Dr. Aaron Carroll wrote a piece at the New York Times on Monday (and re-posted at The Incidental Economist a few days later) about states moving to institute premiums in their respective Medicaid programs. Premiums in health insurance are what you pay for every month and have been traditionally forbidden in the state-federal program for low-income Americans. Yet as the federal government begins to relax this prohibition it’s worth recognizing that this will have negative consequences for the category of folks who need insurance coverage the most.
A respected dearth of research shows that inducing greater cost-sharing in health insurance drives down utilization — which is why companies and various federal programs have been using them for decades as means to contain and control certain costs. However this doesn’t typically describe premiums as Carroll writes, which are inherently different because they’re not a “means to influence whether or not an individual uses services. They’re a means to purchase insurance.” The problem is that families pursuing expanded Medicaid coverage (with annual income below $27,310 for a family of three) don’t have much to spare. At some point on the line to increasing cost-sharing for this population the ‘utilization’ hits zero pretty quickly. He continues to note that while premiums make up the bulk of how services are paid for in private coverage, at the amounts being considered they would be too low to serve the same function in Medicaid. So the practical impact wouldn’t actually be an attempt to get people ‘invested’ in their health care consumption but rather to simply dissuade people from signing up at all.
Of course this could actually be the point of introducing premiums in Medicaid:
This may, of course, be part of the purpose. It’s estimated that more than 280,000 people would be eligible for a Medicaid expansion in Pennsylvania. Getting 12 percent of them to refuse coverage would save the government more than $200 million. That’s a very rough estimate, of course, but the potential savings from disenrollment greatly outweigh whatever Pennsylvania might collect in premiums from the people who do enroll.
Cost-sharing is a mechanism to prevent people from overusing health care. Signing up for health insurance isn’t the point at which we do that, though. Premiums aren’t supposed to be a means to discourage people from gaining access to the health care system. But that seems to be how they’re functioning in Medicaid.
Color me shocked (I think that turns to a dull ocher if you blend sarcasm). Sure, as Carroll says, requiring some services to have contributions from the insured may make sense. But in a situation where costs unrelated to care might cause people to forgo Medicaid coverage, even instituting small and essentially meaningless premiums sort of defeats the purpose of the program in the first place.
That just leaves “skin in the game” arguments, which are my least-favorite in the back-and-forth over providing health insurance. Being uninsured while obtaining services requires, well, 100 percent of your ‘skin,’ until the only other option is charity care or death. The poor don’t need a principled lesson on having a stake in health care treatments; they need help paying for services in a wealthy country with a majorly ‘effed up health care system. Introducing premiums in Medicaid is nothing more than a punitive measure against the most vulnerable.