The Deficit Reduction Omnibus Reconciliation Act of 2005 received final approval from the House on February 1, 2006, giving states the flexibility to impose new cost-sharing requirements on their low-income populations. A recent Congressional Budget Office (CBO) report estimates the bill’s impact over the next five years will create a loss of coverage for about 45,000 Medicaid beneficiaries and a $3.2 billion reduction in Medicaid outlays due to cost-sharing and benefit package design changes.[1]
Several states have already implemented cost-sharing alternatives. The three state snapshots below provide some preliminary lessons on the impact of one type of cost-sharing: premiums. While the findings are still cautionary, the research provides a glimpse of considerable diversity in the payment schemes, state environments, affected populations, and projected cost savings.
Oregon: In January 2003, Oregon implemented several changes to its Medicaid program, creating Oregon Health Plan (OHP) Standard, in response to growing budget constraints. The revised program included higher premiums and cost-sharing for poor adults, as well as benefit reductions. OHP Standard covers people with incomes below 100 percent of the federal poverty level (FPL), and the premiums ranged from $6 to $20 monthly, depending on income. In addition, stricter premium payment policies were implemented. A study conducted several months following the implementation of these changes found that enrollment of low-income adults not eligible for the Temporary Assistance for Needy Families (TANF) program had declined by nearly half in less than a year. Much of this coverage loss was attributed to the higher premiums and cost-sharing requirements. A survey of newly disenrolled individuals found that 72 percent had become uninsured. Sixty percent of the disenrolled population reported an unmet health need, and close to 80 percent indicated they had an unmet mental health need.
For an in-depth analysis of these programmatic changes on the Medicaid population, please visit: http://www.statecoverage.net/statereports/or51.pdf
Maryland: In July 2003, the Maryland Children’s Health Program (MCHP) began requiring that families at 185 percent to 200 percent of FPL pay a $37 monthly premium. Of 6,400 MCHP children subjected to the new premium, a quarter were disenrolled during the first two months after the change due to outstanding payment. Survey findings indicate that the premium was not the main reason why families dropped coverage. Three-fifths of families reported that they considered the premium affordable and 55 percent of children had found access to alternative coverage.
To access additional information on the demographics and utilization experience of individuals who dropped coverage compared to premium payers, please visit: http://www.statecoverage.net/statereports/md36.pdf
Rhode Island: Rhode Island’s RIte Share program provides coverage for children and pregnant women up to 250 percent of FPL, and parents up to 185 percent of FPL. Families with incomes up to 150 percent of FPL do not pay for RIte Share benefits. Families with incomes between 150 percent and 250 percent of FPL pay a sliding scale monthly premium of $61, $77, or $92 per month, depending on their income. A 2002 survey found that nearly four-fifths of RIte Share enrollees were able to make timely premium payments. Of the 18 percent who were unable to make monthly payments, nearly half reported the premiums were unaffordable. Of those individuals who disenrolled from RIte Share, 49 percent found coverage elsewhere (35 percent enrolled in employer-sponsored insurance and 14 percent re-enrolled in RIte Care due to their income falling below 150 percent of FPL). For families that remained uninsured after disenrollment, 33 percent indicated it was because they did not have access to other coverage.
For further information on the RIte Care Follow-Up Survey, including differences in health status and access to care, please visit: http://www.statecoverage.net/statereports/ri25.pdf
