THE NOTION of asking Medicaid recipients to pay more toward their health care has a lot of intuitive appeal. Rapidly growing costs for the health care program for the poor are straining state budgets across the country, as well as the federal government's. In private insurance programs, co-payments, deductibles and other cost-sharing mechanisms have helped make patients more informed and cost-conscious consumers.
It's not surprising, then, that the nation's governors are pressing for more flexibility to require Medicaid recipients to pay more for their care as well. But the evidence from states that have adopted such cost-cutting measures suggests that any changes should be made only with extreme caution. Those considering changes in the program must make certain that the payments -- even if they don't appear burdensome -- don't prevent recipients from getting needed services and don't backfire by resulting in more expensive emergency room and hospital care.
Medicaid provides health insurance for more than 55 million children in low-income families, adults (mostly parents and pregnant women), senior citizens and disabled persons; most live on incomes below the poverty line, now $19,350 for a family of four. Under the program's current rules, states for the most part can't charge premiums, and a majority of recipients, including children and pregnant women, can't be assessed any cost-sharing payments either. Others can be asked to pay "nominal" cost-sharing, such as a $3 maximum co-payment or a co-insurance payment of 5 percent. Even then, certain services, such as emergency-room visits, aren't subject to such charges, and beneficiaries can't be denied service if they don't pay their share.
The National Governors Association, as part of a generally sensible menu of policy recommendations, wants to change the rules so that states would have freedom to impose premiums and cost-sharing for all Medicaid beneficiaries and services. The governors propose to limit the potential effect of this change by capping overall out-of-pocket costs: Households making below 150 percent of the poverty level couldn't be required to pay more than 5 percent of their total income; those making more would have their exposure limited to 7.5 percent.
It's reasonable to review and update the existing rules, but the changes the governors would make go too far. In particular, lawmakers and policymakers ought to be wary of authorizing premium payments; the evidence on this suggests that such a requirement can backfire. For example, when Oregon obtained a federal waiver a few years ago to increase premiums for adult Medicaid recipients, including those with no incomes, program enrollment dropped by almost half, and most of those eliminated ended up with no insurance.
Giving states more leeway on co-payments is a closer call, particularly since the "nominal" charges now allowed haven't risen since 1982. But the governors are asking for a change that would go much further than simply adjusting those levels for inflation. They would let states charge co-payments, potentially significant ones, even to those below the poverty level and for services, such as preventive care, that should be encouraged.
It's not at all clear that this is affordable for recipients, productive in terms of reducing health costs or necessary for states, which can already seek waivers from the rules. Even small co-payments can be unsustainable for those on constrained budgets; imagine a poor senior with numerous prescriptions to fill each month. This is an area in which lawmakers and policymakers ought to proceed with care.