New research shows we pay doctors less to care for Black and Latino patients than white ones

Sometimes, in our bewildering health system, a patient’s gratitude is a sign of how much the system has failed them. When someone tells a new doctor, “I feel so lucky to see you,” the appreciation can come from years of trying to get high-quality care. And much of that struggle may not be accidental — it is the direct result of how our health system pays doctors.

As a new year begins, it’s worth confronting a hard truth: Our healthcare system fails to treat everyone equally. A key reason is the financial incentives we have created. We pay doctors less to care for some people than others.

Our new research shows that practices receive 8.8% less for visits with Black patients and nearly 10% less for Hispanic patients than for their white peers. For children, the gaps are even wider. Physicians got 13.9% less for visits with Black children and 15% less for Hispanic children.

This disparate pay will only worsen after the largest funding cut in Medicaid’s history.

How does this affect patients? Consider childhood asthma. Having a regular pediatrician and the right inhalers can mean the difference between living symptom-free and taking many miserable trips to the emergency room. Yet, one in eight children with asthma lacks a usual place for care, the Centers for Disease Control and Prevention reports, and poor access is far more common for Black or Hispanic children than for their white counterparts.

We get what we pay for. In the U.S., doctors are paid very different sums for different patients, even when providing the same service. Commercial insurance tends to pay the most. Medicare, which primarily serves older Americans, pays less. And in most states, Medicaid, which serves low-income Americans, pays the least.

What does this mean for a child on Medicaid? Many physicians refuse to treat anyone with Medicaid. When researchers posed as parents and called pediatrician offices seeking an asthma appointment, over half of callers with Medicaid were denied appointments.

Yet, when these same clinics received a call about a child with private insurance, every single one offered an appointment. Financial incentives matter.

This disparate pay will only worsen after the largest funding cut in Medicaid’s history. The recently passed “One Big Beautiful Bill Act” reduced federal Medicaid support by roughly $1 trillion over the next 10 years.

States now face three options: remove people from Medicaid, cut optional services, or further reduce what they pay providers. States like North Carolina have already moved to cut doctor pay, and others will likely follow suit.

With this law, we are hitting the brakes instead of the accelerator. It recalls a scene from The Simpsons in which Bart is put in a remedial class and says: “Let me get this straight. We’re behind the rest of the class, and we’re going to catch up to them by going slower?”

In our new research, Medicaid is a major driver of these payment disparities, but not the only factor.

Even among patients with similar coverage, like commercial insurance, Black and Hispanic patients still found themselves in plans that paid doctors less. These differences amount to a “tax” physicians face for treating patients whose health insurance pays less. This tax not only penalizes physicians in safety net roles but also shapes which patients ultimately get treated.

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Physicians provide more care when they are paid higher prices. One frequently cited study showed that raising physician payment by 2% resulted in 3% more care provision. Based on this figure, we project that eliminating pay disparities would cut the gap in general checkup visits by more than half between white children and Black or Hispanic children.

As long as we provide less incentive to treat some patients, we will get what we pay for: a system that falls short for people with less, especially children. Reversing this trend will require strengthening Medicaid rather than gutting it. Raising Medicaid payments to doctors to be equal to Medicare rates would improve access, evidence suggests. But reforms like this require investment.

Right now, we live in a country where modern medicine achieves great things, sometimes at very low cost. But those benefits are out of reach for those who can’t get a doctor’s appointment.

Our national policies embed inequality into our system of healthcare financing. Unless we confront and reform those policies, uneven access to care will persist and likely worsen.

Aaron Schwartz is a senior fellow at the Leonard Davis Institute of Health Economics at the University of Pennsylvania, where Rachel M. Werner is the executive director. Both are also practicing physicians.