The Effects of Premiums and Cost Sharing on Low-Income Populations: Updated Review of Research Findings
By Samantha Artiga, Petry Ubri, and Julia Zur
Kaiser Family Foundation, June 1, 2017
Recently, there has been increased interest at the federal and state level to expand the use of premiums and cost sharing in Medicaid as a way to promote personal responsibility, prepare beneficiaries to transition to commercial and private insurance, and support consumers in making value-conscious health decisions. This brief reviews research from 65 papers published between 2000 and March 2017 on the effects of premiums and cost sharing on low-income populations in Medicaid and CHIP. This research has primarily focused on how premiums and cost sharing affect coverage and access to and use of care; some studies also have examined effects on safety net providers and state savings. The effects on individuals, providers, and state costs reflect varied implementation of premiums and cost sharing across states as well as differing premium and cost sharing amounts. Together, the research finds:
* Premiums serve as a barrier to obtaining and maintaining Medicaid and CHIP coverage among low-income individuals. These effects are largest among those with the lowest incomes, particularly among individuals with incomes below poverty. Some individuals losing Medicaid or CHIP coverage move to other coverage, but others become uninsured, especially those with lower incomes. Individuals who become uninsured face increased barriers to accessing care, greater unmet health needs, and increased financial burdens.
* Even relatively small levels of cost sharing in the range of $1 to $5 are associated with reduced use of care, including necessary services. Research also finds that cost sharing can result in unintended consequences, such as increased use of the emergency room, and that cost sharing negatively affects access to care and health outcomes. For example, studies find that increases in cost sharing are associated with increased rates of uncontrolled hypertension and hypercholesterolemia and reduced treatment for children with asthma. Additionally, research finds that cost sharing increases financial burdens for families, causing some to cut back on necessities or borrow money to pay for care.
* State savings from premiums and cost sharing in Medicaid and CHIP are limited. Research shows that potential revenue gains from premiums and cost sharing are offset by increased disenrollment; increased use of more expensive services, such as emergency room care; increased costs in other areas, such as resources for uninsured individuals; and administrative expenses. Studies also show that raising premiums and cost sharing in Medicaid and CHIP increases pressures on safety net providers, such as community health centers and hospitals.
Recently, there has been increased interest at the federal and state levels to expand the use of premiums and cost sharing in Medicaid as a way to promote personal responsibility, prepare beneficiaries to transition to commercial and private insurance, and support consumers in making value-conscious health decisions. Current rules limit premiums and cost sharing in Medicaid to facilitate access to coverage and care for the low-income population served by the program, who have limited resources to spend on out-of-pocket costs. This review of a wide body of research provides insight into the potential effects of increasing premiums and cost sharing for Medicaid enrollees. It shows that premiums serve as a barrier to obtaining and maintaining coverage for low-income individuals, particularly those with the most limited incomes, and that even relatively small levels of cost sharing reduce utilization of services. As such, increases in premiums and cost sharing result in increased barriers to coverage and care, greater unmet health needs, and increased financial burdens for families. Further, the research suggests that state savings from premiums and cost sharing in Medicaid and CHIP are limited and that increases in premiums and cost sharing in Medicaid and CHIP can increase pressures on safety-net providers.
Republicans see Medicaid as welfare. Most Americans don’t.
By Drew Altman
Axios, June 21, 2017
Republicans want to roll back the Medicaid expansion, cap federal Medicaid spending increases, and add work requirements, drug testing, time limits, copays and premiums to some state Medicaid programs. But almost no one else wants to do these things. One poll finding goes a long way toward explaining why: Republicans view Medicaid as a form of welfare, and pretty much everyone else views it as a government insurance program.
Why it matters: Welfare remains unpopular in our country; it’s always popular to limit or cut “welfare”. Whether it should be, and what this says about us, is a different question.
Perceptions of Medicaid as welfare don’t seem bothered much by facts, such as, for example, that two thirds of Medicaid spending goes for the low income elderly and disabled who don’t fit the Ronald Reagan era image of the welfare king or queen. But it’s not the majority view in any case. A little less than a third of voters identify as Republicans today, and about half of them see Medicaid as welfare.
By Don McCanne, M.D.
Tomorrow the Republicans in the Senate are expected to release their proposal to repeal and replace the Affordable Care Act. Although there will likely be some modest detrimental changes recommended for the individual market insurance exchanges, the largest impact will likely be in changes recommended for the Medicaid program. Today’s message explains why that would be a grievous mistake.
Medicaid is the largest insurance program in the United States, serving over 74 million people. These are low-income individuals who do not have assets that could pay for their proportionate share of America’s health care bill. Most of us consider Medicaid to be an essential insurance program for these individuals and families (in the absence of a single payer system). However, new poll results by Kaiser Foundation show that one-half of Republicans (Republicans being one-third of the population) consider Medicaid to be predominantly a welfare program, and those Republicans now control our government. The political representatives of one-sixth of our population are about to take a budget ax to this crucial program, because, after all, it is merely a welfare program and one that we can no longer afford to maintain (Republican view).
The consequences of the various policies under consideration are dire. They are considering allowing states to impose premiums that would create a barrier to Medicaid coverage, leaving those vulnerable without insurance. They are considering allowing the states to use cost sharing to make Medicaid beneficiaries better health care shoppers, but it has been shown that even small out-of-pocket costs create barriers to care for this population. They likely will dramatically reduce over time the federal contribution to the state Medicaid programs which may cause even more states to limit eligibility, keeping out individuals who may be impoverished but still have barely enough income to have a cellphone (as if cellphone fees were enough that they could be used instead to purchase health plans in the individual market).
What we will see tomorrow will be legislative recommendations to the Republicans in the Senate. It remains to be seen whether or not they will conveniently fail to find the votes to pass their proposal so that they will not all be labeled as having stone-cold hearts.
Even if Medicaid does get a reprieve, we still cannot relax. It will continue to be vulnerable to attacks by those who consider it to be welfare and thus a tool to reduce budget deficits. Medicaid must be replaced by a program that provides access to comprehensive health care benefits while removing financial barriers to care – not just for lower-income individuals, but for all of us. Regardless of the Republican replacement proposal we need to intensify our advocacy for replacement with an improved Medicare for all.
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