The inequity of Medicaid reimbursement in the United States.

The United States Medicaid programme aims to provide public health insurance to certain categories of the low-income population. Considerable non-uniformity exists within the programme because each of the 50 states, Washington, DC and 5 territories are individually responsible, within broad federal guidelines, for its administration. The non-uniformity shows up in different eligibility requirements, benefits and health care provider reimbursement rates. This paper examines reimbursement rate variations across individual programmes and discusses how these variations affect health care provider participation. Dual market theory suggests, and empirical results conclude that low reimbursement rates cause health care providers to participate less fully in the programme. Variations in access to medical care because of differences in reimbursement rates thereby create severe horizontal and vertical inequities across programmes. To reduce these inequities, the federal government might offer earmarked grants for the mandated purpose of raising reimbursement rates to a uniform percentage of private rates in all programmes.