Facilities operated by public and nonprofit agencies have become increasingly important sources of primary care for Medicaid patients. These facilities are particularly important sources of care in segregated, competitive urban areas, where they are more geographically accessible than many private physicians and expand the availability of care to Medicaid patients rather than substituting for care provided by private physicians. In rural areas, in contrast, the availability of care from public facilities appears to reduce the level of care Medicaid patients receive from private physicians in the counties where these facilities are located. These findings suggest that policymakers can expand urban Medicaid patients' access to care by spending on public care, but at the cost of increasing the segregation of Medicaid patients into a two-tier system of care.

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