Does Spending More Get More? Health Care Delivery and Fiscal Implications From a Medicare Fee Bump

While salient features of the Affordable Care Act include insurance expansions and private coverage reforms, various other provisions are embedded within the law. We focus on a temporary 10 percent fee increase for primary care visits supplied to publicly insured (Medicare) beneficiaries. Using administrative and survey data, we assess the price shock's impact on service volume, physician labor supply, and quality of care. Primary care physicians (PCPs) in independent practices demonstrate, at most, a marginal 2 percent increase in new patient visits while horizontally and vertically integrated PCPs show no change. Both PCP organizational types witness declines in established patient visits, on average, but there is marked heterogeneity: established patient visits increase by 1 to 2 percent among PCPs with fewer Medicare claims in the pre-period. The Medicare fee bump did not observably impact other labor supply outcomes and quality of care margins. We estimate that the policy introduced a $1.5 billion transfer from taxpayers to providers during the initiative's first three years.