By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Medicaid Cost-Sharing Disaster Looms Ahead
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Medicaid Cost-Sharing Disaster Looms Ahead
Policy & Law

Medicaid Cost-Sharing Disaster Looms Ahead

Brad Wright
Brad Wright
Share
5 Min Read
SHARE

From 1974 to 1982, a group of researchers conducted the RAND Health Insurance Experiment. In lay terms, what they did was assign people to different levels of insurance coverage, with a particular focus on the amount of co-payments, co-insurance, and deductibles that people had to pay, and then they observed their use of the health care system. As you might expect, those who had to pay more out of their own pockets used less health care. More importantly, they didn’t make a distinction between necessary and unnecessary care.

From 1974 to 1982, a group of researchers conducted the RAND Health Insurance Experiment. In lay terms, what they did was assign people to different levels of insurance coverage, with a particular focus on the amount of co-payments, co-insurance, and deductibles that people had to pay, and then they observed their use of the health care system. As you might expect, those who had to pay more out of their own pockets used less health care. More importantly, they didn’t make a distinction between necessary and unnecessary care. If you’re up to the challenge, you can read some of the publications here and here.

This is why insurance companies use these methods of cost-sharing to help keep utilization and costs down. The reasoning goes that when people have to spend some of their own money at the time that they are deciding whether or not to utilize the health care system, they will be more judicious in their use of resources. In other words, if you are feeling a little bit under the weather and you don’t have to pay anything to go to the doctor, you are more likely to go than if you have to fork over $20. On the other hand if you are “truly” sick, paying the $20 will be totally worth it.

But what about the very low-income? For them, even when they are extremely sick, $20 may be too much money to spend on health care. They may have the money, but need to spend it on other things like food, or–if they are very poor–they may not have the money at all. In other words, for the low-income, cost-sharing goes from being a motivator of the judicious use of resources to a barrier to accessing the health care system. For this reason, Medicaid–the insurance program for low-income Americans–has historically limited the amount of cost-sharing that states can impose on beneficiaries.

More Read

Breast Cancer: A Young Woman’s Perspective
Why Outsourcing Your IRO Is a Good Idea
EEOC Regs on Wellness Incentives: Progress, but Many Issues
More On Wellness Programs To Improve Health and Reduce Costs
What Is the Scoop with Medicare?

States, meanwhile, complain of the burden that the Medicaid program places on their budgets, and they want the federal government to permit more cost-sharing. After all, they say, the economic principles that motivate cost-sharing do not play favorites. They work for those of all different income levels.

The problem is, that’s not true. Cost-sharing is not based relative to income, but rather is a fixed amount and/or a percentage of health care charges. Therefore, common sense points out that the overall burden of any given level of cost-sharing decreases as an individual’s income increases. Translation: cost-sharing hits the poor the hardest.

Now, in an effort to woo states that have so far declined to participate in the Medicaid expansion under the Affordable Care Act, the Department of Health and Human Services has published a proposed rule that would permit states to charge “higher than nominal levels” of cost-sharing to Medicaid beneficiaries earning more than 100% of the federal poverty level. While this does continue to protect the poorest of the poor, it exposes those marginally less poor to a significant cost barrier, which the RAND Health Insurance Experiment tells us means they will seek less care. As we know from the Oregon Health Study, when the uninsured suddenly gain Medicaid coverage, they have better access to care, use more of it, and it costs more money than leaving them to go without altogether. Unfortunately, the current political compromise is likely to throw a wrench into the works. Expanding coverage for low-income Americans, while shifting more of the financial burden of their care directly onto them, is a recipe for a disaster of underinsurance, where individuals are covered in spirit, but remain vulnerable in practice. We would do better to be honest with ourselves and just deny them coverage.

 

TAGGED:cost-sharingMedicaid
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

a woman walking on the hallway
6 Easy Healthcare Ways to Sit Less and Move More Every Day
Health
September 9, 2025
Clinical Expertise
Healthcare at a Crossroads: Why Leadership Matters More Than Ever
Global Healthcare
September 9, 2025
travel nurse in north carolina
Balancing Speed and Scope: Choosing the Nursing Degree That Fits Your Goals
Nursing
September 1, 2025
intimacy
How to Keep Intimacy Comfortable as You Age
Relationship and Lifestyle Senior Care
September 1, 2025

You Might also Like

medication heart
BusinessFinanceHospital AdministrationPolicy & Law

4 Reasons Doctors Are Taking a Fresh Look at In-Office Dispensing

January 9, 2014
Public Health

Hologram or Avatar Doctors: Why They Will Never Happen

April 11, 2013
opioid meds overprescribed
Policy & LawPublic HealthSpecialties

Are Prescription Painkillers Over-Prescribed to Non-Surgical Patients?

November 18, 2013
mhealth
Medical EducationMedical RecordsMobile HealthNewsSocial Media

Daniel Kraft: Health Media for the Future

March 1, 2013
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?