A multi-equation model of payments and public access to services: the case of dentistry

The study uses a multiple equation model estimated using weighted least squares regression to evaluate Medicaid patients' access to dental care in terms of: (i) how payment affects the proportion of dentists who treat Medicaid patients (participation) and the number of Medicaid services provided by each participating dentist (rate) as well as (ii) the manner in which increased participation translates into greater patient access. The first equation models Medicaid participation as a function of payments to dentists; the second, Medicaid service as a function of payments; the third, Medicaid dental service access (proportion of beneficiaries who receive care) as a function of participation and service level and the fourth, the level of Medicaid dental care per beneficiary as a function of dentist participation and service level. Because participation and payments are endogenous, the study uses an instrument as a proxy for payments. We express the empirical results in terms of 'payment elasticity of access', the proportionate increase in access that occurs for a specific proportionate increase in payment. For Medicaid dental services the payment elasticity of access is relatively low: while providers increase participation and the level of service they provide, this does not translate into corresponding increases in access. In effect, a 10% increase in payment translates into greater dental participation in the Medicaid programme, but yields less than 1% increase in access. These results have implications for other public service programs with access issues.