The Effect of Medicaid Policies on the Diagnosis and Treatment of Children's Mental Health Problems in Primary Care

Primary care physicians play a substantial role in diagnosing and treating children's mental health disorders, but Medicaid managed care policies may limit these physicians' ability to serve low‐income children. Using data from the universe of Medicaid recipients in three states, I evaluate how Medicaid managed care policies impact primary care diagnosis and treatment of children's mental health disorders. Specific policies examined include the presence of a behavioral carve‐out, traditional health maintenance organization, or primary care case management program. To alleviate concerns of endogenous patient sorting, my preferred identification strategy uses variation in Medicaid policy penetration to instrument for individual plan choices. I show that while health maintenance organizations reduce diagnosis and non‐drug treatment of mental health disorders, primary care case management program policies shift in diagnosis and treatment from within primary care to specialist providers such as psychiatrists, where serious mental health conditions are more likely to be identified. Copyright © 2013 John Wiley & Sons, Ltd.