Public insurance reimbursement policies shape the structure and reach of healthcare markets. In this study, we examine the 1980 federal Medicaid mandate requiring states to reimburse Certified Nurse-Midwives, one of the first reforms targeting non-physician providers. We find the mandate increased midwife-attended deliveries by 1.1 percentage points, an 80% rise, adding about 1,100 midwife births annually per state by 1985. We also document a geographic expansion of midwife services into unserved areas and increased hospital employment, consistent with supply-side labor market responses. Our findings demonstrate that reimbursement mandates directly alter healthcare delivery by expanding provider use and reshaping the workforce.