qotd: Free Medicaid? Gotcha!

Bloomberg View
August 4, 2014
You Qualify for Medicaid: Don't Sign Up
By Christopher Flavelle

The debate over Obamacare's Medicaid expansion divides states into two
broad categories -- those that expand their program and those that
don't. New research suggests we should talk more about a third group:
States that agree to expand Medicaid, then impose premiums whose only
purpose seems to be keeping people out of the program.

A paper released today in the journal Health Affairs, written by
researchers from the federal government's Agency for Healthcare Research
and Quality, seeks to quantify the effect of premium increases on
children's enrollment in Medicaid or its sister plan, the Children's
Health Insurance Program. They found that even small premiums lead to
big drops in sign-ups.

Using data from 1999-2010, the researchers -- Salam Abdus, Julie Hudson,
Steven C. Hill and Thomas M. Selden -- found that for children in
families making from 101 percent to 150 percent of the federal poverty
line, a $10 increase in monthly premiums was associated with a 6.7
percent reduction in enrollment. For the subset of families not eligible
for health coverage through their jobs, that grew to 7.3 percent.

The authors of the Health Affairs study don't examine the effect of
premium increases on adults. But Laura Dague, a professor at Texas A&M
University, has. In an article published in the Journal of Health
Economics in May, Dague looked at three years of data from the Wisconsin
BadgerCare Plus program, which offers subsidized health coverage to
families with low incomes. She found that moving from $0 to $10 a month
reduced enrollment among children and adults by 12 percent to 15 percent.

What struck Dague about those results was that it's not just the
magnitude of the premium that matters, but the existence of a premium.

"The biggest effects in my data were at the margin where folks start
having to pay premiums at all," she told me by phone last week. She
wasn't sure why that was -- perhaps the difficulty of paying another
monthly bill or the psychology of having to pay in the first place.

What makes these papers relevant is that at least four states --
Indiana, Iowa, Michigan and Pennsylvania -- have expanded or are trying
to expand Medicaid access in a way that imposes premiums on those making
from 101 percent to 138 percent of poverty. Those premiums aren't high:
$25 a month in Indiana, $10 in Iowa, $25 in Pennsylvania ($35 for a
household) and 2 percent of income in Michigan. But these new studies
show that even those small amounts can significantly reduce the number
of people who sign up.

That seems to be the point. After all, Medicaid spending per beneficiary
will reach almost $6,400 in 2014, against which $120 in premiums each
year generates additional revenue that's barely significant. And as
Dague notes, imposing a premium at all means spending money to obtain
and process those payments.

"If the administrative costs of collecting premiums are high relative to
revenue collected," she wrote, "small premiums seem difficult to justify
as anything other than a measure to discourage enrollment."

If the states that have already imposed premiums were the outliers, then
this would be a frustrating story but a limited one. However, 24 states
still refuse to expand their Medicaid programs, and there's a strong
chance that some of those will change their minds on the condition that
they can impose premiums, too. There's an equally good chance that the
Centers for Medicare and Medicaid Services, which faces pressure to
bring those states into the fold, will go along with it.

Unquestionably, access to Medicaid for a small premium is better than no
access at all. But this new research says we shouldn't mince words about
the point of those premiums. They're designed to get fewer people to
sign up.

http://www.bloombergview.com/articles/2014-08-04/you-qualify-for-medicaid-don-t-sign-up

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Health Affairs
August 2014
Children's Health Insurance Program Premiums Adversely Affect
Enrollment, Especially Among Lower-Income Children
By Salam Abdus, Julie Hudson, Steven C. Hill and Thomas M. Seedless

In this article we have examined the effects of public premiums on
insurance coverage of children who were eligible for Medicaid or CHIP
and whose family incomes were above 100 percent of the federal poverty
level in 1999–2010. Higher public premiums are associated with lower
public coverage and with increases in private coverage and uninsurance.
The magnitudes of these premium effects vary considerably by poverty
level and by parental coverage offers.

Among lower-income children, premium increases are associated with
larger reductions in enrollment in public coverage, and a larger share
of the decline in enrollment takes the form of increased uninsurance.
The association between premiums and uninsurance is particularly strong
among lower-income children who lack access to employer-sponsored
insurance through parental offers.

http://content.healthaffairs.org/content/33/8/1353.abstract

****

Journal of Health Economics
September 2014
The effect of Medicaid premiums on enrollment: A regression
discontinuity approach
By Laura Dague

This paper estimates the effect that premiums in Medicaid have on the
length of enrollment of program beneficiaries. Whether and how low
income-families will participate in the exchanges and in states'
Medicaid programs depends crucially on the structure and amounts of the
premiums they will face.

http://www.sciencedirect.com/science/article/pii/S0167629614000642

****


Comment by Don McCanne

The obsession of the policy and political communities with requiring
even low income families to experience consumer sensitivity to costs has
crossed the bounds into blatant psychopathology, as these studies confirm.

The Medicaid and CHIP programs were specifically designed to provide
health care coverage for low income families - a goal with which most
caring individuals agree. The very modest Medicaid and CHIP premiums
extracted from these families are so small that they have no impact on
the overall financing of the programs. Yet they are enough that these
families with no discretionary income find these programs to be
unaffordable, and so they remain uninsured.

The screwball idea that these premiums somehow make these low income
families better consumers is totally void of reason. These premiums
merely defeat the purpose of the programs - getting these people the
coverage that they need. The psychopathology rests with those who insist
that cash payments, no matter how small, are absolutely essential for
these families to appreciate the benefits of actively participating in
markets rather than passively accepting a government handout. This is
ideology gone mad!

Under a well designed single payer system, premiums and cost sharing are
eliminated. People simply get the heath care they need when they need
it. Paying for the system is totally removed from the delivery of care
since it is financed through progressive taxes that everyone can afford.