The CMS barred the state from canceling coverage for failure to pay. The state also will waive the premium for those who demonstrate they can't afford to pay or participate in its Healthy Behaviors wellness program.
Still, the decision “sets a dangerous precedent,” said David Machledt, a policy analyst National Health Law Program. “Whenever HHS grants something, we've seen other states ask for the same thing. They are clearly borrowing from each other.”
In May, Indiana announced a plan, known as Healthy Indiana Plan (HIP) 2.0, that would give the state the ability to charge a monthly “contribution” ranging from $3 to $15 for people under the federal poverty level. Like Iowa, coverage would not be terminated for those who do not pay the fee. Instead, those who don't contribute would be moved to a more basic level of coverage that doesn't include vision and dental benefits. In addition, they would be liable for copayments ranging from $4 for an outpatient procedure to $75 for an inpatient stay.
Arkansas—the first state to be allowed to use federal Medicaid expansion dollars to buy private insurance for individuals with incomes up to 138% of the federal poverty level—followed suit in August. The states asked to amend its current waiver to require people with annual incomes between 50% and 99% of the federal poverty level to contribute $5 a month to “health independence accounts.” Failure to pay into the accounts would trigger copays. The state already requires copays for enrollees earning between 100% and 138% of the poverty level, a population that makes up 18% of the Arkansas Medicaid beneficiaries enrolled in private plans.
The CMS has yet to approve Arkansas' or Indiana's request, but the trend is troubling to healthcare providers, policy experts and consumer advocates.
“Enrollees might not understand that they won't be dis-enrolled or that they can get a hardship exemption,” said Dee Mahan, Medicaid program director at Families USA. “Even if the state puts out a big effort, they might not reach people. Or a large number of people might not read the full notices they get. I know I don't read all the detail of every mailing I get from my insurance company.”
Providers in Arkansas are concerned that requiring copays for enrollees with such small incomes jeopardizes the impressive success the state has seen in reducing its ranks of uninsured.
With nearly 200,000 people gaining coverage, hospitals around the state say their bottom lines have improved with more paying patients and lower costs for uncompensated care.
“These are such low-income families, cost-sharing is going to be a barrier to care for these people,” said Dr. Roxane Townsend, CEO of the Little Rock, Arkansas-based UAMS Medical Center.
It's possible that some could even abandon coverage, UAMS' CFO Daniel Riley added. “We're already seeing in those eligible for subsidized exchange coverage, that when they have to pay a copay, even if it's just a little bit, they are not signing up,” Riley said.
Others have questioned why states are willing to take on new administrative costs to collect and track premium payments for the sake of making sure beneficiaries have some skin in the game.
“Premium collection costs and monitoring out-of-pocket caps may exceed the value of premiums, calling into question the logic of charging nominal premiums,” Tricia Brooks, a senior fellow at the Center for Children and Families, said in a December 2013 analysis (PDF).
For instance, Virginia previously imposed a $15 a child per month premium on families with income between 150% to 200% of the poverty level. The state permanently eliminated the premiums both because people struggled to pay them, and because it was spending $1.39 to collect every $1 in premiums.
States have declined to discuss the administrative burden of enforcing the cost-sharing of their alternative Medicaid models. Michigan for instance is charging monthly premiums worth up to 2% of annual income for residents earning between 100% and 138% of the poverty level.
“There will be additional administrative expenses beyond what the costs would have been had we simply expanded Medicaid,” said Angela Minicuci, a spokeswoman at the Michigan Department of Community Health.
However, she said she was unable to quantify it because premium collections are handled by the Michigan Medicaid Health Plans, which will contract out for those services. Those contracts are not yet final, Minicuci said.
