Govs. eyeing Medicaid co-pays

An increase of just $1 per service forces tough decisions for some.

WASHINGTON -- One woman visited the emergency room four times rather than pay a $1 fee for her insulin. That way she could get it for free.

Another found herself choosing between diapers for her grandchildren or medicine for her diabetes and heart problems. She, too, ended up in the hospital, treated by Dr. Kevin Larsen, a specialist in internal medicine in Minneapolis.

Larsen offered the two cases as examples of how some of the poorest patients were affected by Minnesota's decision to impose small co-pays for its Medicaid population two years ago. The fees -- $3 for a brand-name drug and $1 for a generic drug -- hardly seem high, Larsen says, but they made the drugs unaffordable.

"It's really incredible the little, tiny bit of disposable income that these patients have and how big a chunk that these seemingly marginal, nominal co-pays take out of that disposable income," he said.

As the nation's governors grapple with the soaring costs of Medicaid, they're eyeing co-payments -- patients' contributions to the cost of health care. At their meeting this weekend in Des Moines, Iowa, the governors are expected to recommend an easing of federal rules limiting what states can charge recipients.

The federal government must sign off on shifting more of the costs to patients, but the governors' recommendations will carry great influence as Congress seeks to reduce Medicaid spending by $10 billion over the next five years. This year, states and the federal government will spend about $329 billion on Medicaid, which serves about 53 million people.

The cost-sharing proposals are perhaps the most controversial of the recommendations, but among governors themselves, both Republican and Democratic, there is overwhelming support, said GOP Gov. Mike Huckabee of Arkansas, the incoming chairman of the National Governors Association.

"We all came to the conclusion that the only way to save it is to make it a more efficient, responsible program," Huckabee said. "If nothing else, we're just asking that they give us a chance to implement this. They can always go back and say, 'You guys screwed it up. It's not working for these poor families.'"

States, within limits, can require some beneficiaries to share in the costs of their health care. Typically, the co-payment limits range from 50 cents to $3 per service.

And some segments of the population are pretty much exempt from cost-sharing requirements altogether, including children, pregnant women, people living in nursing homes or other institutions, and people receiving hospice care.

Also, even if beneficiaries are charged a co-pay but decline to pay it, providers cannot withhold care.

The governors say the rules have not been updated since 1982 and prevent Medicaid from utilizing the kind of market forces that promote personal responsibility. They promise that any change will limit co-payments to no more than 5 percent of a recipient's income.

Huckabee insists that an overwhelming number of Medicaid recipients want to pay something for the care they receive, saying such cost-sharing was well received by participants in his state's separate health insurance program for children. All states have such federally subsidized programs for children from families with incomes that are too great for Medicaid but not enough for private insurance.

Liberal groups maintain that it's not fair to compare the Medicaid population to the children's health insurance population. Medicaid enrollees often are in poorer health and have much lower incomes, so low that even nominal increases become extraordinary barriers, the Center on Budget and Policy Priorities said in one report.

Huckabee said the groups predicting a health care disaster for the poor because of greater cost-sharing are the same groups that predicted welfare reform would result in long bread lines.

"I sometimes have a problem with wealthy people telling me what it's like to be poor," the governor said.

A study in this month's issue of Health Affairs, a health policy journal, showed Medicaid recipients dropping out of the program when premiums and co-pays were increased in Oregon two years ago.

Oregon enacted monthly premiums of $6 to $20 for couples in the program and co-pays of $5 for a doctor's visit and $50 for an emergency room visit. Strict rules were put in place to lock out for six months those who missed a monthly payment.

The program's rolls dropped from about 89,000 to about 48,000. Researchers said that about half of the drop could be attributed to the higher fees. Those who dropped out for reasons unrelated to cost-sharing mainly had earned wages that disqualified them from the program.

"Although some proponents of cost sharing argue that even the very poor can pay a few dollars a month in premiums, our findings suggest otherwise," the researchers said.

Democrats and some Republicans in Congress oppose more cost-sharing, though they note that they support some of the other recommendations from the governors, such as reducing the price that states pay for prescription drugs.

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On the Net:

National Governor's Association: http://www.nga.org

Center on Budget and Policy Priorities: http://www.cbpp.org