Do Medicaid physician fees for prenatal services affect birth outcomes?

This study exploits a natural experiment to examine the relationship between Medicaid physician fees and birth outcomes among a national sample of pregnant women. Applying a cohort difference-in-differences methodology, I find a significant negative association between these fees and the risk of low birth weight. I estimate that a 10% higher than average relative Medicaid fee is independently associated with a 0.074% lower absolute risk of low birth weight (<2.5 kg) and a 0.035% lower risk of very low birth weight (<1.5 kg) among Medicaid-insured women. For low-income women, this association grows significantly. Lastly, I find a moderate association between these fees and use of first trimester prenatal services. (C) 2001 Elsevier Science B,V. All rights reserved.