation barriers to child health care access remain after health reform.

Access to quality health care.

Adolescents' access to health care.

Letter from . . . Chicago: Primary health-care crises.

Women and access to health care.

Health Literacy and Access to Care.

Access to health care in America.

Effective access to health care in Mexico.

Medicaid maternal and child health care: prepaid plans vs. private fee-for-service.

Mental health care, the Affordable Care Act, and Medicaid expansion.

Organizational influences on access to health care.

Children with Special Health Care Needs in CHIP: Access, Use, and Child and Family Outcomes.

Medicaid expansion and access to care among cancer survivors: a baseline overview.

From equal access to health care to equitable access to health: a review of Canadian provincial health commissions and reports.

Economic and Public Health Impacts of Policies Restricting Access to Hepatitis C Treatment for Medicaid Patients.