The Supply Side Responses to the Affordable Care Act

Caitlin E. McIlwain

Advisor: Dr. Dennis O’Dea

University of Washington, Department of Economics

Spring 2018

The implementation of the Affordable Care Act (ACA) has provided insurance to roughly 20-24
million previously unprotected Americans. Through the Medicaid expansion tier of the ACA, there
has been an increase in health insurance coverage and a subsequent increase in demand for
healthcare. This thesis aims to determine if this increase in healthcare demand has been
appropriately met by an increase in the supply of medical services, or if there appears to be a lag
in supply (representing a fixed or inelastic healthcare supply relative to demand). I used new
patient appointment wait times from 15 different metropolitan areas measured for five different
medical services in 2004, 2009, 2014, and 2017 (from the Merritt Hawkins 2017 Physician Survey)
as a proxy for the supply side responses to healthcare demand. Using linear regressions that
controlled for the fixed effects of differences between metropolitan areas and demographics such
as population and age, I sought to determine if Medicaid expansion caused new patient
appointment wait times to increase. Due to the lack of data stemming from the newness of the
ACA, the regression analysis did not output significant results, leaving multiple unanswered
questions about the true causes of new patient appointment wait time variation, and the effect of
the ACA on the supply of healthcare.
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Introduction
In October of 2016, President Barack Obama stated that “in America, healthcare is not just
a privilege, but a right for every single American” (Obama 2016). In accordance with his beliefs
about what health insurance in the United States should entail, Obama signed the Patient Protection
and Affordable Care Act (the ACA) into law, providing insurance to roughly 20-24 million
previously unprotected Americans (Healthcare.gov). As one of the most significant changes to US
healthcare since the introduction of Medicare and Medicaid in 1965, the ACA provides a rich
source for fruitful economic research about government involvement in healthcare. This thesis will
address the supply side responses of the US healthcare market to the ACA. Specifically, what is
the effect of the implementation of the Affordable Care Act on new patient appointment wait
times?
At present, most discussion surrounding healthcare and health insurance focuses on the
effects of increasing the number of insured on the demand for healthcare: How many people have
moved from the uninsured to the insured bracket? To what extent does an increase in health
insurance actually increase the health of Americans? And perhaps one of the most controversial
questions that underlines all public policy debates: have insurers increased premiums in response
to an increase in demand for healthcare? These questions are answered in most of the current
literature surrounding the ACA already, but they leave a crucial question unanswered: if demand
is increasing, is supply also increasing? As will be discussed in the later sections, most literature
establishes that demand for healthcare increases as the ACA gives health insurance to more people,
but I wonder if supply can change at the same rate? In other words, it may be true that the market
for health insurance is not a perfectly competitive market due to the barriers that inhibit timely
supply side adjustments (such as difficulty in increasing the capacity and number of medical
offices, and difficulty increasing the number of doctors eligible to be hired). By using patient wait
times as a proxy for the supply side responses, we can evaluate to see if the supply of medical
practitioners and facilities is increasing with the number of insured (a movement along the supply
curve), or if patients are experiencing longer wait times as a result of too much demand for a fixed
supply. In other words, we will be examining whether or not the supply curve is fixed (inelastic)
or upward sloping (see figure 1 and 2).
To understand why the ACA has provided economists with such a novel source of
information that can be used to evaluate health insurance platforms, it is important to understand
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the mechanisms behind the ACA itself. The ACA, signed into law in March 2010, is a three tier
system that is implemented differently across all states. It includes bans on pre-existing condition
exclusion and health-based pricing. In addition, the ACA requires individuals (and large employers
with 50 or more employees) to purchase health insurance or pay a tax fine, and it also provides
free and subsidized insurance through Medicaid expansion for low income families living at up to
138% of the federal poverty line and gives tax breaks to individuals living at up to 400% of the
federal poverty line (Healthcare.gov). This thesis will specifically focus on the Medicaid
expansion tier of the ACA.
Moreover, Medicaid has become a key pillar of the American health insurance system
covering more than 65 million low-income people. As a federal grant program created in 1965,
“Medicaid has long afforded states considerable discretion to shape eligibility for the program and
the services that enrollees receive [see figure 3 for graph of state Medicaid Expansion decision].
Hence, who gets what from Medicaid has varied greatly from one state to the next” (Cantor et al
2013). Some individuals with an income between 100% and 138% of the federal poverty line
qualify for subsidized coverage. However, if their state of residence does not expand Medicaid,
those earning below 100% of the federal poverty line will not be eligible for this fully subsidized
coverage. These differences in state implementation of Medicaid expansion provide a fertile
ground for a natural experiment and give us the ability to conduct a linear regression that utilizes
dummy variables to indicate the presence of Medicaid expansion and to control for the fixed effects
of the inherent differences between metropolitan regions.
It is also important to note that Obamacare has only been fully implemented since the start
of 2014, giving state governments three years to implement their amendments from the signing of
the bill into law in 2011. The majority of studies that have been conducted with regards to the
ACA are extremely recent, which suggests that there are myriad questions left to be answered,
including my own. Objectively answering questions about the effects of a controversial public
policy can potentially draw more support (or less, depending on the results), suggesting that any
public economics study is inherently valuable.
Furthermore, the implications of this study (and all studies that look at healthcare in the
US) can help economists answer a broader question: should the government truly be involved in
healthcare at all? This question follows the idea of healthcare as a public good. When the market
for a public good fails, it is necessary for the government to intervene. In the scope of healthcare,
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the market faces adverse selection, asymmetric information, equity concerns, moral hazard, and
externalities (Gruber 2005). The many failures in the healthcare market call for the government to
play a paternalistic role, which some argue is too overbearing, and does not positively affect the
health of Americans. Therefore, by examining the economic responses to the ACA (specifically
the supply side responses), we can address some of these discussions that relate to the overall
impact of the government’s role in the US health insurance system, especially if we can garner a
broader picture of how the supply is modelled. As will be discussed, the results of this study were
surprisingly inconclusive, leaving a multitude of questions (like those above) unanswered,
suggesting that the economy had a surprisingly trivial market response to such a controversial
policy. (It is important to note that this study does not comment on the health outcomes of the
ACA, which augments the discussion of the government role in the healthcare market.)
This leads to the question: what are the hypothesized results of this thesis? As will be
discussed in the Methodology portion of this paper, it appears that averaged across all medical
services, new patient wait times appear to be increasing. That is, in most years and in most MSAs,
on average the new patient wait times show a positive growth over time. I suspect that the reason
for this increase is the expansion of Medicaid. More specifically, I predict that in the states that
expanded Medicaid, we should expect to see an increase in new patient appointment wait times
compared to new patient appointment wait times in states that did not expand Medicaid as a result
of the ACA. That is, supply is fairly inelastic compared to demand (see figure 2). There are several
economic mechanisms underlying this hypothesis, but first, I will explain some behavioral patterns
that are prevalent in healthcare. Often, when an uninsured person experiences an adverse shock to
their health, they seek treatment from emergency care facilities (if they seek treatment at all)
because they legally cannot be turned away (Abelson 2008). This means that if the number of
uninsured is high, then the demand for primary care related services at emergency care facilities
is also high. So, as the number of uninsured decreases with Medicaid expansion, these patients are
expected to move from emergency care services to primary care offices, where they can seek more
regular care at no moral cost of abandoning payments (which occurs frequently in emergency care
facilities that treat uninsured patients) (Abelson 2008). With the ACA, more people have joined
the insurance pool and are seeking regular appointments, but I predict that the the number of
doctors will not have increased at the same rate. Thus, there is likely a shortage in number of
doctors and doctor’s offices because of the barriers to entry in the medical field, and the large time
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costs of physically building larger offices to accommodate more patients. More simply put, it is
difficult and time consuming to become a medical specialist (and to build healthcare facilities) and
thus when demand for healthcare increases, doctors cannot be hired and trained at the same rate
(Carroll 2016). According to the Association of American Medical Colleges (AAMC) there is
currently a deficit of 21,800 physicians in the United States, which is projected to rise to 65,500
in 2020 and to as many as 90,400 by 2025 (Survey of Physician Appointment Wait Times, 2017).
Since the Medicaid expansion has only been in effect for the last four years, there hasn’t been
enough time for supply to ‘catch up’ with demand. Thus, in the short run, I expect supply to be
relatively fixed, following an elastic demand (see figure 2). It should be noted again that while this
thesis draws on the simple economics mechanism of supply and demand, it is founded in the idea
that the market for medical care has barriers to entry (thus creating the relatively fixed supply of
healthcare in the short run).
With this prediction in mind, I will now briefly discuss how I plan to approach this
question. I will be using survey data on new patient appointment wait times, in days, in Cardiology,
Dermatology, Obstetrics-Gynecology, Orthopedic Surgery, and Family Medicine practices, taken
from 15 major metropolitan locations in 2004, 2009, 2014 and 2017. With this data, I will run a
linear regression to causally determine the reason for the change in wait times, while controlling
for the demographic differences between the cities. As aforementioned, this regression will use
dummy variables to control for the fixed effects of the differences inherent in the different
metropolitan areas. The aim of this study is to establish that the increases in new patient
appointment wait times are related to the expansion of Medicaid (and thus, the ACA), again noting
that patient wait times are negatively related to the supply of doctors.
While the conclusion of this study may suggest some policy implications for future
healthcare reforms, several questions will be left unanswered due to the newness of the ACA; the
whole story of its effects cannot yet be told, especially with the data available for this thesis. While
I noted that I expected the supply of doctors to be inelastic in the short term, it is still to be
determined if this is applicable, and what effect Medicaid expansion truly has on the healthcare
market. Additionally, due to the ambiguity of the relationship between Medicaid expansion and
patient wait times, there is ample room for more studies to be conducted that identify the true
underlying reasons for the variation in new patient wait times. Moreover, the balance between wait
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times in primary care offices and urgent care services would also be a scintillating study, one that
will be touched on in the conclusion of my research, but not explored in full.
Literature Review
Notably, most previous literature on the ACA focuses on health care demand as a result of
increased health insurance coverage. There is an area of study that focuses on the elasticity demand
for healthcare associated with medical insurance and have included basic analysis on the initial
effect of the ACA on the uninsured. There has also been a cohort of studies conducted before the
era of the ACA that address the overall effects of government mandated health insurance on health.
Furthermore, economists have experimented with a third category of research: the supply of
healthcare. This category includes studies on moral hazard and health care suppliers, the supply of
emergency care services, and some correlation studies on wait times. Throughout this section, it
will become evident where this thesis fits among the literature.
Research focusing on healthcare demand has been around since before the ACA was
written into law. In the early years after the introduction of Medicaid and Medicare (1965),
questions arose from uncertainty about how demand responds to insurance-induced changes in
price. Public policy decisions relied on the ability to quantify this response, leading the federal
government to initiate the Rand Health Insurance Experiment (HIE) in 1974. In this experiment,
which was conducted by Manning and Newhouse et al, 5809 consumers were randomly assigned
to one of 14 different coinsurance plans, and their behavior was recorded. Coinsurance refers to
the idea that the insured pays a share of the payment made against the claim. The coinsurance rates
were zero, 25, 50, or 95 percent. Each plan had an upper limit (the Maximum Dollar Expenditure
or MDE) on annual out-of-pocket expenses of five, 10, or 15 percent of family income, up to a
maximum of $1,000. Manning and Newhouse et al used a regression model (ANOVA) to examine
their data and establish causality between increasing insurance (decreasing the coinsurance payout)
and the effect on healthcare demand. Initial results from the experiment suggested that health
insurance without coinsurance “leads to more people using services and to more services per user”,
referring to both outpatient and inpatient services. This study concludes that increasing the
insurance of consumers will increase the demand for medical care, but interestingly, health
outcomes, except for chronic conditions, were not bettered through this increased usage of medical
services. The authors then discussed the moral hazard of increasing insurance, which is determined
by the fact that health outcomes did not improve as medical care usage increased. For the purposes
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of this thesis, the study provides invaluable discussion on the increased demand as the consumer
pays less (is insured more). This has become one of the most significant tools created for the study
of healthcare demand as a response to decreasing consumer payout (or increasing insurance).
Additionally, Manning and Newhouse et al concluded from their data that there appears to be little
justification for the common practice of group insurance policies treating emergency room services
more generously than physician office visits. This is because emergency room services are just as
responsive to insurance plans as physician office visits. Their research establishes that demand for
primary care is almost immediately responsive to increased insurance coverage, which prompts
me to make this underlying assumption throughout this paper.
Within the same area of research, Finkelstein and Taubman et al 2012 conducted a
remarkably similar study using data from a randomized lottery in Oregon to establish the effect of
health insurance expansion on healthcare use, health outcomes, financial strain, and general well-
being of low-income adults. They capitalized on a lottery that selected a group of uninsured low-
income adults to be given the chance to apply for Medicaid. They found that the treatment group
had significantly higher healthcare utilization (primary and preventative care as well as more
hospitalizations) as well as better self-reported health than the control group (those in the overall
grouping that did not get selected by the lottery to apply for Medicaid). Numerically, the
economists were able to establish that a one percent increase in insurance coverage is associated
with a 30% increase in the probability of having a hospital admission, a 15% increase in the
probability of taking prescription drugs and a 35% increase in the probability of having an
outpatient visit.
Like the Rand HIE, the study done by Finkelstein and Taubman had a rare source of data
that came out of the framework of a randomized controlled trial design. In this study, the
researchers conducted cost benefit analysis on health insurance, using their findings on increased
health care utilization as a cost and the positive impact on health and consumption smoothing as a
benefit to determine the overall policy implications of increasing health insurance for the poor.
The study overall determined that increasing health insurance for individuals increased their usage
of healthcare and subsequently increased their self-reported health. While this study contributes to
the literature on the demand side for health insurance, it avoids the discussion of the supply side
effect. Finkelstein et al even notes that “there may be supply side responses from the healthcare
sector” that coincide with the insurance expansions. Their study precisely leaves a gap for an
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alternative study to focus on these supply side effects: the area of research addressed by this thesis.
However, the pool of data used in this study is too specific to generalize to a greater population–
a common problem with randomized experiments. By performing a difference-in-difference
experiment using a national data set, this extrapolation problem can be overcome.
Before examining the alternative studies that contribute to the area of supply side research,
I will make note of one important study by Charles Courtemanche et al that examines the early
impacts of the Affordable Care Act on Health Insurance Coverage in Medicaid Expansion and
Non-Expansion States. This study aimed to estimate the causal effects of the ACA on health
insurance coverage. While the study does not directly relate to supply side effects of the ACA, it
does utilize a difference-in-difference-in-difference method to exploit the cross-sectional variation
in the intensity of treatment arising from the differences in state participation in Medicaid
expansion (thus making the data more useful for generalizing across a larger population). This
methodology inspired the methodology that will be used in this thesis, simply because it allows us
to use national data but controls for the natural differences between two groups of states and their
respective populations. Using this methodology, Courtemanche et al found that the full ACA
increased the proportion of residents with insurance by 5.9% compared to the 3.0% in the control
states (the states that did not expand Medicaid), and that these gains were largest for those with
incomes below the Medicaid eligibility threshold, non-whites, young adults, and unmarried
individuals. Specifically, the Medicaid expansion component of the ACA was found to increase
coverage by 3.1% in 2014, while the implementation of the other components of the ACA
increased coverage by 2.8%. This literature was vitally important in suggesting a robust
methodology that would be appropriate to use for a study on the effects of the ACA. By focusing
on one specific component of the ACA, the researchers were able to isolate certain causal effects
and determine the heterogeneity in the ACA’s impacts. This study only focuses on the extensive
margin of coverage (the take up of coverage demanded) and ignores other mechanisms such as the
quality of coverage (the intensive margin), and the supply of coverage (denoted by wait times)
resulting from increasing the number of insured. In addition, the data in this study is limited to
only the first year of full ACA implementation, 2014. This shows that there is a gap in the research
as more data becomes available post 2014.
Up to this point in the literature review, I have discussed the studies that focus on the effect
of increased health insurance on the number of people covered, and the demand for healthcare.
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These types of studies can lead to discussions about the effect of health insurance on the health of
patients, the ‘end goal’ of health insurance research. This was included in Finkelstein’s 2012 paper
and is poured over in detail in Meltzer and Levy’s 2008 study that found convincing evidence that
demonstrates that health insurance can improve health measures of some population subgroups.
While Finkelstein’s study is valuable for the overarching policy implications of government
mandated health insurance and the ‘bigger picture’ of healthcare, it is noted to establish that studies
examining the overall effects of health insurance on health do exist.
The final category of research pertaining to health insurance reviews the supply of
healthcare and how it responds to an increase in health insurance. Within this area of research, not
many causal studies have been conducted, proving that there is a gap in the research where this
paper fits.
To begin, the most significant study relating to this thesis is Courtemanche and Freidson
et al’s 2017 study on the ACA and ambulance response times. Notably, this 2017 study provides
the first estimates of the effect of coverage expansion under the ACA on wait times for any type
of medical service (and thus an estimate for the supply side response). Courtemanche and Freidson
decided to focus on emergency care services because their goal was to estimating the effect of the
ACA on ambulance response time, which was defined as the time elapsed between notification
and when the first ambulance arrived on the scene of a motor vehicle accident. To conduct their
study, Courtemanche and Freidson et al exploited temporal and geographic variations in the
implementation of the ACA and pre-treatment difference in uninsured rates that resulted from the
2012 Supreme Court decision that made the Medicaid expansion component of the ACA optional
(as of May 2017, 19 states had opted out). Using a difference-in-difference regression, they
estimated that the expansion of private and Medicaid coverage under the ACA combined to slow
ambulance response times by an average of 19%. Full implementation of the ACA led to an
increase in insurance coverage of approximately five percentage points and an increase in
ambulance response time of 1.89 minutes (or one minute and 53 seconds). This tells us that with
every percent increase in insurance enrolment, there was a 22.8 second slowdown of ambulances.
Through the discussion of their results, Courtemanche and Freidson conclude that through
extending coverage to individuals who, in its absence, would not have utilized the emergency
medical services, the ACA added strain to emergency response systems. They suggest that their
study is an extension of studies done on the effects of expanding health insurance on healthcare
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utilization because healthcare utilization depends on the supply-side response to increased demand
for insurance. Courtemanche and Freidson suggest that some of the reasoning behind a lagging
supply side response could be in the barriers to entry such as licensing requirements, the capital
costs of medical facilities and equipment, and the extensive regulations governing the construction
of new medical facilities. Their study, being the first of its kind, opens the doors for myriad
subsequent research on supply-side responses in other medical care services to take place. Their
methodology, although fairly robust was not a traditional difference-in-difference, but rather
simply a regression. Similarly, I will be using a linear regression analysis to establish whether or
not a causal relationship exists between Medicaid expansion and new patient appointment wait
times.
Although Courtemanche and Freidson’s study may be the first causal study of its kind that
discusses supply side responses to the ACA, it is not the only study to address the supply of health
care and its overlap with health insurance. Garthwaite 2012 examined the effects of the ACA on
physician behavior. Driving his study, Garthwaite cited existing predictions of physician
shortages, to suggest that the expected increase in the utilization of medical services by these
millions of newly insured Americans generates concerns among policymakers and health
professionals about the potential for dramatically longer wait times for appointments, lower quality
of care, and overloaded physician practices. Garthwaite’s study focuses on the intensive margin
supply side responses, examining behavior of physicians who are overburdened with too many
appointments as a result of an increase in the number of patients. He does not discuss the
overarching barriers to entry that may be the true cause of the supply side shortage and narrows
his research to looking at the State Children’s Health Insurance Program that was established in
the 1990s. Using a robust dataset and a difference-in-difference identification strategy, he found
that physicians decreased the number of hours spent with patients but increased their program
participation with an increase in health insurance coverage. Suggestive evidence shows that this
decrease in hours spent with each patient resulted from shorter office visits, which signals that the
supply side does respond to increases in the demand for healthcare that result from health insurance
expansion.
Finally, and briefly, studies have been done that suggest merely correlations between wait
times and insurance expansions. One study done by Polsky et al in 2015 looked at the relationship
between availability of primary care appointments and the increasing Medicaid coverage from the
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ACA implementation. Polsky et al suggested that there was a correlation between a surge in people
insured under Medicaid and an increase in primary appointments available for new members in
offices aimed at providing for Medicaid recipients. This study cannot be generalized to suggest
that all medical service offices had the ability to increase appointment availability, nor can it be
viewed as a causal study, since as mentioned, it was based solely on a correlation between data.
Thus, the minimal amount of literature on supply side responses to insurance expansions
makes for a wide gap in the literature where this paper fits. As aforementioned, ample studies
discuss the demand responses to insurance expansion, be it through increased coverage, or through
demanding more healthcare, but the supply side responses are left relatively untouched. Notably,
these studies used mostly difference-in-difference approaches to establish causality. I will be
focusing on a linear regression analysis, capitalizing on fixed effect controls to determine the
existence of a causal relationship as previously discussed.
Data Overview
In the following section, I will outline the data I will use to examine the relationship
between Medicaid expansion and the supply of healthcare, along with a description of the
methodology used to determine causality, and explanations of the control variables I deemed
necessary to include.
The data collected and analyzed for this thesis was driven by the Merritt Hawkins 2017
Survey of Physician Appointment Wait Times. This survey provides data for the dependent
variable: new patient appointment wait times, and thus is a crucial element of the methodology.
Merritt Hawkins, established in 1987, is a national healthcare search and consulting firm
which specializes in the recruitment of physicians and works to provide healthcare staffing services
across the nation. The firm sought to determine the average time (in days) new patients were
required to wait before getting an appointment to see a doctor in 15 large metropolitan markets
(Atlanta, Boston, Dallas, Denver, Detroit, Houston, Los-Angeles, Miami, Minneapolis, New York,
Philadelphia, Portland, San-Diego, Seattle, Washington DC). Notably, this is a study of the
extensive margin of the supply (new patients), and not of the intensive margin (wait times in
medical service lobbies). Rather than using data that focuses on the amount of time spent waiting
in the waiting room of a medical care facility, this survey examined the waiting time that
accompanies new patient appointments. This gives different insight into the market reactions to an
increase in healthcare demand.
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This is the fourth time the survey has been conducted using the same metropolitan markets,
and thus the years 2004, 2009, 2014, and 2017 were the primary years for which demographic and
population data was examined. A relatively small amount of data observations was used to conduct
this thesis due to the fact that the ACA has only been fully implemented since 2014 (and not
universally implemented according to the 2012 Supreme Court ruling). The Merritt Hawkins
Patient Wait Times Survey gives generous and unprecedented insight into the possible supply side
responses to the ACA.
The dependent variable, new patient appointment wait times, acts as a proxy for the supply
of healthcare; a longer wait time signifies a lesser ability to provide healthcare to patients. The
survey focuses on five medical specialties: cardiology, dermatology, obstetrics-gynecology,
orthopedic surgery and family medicine. The names of the physicians (which were notably
different each year the survey was conducted) were selected at random from internet-based
listings. Research associates employed by Merritt Hawkins called each randomly selected office
in each of the 15 metropolitan areas and asked to be told the next available time for a new patient
appointment based on a hypothetical and non-emergent reason that was standardized across all
research associates for all years. The surveyors were tasked with contacting a minimum of 10
separate physician’s offices per specialty with a maximum of 20 offices contacted per major
metropolitan area for a total of 1,414 medical offices surveyed in large cities for the 2017 survey.
The Merritt Hawkins research associates called 1,399 offices in 2014, 1,162 offices in 2009, and
1,062 offices in 2004 and made no attempt to contact the same offices in each time period. If the
physician was no longer seeing new patients, the wait time was designated as 365 days. While it
is important to note that the selected offices (and the amount of offices) called varied across time
periods, the fact that they were randomly selected alleviates concern stemming from the
incomparability of the time periods. Moreover, the random selection process in each period
prevents an outlier from skewing the data across the entire time range; with a random selection in
each period, any potential outlier only skews the data for one period. The take up of Medicaid
within each office was also fairly evenly distributed, according to the reported average percentage
of Medicaid acceptance in each office for every Metropolitan area. This alleviates concern that the
randomly selected offices also happened to be offices that, ceteris paribus, would not have been
affected by the expansion of Medicaid because they did not accept Medicaid in the first place.
The survey concluded that, on average across medical services, in most years and
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metropolitan areas, new patient appointment wait times seemed to increase with the significant
expansion of health insurance coverage through the implementation of Affordable Care Act, but
no causality was determined (see figures 4 through 13). This lack of causality motivated this thesis,
as questions related to the true relationship between the ACA and the supply of healthcare cannot
be answered using simple correlations.
Figures 4 through 13 in the Appendix are graphical representations of the change in average
patient wait times over the time periods in which the survey data was collected. I have chosen to
divide the graphs by the MSAs that accepted Medicaid expansion and those that did not for the
purposes of comparability and readability.
Figures 4 through 13 indicate that in some specialties, new patient appointment wait times
have increased steadily for almost all MSAs in both 2014 and 2017 (OB-GYN appointments for
both expansion and non-expansion states, Family Medicine appointments for non-expansion
states, and cardiology appointments for expansion states and non-expansion states). Notably, there
was an increase in appointment wait times in both the expansion states and non-expansion states
for all specialties in 2014 and 2017. However, the states that expanded Medicaid saw larger
increases in appointment wait times after the ACA was implemented. The graphs also indicate that
for some MSAs in particular years and medical services, there was significant variation in the wait
times. Some MSAs saw decreases in patient wait times even after Medicaid expansion.
However, when graphed by MSA across specialty (the wait times were averaged across all
five medical services), the average new patient wait times mostly appeared to increase in both
expansion and non-expansion states from 2014 to 2017 (apart from Denver, Washington DC, and
New York) (see the graphs below).
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On average, the 2017 survey indicates that the new patient appointment wait times for all
five medical specialties across the 15 different metropolitan areas reached an average of 24.1 days,
representing a 30.3% increase over 2014, a 17.6% increase over 2009 and a 15.3% increase over
2004. Additionally, Boston experienced, by far, the longest average wait time (52.4 days) of any
of the 15 metropolitan markets in 2017, as it did in the 2014, 2009 and 2004 surveys.
The averaged wait times appear to be increasing across the four time periods, with larger
wait times in Medicaid expansion states, and a more robust increase in patient wait times between
2014 and 2017 (post ACA implementation). In non-expansion states, the wait times seem to be
changing more subtly, with smaller increases between years three and four than there were for
Medicaid expansion states.
More generally, the wait times averaged across MSAs are provided in the table below and
followed by a graph that gives a visual representation of the time trends. This table suggests that
in some specialties, wait times were increasing significantly, while in others, wait times varied
significantly throughout the measured years, with the largest wait times represented in a year other
than 2014 or 2017.
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Year OB-GYN Orthopedic Surgery Cardiology Dermatology Family Medicine

2004 23.3 16.9 18.8 24.3 20.3

2009 27.5 16.8 15.5 22.1 20.3

2014 17.3 9.9 16.8 28.8 19.5

2017 26.4 11.4 21.1 32.3 29.3

This table indicates the average wait times across all MSAs for each medical service listed in the
Merritt Hawkins Survey.

This graph details the general trend of wait time increase in each specialty. By reviewing
the trend from 2009 to 2014, and 2014 to 2017, two out of the five specialties show an increase in
wait time from 2009 to 2017 (Dermatology had wait times that went from 22.1 to 32.3 days and
Cardiology saw an increase in wait times from 15.5 days to 21.1 days), while Family Medicine,
OB-GYN, and Orthopedic Surgery specialties all experience increased patient wait times between
just 2014 to 2017. The wait times for these services increased by 9.8 days, 9.1 days, and 1.5 days
respectively in the last two recorded years. All specialties saw increased wait times between the
years 2014 and 2017.
Noting these trends, I used demographic data from each metropolitan area and year listed
in the Merritt Hawkins Survey to run a regression analysis with the aim of establishing a causal
relationship between Medicaid expansion and the general increases in patient wait times.
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Specifically, I gathered data from the Census Bureau’s American Community Surveys (ACS) for
the 2009, 2014, and 2016 data. The 2017 ACS data will not be available until September of 2018,
and thus the 2016 ACS data was used as a replacement. Since the global economy did not
experience extreme shocks in 2016 or 2017, the data is acceptably comparable for the purposes of
this thesis. Additionally, the Census Bureau released its first multiyear estimates based on ACS
data collected from 2005 through 2007 in 2008, and thus I manually extracted 2004 Census Data
to conform with the rest of the population data (the proportion of the population who were 65 and
older, total population, and education level) that was taken from the ACS. I manually added the
population for each county included in the 2004 Metropolitan Statistical Area definitions.
Moreover, I selected to use Metropolitan Statistical Areas (MSAs are regions that contain
at least one Census-Bureau-defined urbanized area of 50,000 or more people and is an aggregation
of counties in and around the urbanized area) as the method for outlining the boundaries of the 15
metropolitan regions selected by Merritt Hawkins. By using MSAs, it standardized the approach
to examining cities. I hypothesized that a person living in suburb of a city may call a medical office
in the city to make an appointment. This person would not be counted in a population headcount
within the city limits, although they make up part of the demographic of patients that the particular
medical office accepts. Thus, it is important not to exclude these consumers from the analysis.
However, some MSAs include counties that can cross state boundaries (Philadelphia MSA
includes Pennsylvania, New Jersey, Delaware, and Maryland; Minneapolis MSA includes
Minnesota and Wisconsin; Washington DC MSA includes Maryland and Virginia; New York City
MSA includes New York, New Jersey, and Pennsylvania). I noted that only the Washington DC
MSA and the Minnesota MSA included a state that expanded Medicaid and one that does not. This
is an important point to highlight because a patient in Wisconsin (a non-expansion state) would
not be affected by the expansion of Medicaid in Minnesota, and ceteris paribus would likely not
change the demand for healthcare. Thus, there may be a smaller effect in these two MSAs, given
that the entire MSA was not affected by a change in US healthcare law. Due to the overwhelming
benefit of using MSAs over urban city or state (given that the data from these statistical areas
includes patients from regions surrounding the metropolitan city), the likely negligible effect of
the overlapping boundary was negated in this study.
It should also be noted that from 2004 to 2016, some MSAs had slightly different
boundaries. Since merely the surrounding counties of the larger city changed in the definition of
 McIlwain 16

the MSA, I concluded that the effect on the demographics of the city would be trivial in the broader
scheme of this analysis.
Methodology
I selected to use the computer program R to run the linear regressions for each of the five
medical specialties (i) (and the averaged specialty wait time) in the Merritt Hawkins Survey1. The
main model I will analyze is as follows:

(Equation 1)

For this regression, I selected to control for demographic data (population of the MSA and
proportion of the population 65 years and older) along with the following variables: personal
income per capita, percentage of adult obesity (at the state level), health care expenditure per capita
(at the state level), and whether or not the state of the city expanded Medicaid with the Affordable
Care Act implementation in 2014. These variables were chosen as possible explanatory variables
that may have an effect on patient wait times. Additionally, the dummy variable (𝛿" ) was used to
capture the MSA fixed effects; by using a fixed dummy variable to represent each MSA, I am able
to control for differences between each statistical area that are not controlled for in the
aforementioned selected variables. This way, the coefficient on the Medicaid Expansion variable
will be representative of changes in wait times away from what is already considered average for
each MSA. Arguments that visits per primary care physician do not translate directly into
variations in access to care, because of differences in utilization patterns and in the organization
of medical practice (Glied and Ma 2015) will be controlled for. For example, as noted above,
Boston had much higher than average new patient wait times, so by using a dummy variable, we
can control for the unmeasured variation and differences between regions that is not addressed by
the demographic variables, the health care expenditure variable or the obesity rate variable.

1
I ran additional regressions that differed per specialty and will be discussed in detail under the results heading of
this paper.
 McIlwain 17

Without this dummy variable, statistical regions with higher wait time growth (such as Boston)
could positively skew the estimated coefficient on the Medicaid variable. It should be noted that
by using this fixed dummy variable, we take away degrees of freedom from a relatively small
sample size that lacks significant variation across time, but I determined that it would be necessary
to do so in order to control accurately for differences between MSAs that are not controlled for in
the selected variables. I chose not to use a dummy variable to control for the differences between
years as I did for MSAs because it took away more degrees of freedom, and the time trend was not
large enough to make this dummy variable useful.
Below I will discuss in detail the relevant controls used in this regression, and the reasoning
behind my selection of these particular variables.
I chose to include healthcare expenditure per capita in my regression in order to control for
the potential implications an increase in healthcare expenditure may have for the supply of medical
services (see the Appendix figures 14 and 15 for graphical representation). According to a 2015
study conducted by the American Medical Association2, about 62.8% of the $3,205.6 billion 2015
national healthcare expenditure was allocated to the cost of services provided to patients. Because
this is quantity data, it is difficult to determine whether the growth of healthcare expenditure is a
result of a shift in demand for healthcare or a shift in the supply of services. For example, if there
was a shift in demand for services that was not met by a similar increase in supply, the doctors in
each office would simply be more strained for time and resources, creating a natural increase in
price of healthcare services (the mechanism behind the increase in health expenditure) as well as
an increase in wait times for services. Conversely, if there was an increase in demand that was met
by an increase in the supply of medical offices (for example, more facilities were built, and more
doctors were hired to meet the expected increase in demand), this would increase healthcare
expenditure but would decrease patient wait times (because more services would be available to
meet the increased demand). Since this paper is based on the hypothesis that there is a lag in the
supply increase of medical facilities (and potentially doctors), this suggests that increases in
healthcare expenditure may be a result of the former mechanism: a shifting demand function, and
thus could potentially increase wait times. Thus, I included healthcare expenditure to control for
the potential positive bias it could have on patient wait times in order to further determine if the
expansion of Medicaid is causally the reason for an increase in wait times.

2
https://www.ama-assn.org/about-us/trends-health-care-spending
 McIlwain 18

Notably, healthcare expenditure was measured at the state level because the expenditure
per MSA was not consistently reported in the Census from 2004 to 2016. Part of the reason for
this lack of consistency stems from the fact that in some cities with only a few large health centers,
the reported expenditure was a clear reflection of the handful of industries representing the region,
and thus the data was not disclosed to the public. I used the Kaiser Family Foundation (KFF)
report3 to determine expenditure by state. In this report, the KFF determined that healthcare
expenditure includes “spending for all privately and publicly funded personal health care services
and products (hospital care, physician services, nursing home care, prescription drugs, etc.) by
state of residence (aggregate spending divided by population). Hospital spending is included and
reflects the total net revenue (gross charges less contractual adjustments, bad debts, and charity
care). Costs such as insurance program administration, research, and construction expenses are not
included in this total”. Although there are significant differences between the MSA level data and
state level data, healthcare expenditure is measured per capita, with denser areas (such as large
cities) (MSAs) having greater influences on the reported expenditure number. Additionally, it
should be noted that the KFF did not release healthcare expenditure per capita data for 2017, and
that the last release of healthcare expenditure data was in 2017 for the year of 2014. The lack of
availability of this expenditure data has required me to reuse the 2014 data for 2017. Since there
are still three time periods of data reported, there is still a trend of spending that can be examined
alongside patient wait times.
I also chose to examine and control for the potential effect of per capita personal income
by MSA for each year in the Merritt Hawkins 2017 Survey on average patient wait times. Per
capita personal income was derived from the Bureau of Economic Analysis Regional Data section
where per capita personal income was computed using Census Bureau mid-year population
estimates4. All dollar estimates are in current 2017 US dollars, making the personal income
comparable across years per MSA. I selected to control for per capita personal income by MSA
because, in simple terms, healthcare is a normal good, and thus the income elasticity of demand is

3
https://www.kff.org/other/state-indicator/health-spending-per-
capita/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D
4

https://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=7#reqid=70&step=30&isuri=1&7022=2
0&7023=7&7033=-1&7024=non-
industry&7025=5&7026=26420&7027=2016,2014,2009,2004&7001=720&7028=3&7031=5&7040=-
1&7083=levels&7029=20&7090=70
 McIlwain 19

positive, and as income increases, so does the demand for healthcare. This effect would increase
patient wait times (assuming that the fixed costs of the supply side responses create a lag) but has
been complicated by a variety of different insurance programs, including the expansion of
Medicaid5. The ambiguity behind the strength of this effect proves the need to control for this
variable in the regression analysis. I note here that I used log(per capita personal income) in order
to examine the percentage rate at which income changes.
Additionally, I am controlling for standard demographic variables such as population size,
proportion of the population 25 years and older with a Bachelor’s degree, and the proportion of
the population 65 years and older in each MSA. This data was extracted from the one-year ACS
reports for 2009-20166, and manually calculated per county in each MSA (by 2004 definition) for
2004 (also using Census Bureau data). Holding all other factors constant, population growth and
proportion of the population 65 years and older should be positively correlated with new patient
wait times, assuming that supply is converges to some fixed level and is therefore exceeded by
demand. Thus, it is important to control for these demographic factors in the regression analysis.
Notably, I used log(population) in my regression in order to look at percentage change, not changes
in the level of people.
Moreover, I used the ACS data to find the proportion of the population with a Bachelor’s
Degree for 2009-2016. This data is used in regression equation 2, a variation on the main regression
analyzed in this paper (I ran the regression for each medical service denoted by i):

Equation 2

Due to the fact that the ACS only began in 2008, I used 2002 education data from the National
Center for Education Statistics (nces.ed.gov) for Philadelphia, Portland, Seattle, Minneapolis,

5
It is likely that an MSA with a higher per capita personal income may have more consumers with private insurance
(or enough wealth to pay off medical expenses) who would not be affected by the expansion of Medicaid. Thus,
ceteris paribus, these individuals with more wealth would not increase their consumption of healthcare (leaving wait
times constant) because of the expansion of Medicaid.
6
https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml
 McIlwain 20

Houston, Washington DC, and New York City MSA data. Because of the absence of severe
economic shocks from 2002-2004, and for the purposes of this regression, I deemed it appropriate
to replace the 2004 education data here with the 2002 education data for the purpose of creating a
complete dataset. I believed that an increasingly educated population would be more inclined to
visit the doctor due to better knowledge of illness and the importance of seeking treatment. Thus,
an increasing demand for healthcare coupled with subsequently lagging supply responses leads to
an increase in new patient appointment wait times.
Furthermore, I determined that the increasing rate of adult obesity over time may impact
healthcare demand of consumers, regardless of the state status of Medicaid expansion (see figure
16 and 17 for graphical representation). John Cawley and Chad Meyerhoefer, conducted an
instrumental variable study which found that a one percent increase in obesity raises annual
medical costs by $2741 (in 2005 dollars) (2012). Additionally, clinically obese consumers spend
42% more on direct healthcare costs than an individual with a healthy BMI (18.5 to 24.9)
(Finkelstein 2009). Even moderately obese individuals (BMI between 30 and 35) are more than
twice as likely as healthy weight individuals to have prescription medicine to manage medical
conditions that likely arise from their weight (Teuner 2013). Moreover, according to the Center
for Disease Control and Prevention, Obesity is the leading causes of death in the US and worldwide
(through the channel of the negative health outcomes it causes such as diabetes, heart disease,
stroke, and some types of cancer) (CDC.gov). These results and correlations suggest that with a
higher rate of obesity, the demand for healthcare will increase due to the myriad health defects that
are associated with an increased BMI. I expect this variable to positively correlate with wait time
(especially cardiology wait time), which drives my reasoning for using it as a control.
Notably, adult obesity percentage is measured at the state level due to a lack of availability
at the MSA level. However, a study by Befort et al 2012 found the obesity percentage was 39.6%
among rural adults compared to 33.4% among urban adults with P = 0.006), which suggests that
using the state level data may exaggerate the effect that obesity has on patient wait times (Befort
2012). I argue that, regardless of how biased the effect of using state versus MSA obesity data is,
it is important to control for any variable that may influence patient wait times that is not the
expansion of Medicaid.
Figure 18 of the Appendix displays six different scatterplots that examine the correlation
between the average wait time across the five medical specialties and education, income, obesity,
 McIlwain 21

Medicaid expansion, healthcare expenditure, and age. There looks to be a weak but possible
positive relationship between log(per capita personal income) and average wait times, Medicaid
expansion and average wait times, and log(health expenditure per capita) and average wait times.
Moreover, the correlation between the proportion 65 and older, obesity, and education with wait
times is hard to determine from the scatterplots provided in figure 18.
Lastly, I ran an additional regression that examined the relationship between family
medical services and the number of general practitioners (GP) operating within the MSA (i is the
family medicine service):

Equation 3

This data on general practitioners was aggregated from the Bureau of Labor Statistics Occupational
Employment Statistics page7. It should be noted that for Detroit, Seattle, Miami, and Portland, data
for general practitioners (GP) was not available, and Physician Assistant (PA) growth was used
instead. Because of the similarities in services provided by PAs and GPs, and the similar job market
(and therefore growth in the supply of medical practitioners) I deemed it to be acceptable to replace
GPs with PAs in regions where the data for GPs was not available in order to have a complete
dataset. If a negative statistically significant relationship formed between log(GP) and family
medicine wait times, this could indicate that the supply increased to meet the changing demand for
healthcare, therefore decreasing new patient wait appointment times. Because this relationship
would indicate an elasticity in the supply of medical services, it is critical to study since this thesis
is conducted under the assumption that supply of healthcare is relatively fixed in comparison to
demand.
Results
The main goal of this paper is to determine if changes in new patient appointment wait
times can be causally attributed to the expansion of Medicaid under the ACA. To obtain an
estimate of the coefficient on Medicaid Expansion, I ran equation 1 through R. The following table
displays the resulting coefficients for both Medicaid expansion and selected variables, along with

7
https://www.bls.gov/oes/tables.htm
 McIlwain 22

the p-values associated with each coefficient for each medical service. There were 39 degrees of
freedom associated with the regression run, indicating weaker statistical significance likely due to
a lack of data.

Family Orthopedic Averaged

Variable Name Cardiology Dermatology OB-GYN Medicine Surgery Specialties
Medicaid 4.469 7.3537 -9.021 -5.982 0.9078 -1.347
0.3027 0.110244 0.0953 . 0.4579 0.82612 0.58307
Adult Obesity Rate 25.924 -109.8644 57.944 74.693 11.4372 -51.355
0.7975 0.304304 0.6423 0.6694 0.90605 0.37364
Per Capital Personal
Income 12.033 69.5300 46.206 148.79 -35.2502 44.725
0.6452 0.014828** 0.1565 0.0184** 0.16443 0.00429***
Health Care
Expenditure -20.613 -20.9242 -21.356 -130.721 4.5451 -20.044
0.3291 0.346062 0.4115 0.0652* 0.82152 0.09901

This table displays the results of the main regression used in this paper (equation 1). Notably, no statistical
significance arises from the estimated coefficient on Medicaid. Each number can be interpreted as an
increase (or decrease) in the number of days a new patient has to wait before an appointment becomes
available.

These results indicate that, at a significant level of 90% (p values less than 0.1) the
estimated coefficients for Medicaid were not significant. Overall, Medicaid expansion was
associated with a 4.469 day increase in cardiology (new patient) appointment wait times, a 7.3537
day increase in dermatology appointment wait times, a 9.021 decrease in OB-GYN appointment
wait times, a 5.982 day decrease in family medicine appointment wait times, and a 0.9078 day
increase in appointment wait times for orthopedic surgery appointments. Across all five medical
services, there was a 1.347 day decrease in new patient wait times, but there was a fairly high p
value, indicating that the result could have occurred at random. This stems from the fact that only
four years of data (three for the family medicine practice), were available, and thus there was likely
not enough data variation to derive a significant result.
Additionally, with a one percent increase in adult obesity, there were no statistically
significant results at a 90% significance level. The estimated coefficients suggest that with a one
 McIlwain 23

percent increase in the adult obesity rate, there was a 25.924 day increase in new patient wait times
for cardiology appointments, a 109.8644 day decrease in wait times for dermatology appointments,
a 57.944 day decrease in wait times for OB-GYN appointments, a 74.693 day increase in wait
times for family medicine appointments, an 11.4372 day increase in wait times for orthopedic
surgery appointments, and a 51.355 day decrease in average specialty wait times. Again, it is
important to note that none of these results were statistically significant.
A one percent increase in per capita personal income8 was associated with a 12.033 day
increase in new patient wait time for cardiology appointments (not statistically significant), a
69.5300 day increase in patient wait times for dermatology appointments (statistically significant
at a 95% significance level), a 46.206 day increase in patient wait times for OB-GYN appointments
(not statistically significant), a 148.79 day increase in wait times for family medicine appointments
(statistically significant at a 95% significance level), a 35.2502 day decrease (not statistically
significant) in patient wait times for orthopedic surgery appointments, and an average 44.725 day
increase in patient wait times averaged across all specialties (with statistical significance at a 95%
significance level).
Lastly, a one percent increase in healthcare expenditure per capita (at the state level) was
accompanied by a 20.613 day decrease in wait times for cardiology appointments, a 20.9242 day
decrease in dermatology appointment wait times (statistically significant at a 95% significance
level), a 21.356 day decrease in OB-GYN appointment wait times, a 130.721 decrease in family
medicine appointment wait times (with statistical significance at a 90% significance level), a
4.5451 day increase in wait times for orthopedic surgery appointments, and on average, a 20.044
day decrease across the 5 specialties (with no statistical significance). It should be noted that most
specialties experienced a decrease in wait times for new patient appointments when there was an
increase in healthcare expenditure by one percent. Since this result is not statistically significant,
we cannot conclude that a one percent increase in healthcare expenditure decreased wait times
(however, this result would align with the theory that if there was an increase in demand that was

8
I also ran a regression replacing per capita personal income with the variable log(consumers under the poverty
line) per MSA (this data was taken from the census.gov) but found no significant or notable results. Despite the fact
that Medicaid expansion targets consumers who make 138% to 400% of the federal poverty line, the resulting
estimated coefficient on Medicaid expansion varied randomly across specialty. Using the variable log(per capita
personal income) allowed me to obtain an estimate for the Medicaid expansion coefficient that was statistically
significant for some medical services, and perhaps a more interesting study.
 McIlwain 24

met by an increase in the supply of medical offices and labor, this would increase healthcare
expenditure but would decrease patient wait times).
Moreover, I sought to see if changes in the number of general practitioners had an effect
on family medicine new patient appointment wait times in order to see if the supply side was
adjusting to an increase in demand for medical care (or vice versa). I obtained the estimated
coefficient for a one percent increase in general practitioners to be associated with a 0.9945 day
increase in new patient appointment wait times with a p-value of 0.8789 (signaling that this result
likely occurred at random). If there had been significance in this result, it would suggest that as
the supply of general practitioners increases, the patient wait times also increase as a result, which
seems to be a non-intuitive result. But, since the result is insignificant, no conclusion can be drawn.
This weak significance could be associated with the relatively small amount of data available from
the Merritt Hawkins Survey and the subsequent lack of variation across the time variables. This
will be discussed in full in the following section of this paper.
I ran equation (3) again for the wait time averaged across all five medical practices9 and
found that a one percent increase in the number of general practitioners resulted in a -0.4439 day
decrease in patient wait time. However, the estimated coefficient was not significant at a 90%
significance level, which means that there is no evidence that patient wait times varied as a result
of a change in the percentage of general practitioners. If there had been significance, this result
may have suggested that as the supply of doctors increases, new patient appointment wait times
decreases, which is an intuitive result if all else is equal.
Finally, I ran regression (2) to determine the relationship between an increase in the
proportion of the population with a given education level and new patient appointment wait times.
The following table represents the coefficient estimates resulting from this regression. Each
coefficient indicates an increase in wait time (unless negative) for a one percent increase in the
proportion of the population with a Bachelor’s Degree, or a one percent increase in healthcare
expenditure.

9
An increase in general practitioners should only have an effect on family medicine services, but I theorized that an
increase in general practitioners may have been related to an overall increase in the number of doctors for all
medical services, as perhaps it is representative of the overall medical practitioner market.
 McIlwain 25

Family Orthopedic Averaged

Variable Name Cardiology Dermatology OB/GYN Medicine Surgery Specialties
Medicaid 4.6871 13.538 -5.2455 -6.585 -1.460 2.1989
0.17620 0.00121** 0.27641 0.370 0.68942 0.33819
Proportion of
Population with
Bachelor’s Degree -1.2356 -1.847 -38.0025 -20.349 -10.335 -14.4687
0.97488 0.96690 0.48964 0.716 0.80504 0.58110
Health Care
Expenditure -15.3522 -1.219 6.7661 44.880 -14.733 -1.6990
0.15037 0.91863 0.64574 0.265 0.19444 0.80870
This table displays the results from regression equation (3). Each number can be interpreted as
an increase (or decrease) in the number of days a new patient has to wait before an appointment
becomes available. Notably, there is only one p-value below 0.1.

The results above suggest that the relationship between new patient wait times and
education level lacks statistical significance. This indicates that a one percent increase in the
proportion of the population with a bachelor’s degree has no effect on new patient appointment
wait times. Interestingly, it appears that all of the non-significant estimated coefficients on patient
wait times are negative, which, if significant, would suggest that as education levels increase,
consumers use medical services less.
Discussion
Thus, this paper concludes that there is no statistical evidence that a relationship exists
between Medicaid expansion and the increase in new patient appointment wait times. While this
result seems surprising, I have theorized several explanations as to why this finding occurred.
The lack of significance associated with estimating the coefficients on Medicaid expansion
is problematic for supporting the null hypothesis of this paper but is likely due to the lack of data
available for this study. The data was limited to four time periods (three for family medicine) and
15 Metropolitan areas surveyed for a total of 60 observations per medical service (45 observations
for family medicine). Because the ACA was only implemented in 2014, this lack of dependent
variable data is consistent with any study conducted on the supply side responses to the ACA,
which likely cannot be known fully at this time. Additionally, when the data was disaggregated
 McIlwain 26

more, it appeared that there was more randomness than pattern among changes in new patient
appointment wait times in some specialties and some MSAs; dermatology (figures 4 and 5) and
orthopedic surgery (figures 12 and 13) seemed to show the largest variations in patient wait times.
Further, hardly any MSA in any medical service displayed a linear (or near linear) increase in
patient wait times across the small time trend, which likely contributed to the resulting insignificant
and varied coefficient estimations. Thus, the failure to draw significance was not solely due to the
fact that the dataset was small, but was also influenced by the fact that the dataset did not have
significant variation or pattern in the time trend available.
Furthermore, some argue that even the demand responses to the ACA are not available
within such a short time period, and thus they were not significant enough to warrant a supply
change that would be hindered by the short run limitations to increasing the supply of medical
services. In 2015, Glied and Ma expected the ACA to result in roughly 20.3 million additional
primary care visits nationally, about a 3.8 percent increase, with people newly insured through the
marketplaces accounting for more than a third of these visits10 (Glied and Ma 2015). Therefore,
increases in overall demand for medical care by the newly insured were expected to comprise only
a modest proportion of the aggregate utilization (Abraham 2014). This supports the theory that
there was a meager demand response to the ACA in the first place that did not warrant a movement
along a short run supply curve (fixed or inelastic) large enough to greatly impact new patient
appointment wait times in a predictable way. In other words, the demand shock was so small, that
even a lack of supply response would not have created predictable increases in new appointment
wait times for all specialties in all MSAs. However, I note that the RAND study by Manning and
Newhouse et al (see the Literature Review) determined that an increase in coverage leads to a more
substantial increase in the use of medical services almost immediately, which is converse to what
Glied and Ma had predicted.
Another explanation for the lack of relationship between Medicaid expansion and new
patient appointment wait times relates to the idea that supply is not necessarily fixed in the short

10
Glied and Ma projected that primary care providers will see, on average, 1.34 additional office visits per week.
Additionally, hospital outpatient departments were predicted to see, on average, 1.2 to 11.0 additional visits per
week, or an average increase of about 2.6 percent nationally. They noted that “increases of the magnitude likely to
be generated by the Affordable Care Act will have modest effects on the demand for health services, and the
existing supply of providers should be sufficient to accommodate this increased demand” (Glied and Ma 2015).
 McIlwain 27

run (perhaps it follows a more elastic curvature as seen in figure 1). Burton and Wishner from the
Robert Wood Johnson Foundation determined (qualitatively through interviews with healthcare
stakeholders in communities that were severely affected by the ACA expansion) that providers
expanded capacity (facilities and hours) and hired more staff to meet the expected increased
demand under the ACA (Burton and Wishner 2017). This suggests that medical facility capacity
expanded appropriately to changes in healthcare demand. I theorize that there are two channels in
which this could have occurred: first, it may be that the healthcare market was not operating to its
full capacity prior to the expansion of the ACA. In other words, slack existed in the output which
allowed medical facilities to increase doctor hours or productivity (addressing the intensive
margin)11 without being hindered by the short term fixed effects inherent in increasing the supply
of industries that rely on limited capital and labor. That is, perhaps doctors had the capacity to
increase the number of patients they tended to (whether through an increase in hours they spend at
the medical facility, or through a decrease in the amount of time spent with each patient12). This
could be why there was no relationship between patient wait times and an increase in healthcare
demand: supply “adjusted” to meet capacity, and thus new patients seeking appointments were
met by doctors taking on more patients. Thus, it could be that supply is still fixed in the short run,
however, it is only fixed when a medical clinic is already operating at full capacity. And second,
the supply of healthcare may be more elastic than I had originally predicted it would be in the short
run, and thus a shift in the demand function (via a shock to the healthcare market) is met by a
responding increase in quantity supplied (see figure 1 for graphical image of a more elastic supply
curve).
Regardless of which theory of supply is correct (a fixed short run supply but a slack in
output, or an elastic short run supply), this suggests that if demand for healthcare increased enough
to warrant a supply change (as hypothesized by the RAND study) then the supply side of the
healthcare market must be responding appropriately to these shifts in demand if new patients are

11
This slack is more likely to occur at the intensive margin, where there was capacity to increase each doctor’s
productivity without increasing patient wait times. However, it could also occur at the extensive margin. This would
have been represented by medical offices having room to hire, but not hiring. This would suggest that there were
unemployed doctors in the market and offices that also had not hired to full capacity (perhaps there was a matching
error, or a lack of full information in the market that caused it to break down), thus an increase in demand would
push medical offices to reach into the pool of available doctors without meeting the issue of fixed short run supply.
Once this pool of hirable doctors “empties”, the effects of a fixed short run supply (increases in new patient wait
times) may be felt. It would be incredibly difficult to support this theory, as most examples of extensive margin
movements would be related to an elastic supply, and not to an imperfect market that is not operating at capacity.
12
Referenced in Garthwaite 2012
 McIlwain 28

not waiting longer for appointments due to the Medicaid expansion13. Although this is completely
converse to what might have been expected, based on the studies outlined in the literature review,
it is a surprising result that can attribute to arguments for the implementation of a universal
healthcare system, or debates arguing for the maintenance of the ACA. In other words, government
intervention through the ACA did not have a causal relationship with the increase in patient wait
times, which may suggest that the healthcare market with government intervention is not
functioning economically any worse than before the ACA was implemented, if ‘worse’ is
interpreted to mean longer wait times14.
Notably, this lack of causality might have stemmed from the aforementioned idea that
demand did not increase as significantly as the RAND study may have suggested, but it also
suggests that perhaps the supply side responses (as discussed by Burton and Wishner) were
significant enough to offset any causal increases in new patient appointment wait times associated
with Medicaid Expansion. Due to the lack of data, we cannot say which theory is accurate, but
based on evidence presented from other studies of the ACA, I believe that supply was not operating
to capacity, and thus the change in demand was met by a change in the intensive margin of supply.
During this regression analysis, I also determined a lack of significance between increases
in general practitioners and wait times (with the expectation that there would be a decrease in wait
times as the number of general practitioners increased, signaling an appropriate supply side
response to the increased demand). We cannot derive much meaning from this result because there
were only three time periods available for the regression analysis, which suggests that any lack of
significance likely stemmed from a lack of variation in dependent variable data. While this
argument could be placed forth for the lack of significance between Medicaid expansion and
patient wait times, I theorize that the economy adjusted to the shock of Medicaid expansion in
such a way that it had no effect on consumer wait times for appointments15.
Therefore, I have derived multiple theories that could explain why we could not establish
a relationship between Medicaid expansion and new patient wait times, but it leaves a critical

13
However, one could argue that the market for healthcare is not operating appropriately because of the mere
existence of wait times. This paper focused on the change of wait times, and not on their overall presence in the
market. In a perfectly competitive market, we would expect to see no wait times because demand for a given price
would perfectly be met by the quantity supplied. This may indicate a shortage of supply; however, it does not
indicate how supply responds to shocks in demand.
14
This paper does not touch on health effects of the ACA, and thus cannot contribute to debate regarding
government intervention in healthcare and a subsequent change in health outcomes.
15
This theory is supported by Glied and Ma (2015), Burton and Wishner (2017), and Abraham (2014).
 McIlwain 29

question unanswered: what is the unexplained factor that is causing the variation in new patient
appointment wait times outlined in figures 4 through 13?
After examining the population education level, adult obesity rate, health care expenditure
per capita, per capita personal income, population, and proportion of the population that is 65 and
older, and seeing little to no significance, I believe that the true reason behind the variation in wait
times cannot be determined using the small sample of data available for this study. Perhaps the
variation was random, or perhaps there is an unexplained factor that causes wait times to change.
It is likely that because of the lack of significant variation between wait times from 2009 to 2014,
that there may not be a way to establish any causality in data for such a brief time period, even if
more demographic variables had been analyzed. It is for this reason that we must seek to use future
studies to examine the supply side responses to increases in insurance, especially as the debate to
move the US towards a universal healthcare plan remains active.
Moreover, what can be said about the changes in emergency department wait times, if any?
As insurance coverage increases, there could be a similar increase in demand for emergency
services (as theorized by Courtemanche 2017). Glied and Ma noted in 2015 that emergency room
visits by the newly insured were predicted to increase by 1.1 million after the implementation of
the ACA, with those gaining Medicaid coverage accounting for more than two-thirds of these visits
(2015). Thus, perhaps there was a substantial increase in demand for healthcare, but it was
immediately absorbed by emergency care facilities. Alternatively, perhaps there was first an
increase in demand for appointment-based services, which resulted in longer wait times, and thus
patients began using the ED to treat non emergent illness. An October 2003 report by the Center
for Studying Health System Change indicates that privately insured patients accounted for most of
the 16% rise in hospital emergency department visits between 1996 to 1997 and 2000 to 2001
(DeLia 2005). Many of these patients were not truly in need of emergency care, but they found it
difficult to see a private practice physician in what they deem to be an appropriate time frame, and
so they sought physician care at a hospital emergency department (DeLia 2005). If this is the case,
then it is evidence of a fixed short run supply, since an increase in patient wait times caused
consumers to shift their demand for healthcare to the ED. This supports the theory that the supply
of medical appointments cannot be accurately met by an increase in demand for healthcare
services. However, for the purposes of this dataset, the lack of significant variation in new patient
appointment wait times for the short timeframe available was likely not large enough to cause
 McIlwain 30

consumers to switch to emergency care visits to avoid the wait times for regular appointments
(which were not increasing as a result of the ACA). It would be interesting to see if this relationship
changes in the long term as more data becomes available.
Thus, because of the shortcomings of data in this paper, there is a wide gap in the literature
for more studies to examine the supply side responses to the Affordable Care Act. These studies
could be focused on the intensive margin of the ED supply, specifically examining the wait times
patients face in the ED before being seen by a doctor. They could also focus on the supply change
of doctors, medical buildings, number of offices, changes in hiring procedures (doctors offices
may require less experience of their applicants), or the intensive margin of appointment-based care
facilities. It would be interesting to examine the relationship between a proxy for supply and the
ACA over a longer time horizon, perhaps focusing on the effects this implementation may have
had on overall health outcomes (this would be interesting especially if the supply response to
increased insurance coverage is manifested in shorter doctor’s appointments, or the hiring of less
qualified individuals). Overall, a larger dataset with more variation and time periods may
contribute to myriad significant studies related to the ACA that could effectively expand the debate
over healthcare.
Conclusion
Ultimately, there is no evidence of a relationship between Medicaid expansion and the
increase in new patient appointment wait times. While this result is surprising and suggests that
the hypothesis of this paper is not supported, I theorize that there are several explanations behind
the lack of causality. One, there was simply not enough data or variation in the data to determine
significance. Two, the change in demand for healthcare was not large enough to have effect on
new patient appointment wait times (given that supply is fixed). Three, the change in healthcare
demand was still significant, but the changes in supply were able to offset the influence that the
ACA could have had on new patient wait times (due to either a market not operating to capacity,
or a more elastic supply curve). And four, the change in healthcare demand was significant, but it
was absorbed by emergency medical services, and not by physician and specialist appointments.
Overall, without statistical significance, no conclusion can be fully supported, which leaves ample
room for future studies involving Medicaid expansion and the supply side responses. These future
studies will act on more data (since the ACA was only implemented recently) and will likely play
an important role in the debate over US universal healthcare.
 McIlwain 31

Appendix

Figure 1: Elastic Supply

Figure 2: Inelastic Supply (not perfectly inelastic as this would not be realistic)
 McIlwain 32

Figure 316

16
https://www.kff.org/health-reform/slide/current-status-of-the-medicaid-expansion-decision/
 McIlwain 33
Figure 4

Figure 5
 McIlwain 34
Figure 6

Figure 7
 McIlwain 35
Figure 8

Figure 9
 McIlwain 36
Figure 10

Figure 11
 McIlwain 37

Figure 12

Figure 13
 McIlwain 38

Figure 14

Figure 15
 McIlwain 39

Figure 16

Figure 17
 McIlwain 40

Figure 18
 McIlwain 41

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