ATLANTA — Sandra Reed became an obstetrician because she wanted to deliver babies.
    Now her Thomasville, Ga., office has added laser treatments and hair removal services — cash-making ventures — to help pay the bills.
    Reed, who heavily relies on Medicaid patients, has had to scramble to make ends meet because the state hasn't increased her payments for serving those on the government health insurance program for the poor and disabled. Those payments have stalled for a decade even though costs have risen.
    Now, beginning with the July 1 start of the fiscal year, those rates are being cut as the state strains to balance its books. The state has lost hundreds of millions of dollars in federal stimulus dollars that have propped up Georgia through the recession.
    Gov. Nathan Deal had originally proposed a 1 percent cut to health care providers, excluding hospitals hit with a separate bed tax. Lawmakers softened that to a 0.5 percent cut. It's expected to save the state some $13.8 million this year.
    But it could spur some doctors to stop seeing Medicaid patients altogether, even as the Obama administration ramps up plans to expand the Medicaid rolls as part of the national heath overhaul in 2014.
    Gary Richter, an Atlanta gastroenterologist, is one such physician. Having humble beginnings in Pennsylvania coal country, Richter feels a commitment to serving the medical needs of the poor.
    "But at the end of the day I have to keep the doors open," Richter said. He said the provider cut combined with other demands — like having a translator on hand for the growing number of non-English speaking patients — have him seriously weighing for the first time whether to continue accepting Medicaid patients.
    That would likely create a ripple effect in the health community as Medicaid patients are forced to seek care in emergency rooms, one of the costliest options.
    Matt Gove, spokesman for Grady Health Center in Atlanta, which sees a high number of indigent patients, said Grady's emergency room volume has spiked by more than 10 percent so far this year alone.
    "It makes sense that when doctors stop seeing Medicaid patients we will see more of them," Gove said.
    Doctors can choose whether to accept Medicaid patients, but hospitals must treat anyone who walks in the door.
    Medicaid is funded by a combination of state and federal money.
    As part of the stimulus package from Washington, federal officials increased their share from 66 percent to 75 percent to help states cope during the economic downturn. That enhanced match translated into $748.9 million in Georgia for fiscal year 2010 and $608.6 million last year. This year, that goes to zero as the extra cash from Washington dries up.
    Meanwhile, Medicaid enrollment has continued to climb, driven by high unemployment and the sluggish economy. Georgia had 1.35 million residents on Medicaid in fiscal year 2008, compared with 1.5 million in the fiscal year that ended June 30. That's more than 15 percent of the state's population.
    There are no firm figures on how many doctors have dropped Medicaid patients. State officials say they do not keep such data. Neither does the Medical Association of Georgia, which represents physicians.
    But Donald Palmisano, executive director of the Medical Association of Georgia, said the number has definitely declined.
    He said Medicaid currently pays 76 percent of what Medicare does for the same services.
    "Medicaid already does not pay for the cost of delivering the services, so the fact that it's being cut is really going to hurt," Palmisano said. "It's just not sustainable."
    The problem is compounded by a shortage of doctors in Georgia and across the nation.
    The Association of American Medical Colleges estimates that, 15 years from now, with the ranks of insured patients expanding, the United States will face a shortage of up to 150,000 doctors.
    A 2006 report from the Georgia Board for Physician Workforce found that the state ranked 37th in the nation on physicians per capita. Although there was no more recent data, Palmisano said there is no reason to suggest that the trend had reversed.
    Indeed, the board said that in the years it had been conducting the survey, Georgia had never ranked above 35th.
    The shortage has become particularly pronounced in rural parts of the state, where salaries are lower and Medicaid rates are high.
    Jimmy Lewis, head of Hometown Health, a consortium of 56 rural Georgia hospitals, said medical school graduates often want to practice in bustling cities rather than sleepy small towns.
    "Access is a big, big problem," Lewis said.
    Reed, the doctor in south Georgia, said that nearby Moultrie has lost three of its four gynecologists. The lone doctor remaining is so overwhelmed that many patients are now trekking 30 miles to her office in Thomasville to avoid waiting weeks for an appointment, she said.
    When it comes to dropping Medicaid patients, Reed said she doesn't have much of a choice. Some 70 percent of the babies she delivers in south Georgia are to patients on Medicaid.
    So she and the three other doctors in her practice have hired an entrepreneurial office manager to bring in money-making services. In addition to laser treatments and hair removal, her office is offering four-dimensional ultrasounds, popular with new parents to get lifelike images of babies in utero.
    "This is not what I expected I would be doing," she said. "It's creating a situation where physicians are using creative ideas. They have to if they want to survive."
    And Richter added that Medicaid is of little use if there are no doctors willing to take it.
    "Just because you have coverage doesn't mean you have access," he said.