Addressing the Needs of the Uninsured in a Challenging Economic Environment

Slide Presentation by Anne Markus, J.D., Ph.D.

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On March 14, 2002, Anne Markus, J.D., Ph.D., made a presentation in a Web-assisted teleconference at Session 3, which was entitled "Stretching Scarce Resources: State Strategies to Design Effective, Affordable Benefit Packages."

This is the text version of Dr. Markus's slide presentation. Select to access the PowerPoint® slides (289 KB).

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Stretching Scarce Resources: State Strategies to Design Effective, Affordable Benefit Packages

Anne Markus, J.D., Ph.D.
Senior Research Scientist
The George Washington University Medical Center

Slide No. 1

Definitions

• Premium: Set amount of dollars per defined payment period (usually monthly) paid to obtain health insurance coverage.
• Cost-sharing: Patient exposure to out-of-pocket costs associated with health service delivery. Includes:
     -Deductible
     -Coinsurance
     -Copayment

Slide No. 2

Purposes of Cost-sharing

General reasons:

• Enticing families to be more cost conscious in seeking care
• Fostering a sense of ownership/personal responsibility
• Directing consumers toward more cost-effective care
• Deterring unnecessary utilization
• Raising revenues to reduce sponsor costs of health care coverage

Slide No. 3

Purposes of Cost-sharing (cont.)

Additional reasons for states:

• Making public health insurance programs aimed at the poor look more like private insurance
• Limiting substitution and crowd-out of private insurance

Slide No. 4

Recent Trends

• Private sector
    -No significant changes to contribution strategies, but changes to benefit structure

• Medicaid/SCHIP (State Children's Health Insurance Program)
    -HIFA (Health Insurance Flexibility & Accountability) initiative

• Medicare
    -Pharmacy Plus initiative

Slide No. 5

Cost-sharing Rules in Public Programs

Medicaid:

• Premiums prohibited with some exceptions
• "Nominal" cost-sharing allowed with some exceptions
• No overall cap specificed

SCHIP:

• Premiums allowed
• Cost-sharing allowed
• Overall cap of 5% of family income

State employee benefit plans:

• Premiums allowed
• Cost-sharing allowed
• May or may not impose overall cap

Slide No. 6

Medicaid and SCHIP Waivers

• Medicaid cost-sharing waivers:
    (1) inappropriate use of ER (emergency room)
    (2) 2 year demonstration program

• Section 1115 waivers:
    (1) waiver of Medicaid and/or SCHIP cost-sharing requirements as part of a 5-year
          demonstration program
    (2) streamlined waiver process and increased flexibility to design cost-sharing rules under HIFA

Slide No. 7

Effect of Premiums

• Premiums influence participation in insurance programs
• As premiums increase, participation rates decrease

Slide No. 8

Effects of Cost-sharing

Use of services

• Cost-sharing influences the use of services
• As cost-sharing increases, use of services decreases
    -outpatient care
    -inpatient care
    -prescriptions
    -preventive services
    -emergency room

Health outcomes

• Cost-sharing may have an effect on health outcomes
• In general, cost-sharing has been found to have a minimal or no effect on health outcomes except for the poorest populations

Slide No. 9

Effect Across Population Groups

• Research shows that cost-sharing has a deterrent effect across the board:
    -children and adults
    -people who are healthy and people who have chronic conditions
    -rich and poor

• Existing body of knowledge also suggests that cost-sharing may have a more pronounced negative effect on low income people:
    -studies on premiums in state programs
    -non-Medicaid studies on cost-sharing
    -Medicaid studies on cost-sharing

Slide No. 10

SCHIP Experiences

• All States with separate SCHIP programs have some form of cost-sharing
• Research in this area thus far focuses on the effect of premiums on initial participation but also on continued participation in program
• Anecdotal evidence also suggests that collecting and processing premiums and other cost-sharing contributions is administratively burdensome and/or not worth the cost

Slide No. 11

Implications

• Income-related, sliding scale of premium and cost-sharing schedule
• Low premiums
• Limited cost-sharing
• Broaden the definition of preventive services exempt from cost-sharing
• Individuals with special needs

Slide No. 12

HIFA Cost-sharing Rules

• Mandatory eligibility groups (e.g., all children up to 100% FPL): same rules as Medicaid
• Optional eligibility groups (e.g., children beyond the mandatory eligibility levels): no cost-sharing rules specified other than an annual cap of 5% of family income for deductibles, copayments and coinsurance
• "Expansion" eligibles (e.g., nondisabled single working age adults, childless couples): no cost-sharing rules specified

Slide No. 13

Examples of State Flexibility Under HIFA

• Arizona (approved HIFA waiver):
    -Childless adults <100% FPL (Federal Poverty Level): same cost-sharing as Medicaid, i.e., $1-$5 except prenatal care, EPSDT
     services, family planning
    -Parents of SCHIP and Medicaid children 100-200% FPL: same cost-sharing as SCHIP, i.e., family
     premiums up to $25 per month, $5 non-emergency use of emergency room, overall limit of 5% of annual
     family income

• California (approved HIFA waiver):
    -Parents of SCHIP and Medicaid children <200% FPL: similar to cost-sharing under SCHIP, e.g.,
     monthly premiums of $10 or $20, copays

Current as of July 2002

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Internet Citation

Stretching Scarce Resources: State Strategies to Design Effective, Affordable Benefit Packages. Presentation by Anne Markus at Web-Assisted Teleconference, "Addressing the Needs of the Uninsured in a Challenging Economic Environment". July 2002. Agency for Healthcare Research and Quality, Rockville, MD. https://www.ahrq.gov/news/ulp/uninsuredtele/session3/markustxt.htm

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