Medicaid cost-sharing seen as deterring enrollment

Eager to get Republican-led states to expand Medicaid, the Obama administration seems increasingly willing to allow them to impose new premiums and cost-sharing on very low-income adults. But some experts say those costs likely will deter eligible people from signing up and seeking needed healthcare. In addition, they warn the added administrative costs will exceed beneficiary payments.

Last December, the CMS allowed Iowa to impose a monthly premium of up to $5 a month for adults with incomes as low as 50% of the federal poverty level, although it barred the state from canceling coverage for failure to pay. In May, Indiana's Republican Gov. Mike Pence proposed charging a monthly “contribution” ranging from $3 to $15 for people under the poverty line; those who don't pay would lose vision and dental benefits and would be liable for copayments out of pocket. A CMS decision on Indiana's waiver proposal is pending.

Arkansas, which previously adopted a Medicaid expansion model using private plans, now has asked the CMS if it can require people with annual incomes between 50% and 99% of the federal poverty level to contribute $5 a month to health savings accounts. Failure to pay would trigger copays. That waiver request is pending as well.

The trend is troubling to consumer advocates and healthcare providers. “Enrollees might not understand that they won't be disenrolled or that they can get a hardship exemption,” said Dee Mahan, Medicaid program director at Families USA.

Providers in Arkansas are worried that requiring copays for low-income Medicaid patients could hurt care and jeopardize the success the state has seen in reducing its uninsured ranks. With nearly 200,000 Arkansans gaining Medicaid coverage, hospitals say their bottom lines have improved. “These are such low-income families (that) cost-sharing is going to be a barrier to care,” said Dr. Roxane Townsend, CEO of the University of Arkansas for Medical Sciences Medical Center in Little Rock.

“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,” said Daniel Riley, UAMS' chief financial officer.

Other experts question the wisdom of having states collect and track premium and health savings account contributions. “Premium collection costs and monitoring out-of-pocket caps may exceed the value of premiums,” Tricia Brooks, a senior fellow at Georgetown University's Center for Children and Families, wrote in an analysis last December.

Virginia previously imposed a $15 per child monthly premium on families with incomes between 150% and 200% of poverty. The state later eliminated the premiums because families struggled to pay them and because it was spending $1.39 for every dollar it collected, according to Brooks' report.

Similarly, a decade ago, Medicaid enrollment in Oregon plummeted 77% in less than 3 years after the state required beneficiaries to make premium contributions, increased copayments and imposed penalties for nonpayment.

An official in Michigan, which expanded Medicaid, acknowledged her state will incur additional administrative costs from charging monthly premiums worth up to 2% of annual income for beneficiaries 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 for the Michigan Department of Community Health.

Follow Virgil Dickson on Twitter: @MHVDickson