Part 2: The Insurance Ladder Nobody Draws

Part 2: Structural Inequity in Prenatal Care

The conversation about Black maternal mortality focuses on Medicaid. But the access problem does not start at Medicaid. It runs through the entire lower half of the American insurance market, including the ACA marketplace and union plans. A Manhattan obstetrician who accepts Aetna and declines Medicaid is not drawing a line at poverty. She is drawing a line at reimbursement. And that line excludes far more patients than anyone publicly acknowledges. obmd.com

There is a chart that the health equity literature almost never shows. It is not complicated. It has four rungs. At the top sits commercial insurance, the Blue Cross PPO, the employer-sponsored United Healthcare plan, the Aetna gold card.

At the bottom sits Medicaid.

In between, occupying the middle two rungs that are almost never discussed, sit the ACA Marketplace plans and the union-negotiated Taft-Hartley health funds.

The conversation about maternal health disparities focuses almost exclusively on the distance between the top and bottom rungs. It treats the problem as binary: Medicaid patients cannot access quality care, and everyone else can.

This framing is wrong, and the error is not minor.

It mischaracterizes who is excluded, obscures the mechanism of exclusion, and leads to policy interventions that address only the most extreme cases while leaving a much larger population without adequate access.

Understanding the full ladder is essential to understanding why Black maternal mortality cannot be solved by addressing Medicaid alone.

What Physicians Actually Get Paid

American physicians are paid differently depending on who is paying the bill. This is not controversial; it is the architecture of the system.

What is underappreciated is how extreme the differences are, and how directly those differences translate into access decisions at the practice level.

Medicaid pays physicians approximately 72 percent of what Medicare pays for the same obstetric services. This ratio has been essentially unchanged since 2008, meaning that Medicaid rates have not kept pace with inflation, practice costs, or the rising administrative burden of participation. When a practice calculates the cost of accepting a Medicaid patient, including the billing complexity, the prior authorization demands, and the 17.4 percent claim loss rate from billing problems, the effective reimbursement is substantially below even the nominal 72 percent figure.

Medicare rates themselves are not generous. Commercial insurance, the benchmark against which faculty practices build their revenue models, pays physicians on average two to three times what Medicare pays. One analysis found that commercial payers paid physicians approximately 270 percent of the Medicare rate for many services. This means the effective reimbursement gap between a Medicaid patient and a commercial insurance patient, for identical obstetric services delivered by the same physician in the same office, can approach a factor of four.

A faculty obstetrician who sees 20 patients per day, replacing commercial patients with Medicaid patients, is not making a philosophical statement about equity. She is making a financial decision that has direct consequences for her practice’s ability to employ staff, maintain equipment, and remain viable. The ethics of that decision are legitimate to debate. Its economics are not.

The Middle Rungs: ACA Marketplace Plans

The Affordable Care Act created a marketplace for individual health insurance that now covers more than 21 million Americans. For many low- and moderate-income individuals who do not qualify for Medicaid but cannot access employer-sponsored coverage, the marketplace is their only option. This population includes a significant proportion of minority women of reproductive age.

What is rarely communicated to these women, and almost never discussed in the maternal health equity literature, is that marketplace plans reimburse physicians at rates substantially below what employer-sponsored commercial plans pay. A 2024 Health Affairs analysis using comprehensive claims data found that in 2021, marketplace prices were 152 percent of Medicare rates, while employer small-group plans paid 179 percent of Medicare rates. For professional services specifically, marketplace plans paid 6.9 percent less than employer small-group plans. For outpatient hospital services, the gap was 26.3 percent.

This means that a woman who purchases marketplace coverage, believing she has real insurance, is holding a card that many physicians and practices price below their threshold for participation. She is not on Medicaid. She is not uninsured. She is in a middle category that receives almost no policy attention, yet represents a genuine and growing barrier to accessing the most sought-after obstetric providers in high-cost urban markets.

In Manhattan, where faculty practice overhead is among the highest in the country and competition for commercial patients is intense, a marketplace plan functions economically more like Medicaid than like a Blue Cross PPO. The physician’s list on her website reads: Aetna, Cigna, United, Blue Cross, Medicare. The marketplace plan her patient purchased may carry one of those brand names, but the reimbursement contract behind it is a different instrument entirely. The plan name on the card is not the same as acceptance by the provider.

The Third Rung: Union and Taft-Hartley Plans

Labor unions have historically been among the strongest advocates for comprehensive health coverage. This is genuine and important. But union health plans, structured as Taft-Hartley multiemployer trusts, are designed to contain costs through negotiated reimbursement agreements that typically pay below standard commercial rates.

A hospital worker covered by a union health plan, a construction laborer, a hotel employee, a transit worker: these are not uninsured people. They are working people with genuine coverage. But their coverage negotiates physician reimbursement at rates that fall below what the same physician earns from standard commercial insurance patients. In markets where physician practices have more commercial patients than they can accommodate, union plan patients join marketplace patients in a secondary tier of access that is rarely named and almost never measured.

This matters for the maternal mortality conversation because union members are disproportionately minority workers in urban settings. In New York City, a significant proportion of the workforce covered by Taft-Hartley plans is Black and Hispanic. These workers have health insurance. They do not have the same insurance, from the physician’s perspective, as the white-collar employee with an employer-sponsored PPO in the same city.

The Practical Geography of Exclusion

When you map these reimbursement tiers onto the faculty practice landscape of a city like Manhattan, the picture that emerges is not a simple Medicaid exclusion. It is a gradient. The faculty obstetrician who accepts Aetna Preferred and United Choice Plus and declines Medicaid, marketplace plans, and union funds is not drawing a line at poverty. She is drawing a line at reimbursement adequacy. And the population below that line is far larger, and far more racially concentrated, than the Medicaid population alone.

This gradient creates a category of patients who are effectively invisible in the access literature: women who are insured, who do not qualify for safety-net programs, who are not counted among the uninsured, but who cannot access the care they nominally have coverage for because the reimbursement behind their coverage does not meet the threshold of participation for the practices they would most benefit from seeing.

A pregnant woman on a silver marketplace plan whose ob-gyn appointment is at a resident clinic is not a Medicaid failure. She is an insurance market failure. Her story does not appear in the Medicaid access statistics. She appears nowhere in the policy conversation. She is, however, delivering at a different hospital than her neighbor with the employer-sponsored Blue Cross plan, and that difference in delivery location is associated, in the published literature, with nearly half the racial disparity in maternal morbidity.

Why This Framing Matters for Policy

The binary Medicaid framing of the access problem leads to binary solutions: raise Medicaid rates, expand Medicaid eligibility, increase Medicaid enrollment. These are all necessary and worth pursuing. But they address only the bottom rung of a four-rung ladder while patients in the middle two rungs continue to be routed away from the highest-quality obstetric care in the country.

A comprehensive structural response to Black maternal mortality requires acknowledging that the reimbursement hierarchy affects access across the full insurance spectrum, not just at the Medicaid threshold. It requires transparency from faculty practices about which insurance plans they actually accept, not just which insurance brands they nominally participate in. And it requires an honest conversation about the obligation of academic medical centers, whose research funding, tax exemptions, and national rankings depend in part on their public mission, to provide equitable access across the insurance spectrum they serve.

The ladder is real. It has four rungs. Pretending it has two does not change how many patients fall off it.

My Take

I have reviewed the insurance plans accepted by faculty obstetric practices at New York’s major academic medical centers. The lists on their websites are long and impressively comprehensive-looking. Aetna. Cigna. United. Oxford. Empire. They do not mention which tier of those plans they accept. They do not mention that a marketplace Aetna plan is not the same financial instrument as an employer Aetna PPO. They do not explain that a woman comparing insurance options during open enrollment has no way of knowing whether the faculty practice she aspires to reach will treat her plan as equivalent to a gold-standard commercial plan or as a near-Medicaid patient.

This lack of transparency is not an accident. It is professionally convenient. It allows practices to appear broadly accessible while operating with a patient panel that skews heavily toward the most generously reimbursed plans. It allows institutions to publish on health equity while their faculty practices optimize for the most profitable patients.

The fix here is not complicated. Every faculty practice that accepts public funding, that trains residents, that operates under a medical school or hospital system with tax-exempt status, should be required to disclose not just which insurance brands it participates in, but which tier of each plan it accepts and at what reimbursement level. The public has a right to know. The patients trying to navigate this system deserve transparency. And the academic medical enterprise that claims to be committed to health equity should be able to withstand having its insurance acceptance practices made visible.

The ladder exists. Let us at least agree to look at all its rungs.

The series continues next week with Post 3: Two Doors, One Building — the documented two-tier system inside academic medical centers, the billing loophole that lets OB/GYNs enroll in Medicaid to capture deliveries while providing no prenatal care, and the Manhattan faculty practice observation with evidence. Post 3 is free. Posts 4 through 10 are for paid subscribers at obmd.com. Annual subscription: $60.

References

1. Zuckerman S, Goin D. How Much Will Medicaid Physician Fees for Primary Care Rise in 2013? Evidence from a Survey of Medicaid Physician Fees. Kaiser Commission on Medicaid and the Uninsured; 2012.

2. Dunn A, Gottlieb JD, Shapiro A, Sonnenstuhl DJ, Tebaldi P. A Denial a Day Keeps the Doctor Away. NBER Working Paper 29010. National Bureau of Economic Research; 2021.

3. McDermott D, Cox C, Rudowitz R, Garfield R. How Differences in Medicaid, Medicare, and Commercial Health Insurance Payment Rates Impact Access, Health Equity, and Cost. Commonwealth Fund; 2022.

4. Polsky D, Cidav Z, Swanson A. Marketplace Plans With Lower Premiums Have Comparable Access to Nearby Providers. Health Aff (Millwood). 2016;35(10):1842-1848.

5. Fiedler M, Bai G, Anderson GF. Providers Paid Substantially Less By Marketplace Nongroup Insurers Than By Employer Small-Group Plans, 2021. Health Aff (Millwood). 2024. doi:10.1377/hlthaff.2024.00913.

6. Berenson RA, Holahan J. Commercial Health Insurance Markups for Physician Services Over Medicare Prices Vary Widely by Specialty. Urban Institute; 2021.

7. Commonwealth Fund. How Unions Act as a Force for Change in Health Care Delivery and Payment. March 2019.

8. MACPAC. Physician Acceptance of New Medicaid Patients: Findings from the National Electronic Health Records Survey. Washington, DC: MACPAC; 2021.