Those who think Medicaid and the Children's Health Insurance Program should increase families' out-of-pocket contributions for their children's care might see the idea backfiring because paying for that care could become unaffordable, according to a paper published this week in the journal Health Affairs.
"If families didn't have to pay any cost sharing, no premiums, no co-payments and no deductibles, there would still be quite a few kids living in families where the burden of paying for healthcare bills exceeds 10% of the family's income," says Thomas Selden, an economist with the U.S. Health and Human Services Agency. The family financial situation gets much worse with even low levels of required out-of-pocket cost sharing.
"If increasing cost-sharing for these families leads to a much greater financial pressure, it could result in a reduction in how much care they may get for their kids," Selden says. "Or it might mean the mom won't get care that she might need."
Additionally, although federal law restricts a family's out-of-pocket spending for publicly insured children to no more than 5% of family income, total family spending and income is seldom tracked by providers and is not well enforced, the authors said. Many states have policies that reduce that 5% cap as well, but families often aren't aware of it.
"The hospital or the doctor who sees a patient who is paying for their care may provide something, a notice of some sort perhaps, saying 'your bills are capped according to state policies, at such and such a rate, and once you get over that in a three, or a six month period, you can qualify for free care," Selden says.
"We need to educate health providers, and we need to tell patients about the importance of maintaining a shoebox to store all those receipts," he says.
Selden prepared the paper with colleagues from the Agency for Healthcare Research and Quality with support from the David and Lucille Packard Foundation. The research was conceived in light of concern about the Children's Health Insurance Program and Medicaid's bulging health care bill, and the debate about whether imposing more cost sharing on Medicaid families would make them less likely to seek unnecessary care.
"On the one hand, higher cost sharing has been promoted as a way of ensuring the sustainability of Medicaid and CHIP by sharing the financial burden with families and by reducing 'unnecessary' service use and the crowding out of employer-sponsored coverage," Selden and the authors wrote. "On the other hand, there is concern that higher cost sharing will increase uninsurance rates and reduce 'necessary' service use and adherence to recommended treatments among children."
The report was based on telephone interviews and information collected under the Medical Expenditure Panel Survey of households and included information on 7,885 children. Families were asked to recall what they paid in health costs as well as their family income. That information was compared with actual Medicaid bills and payments.
The authors concluded that even with zero Medicaid and CHIP cost-sharing requirements for children, 12.7% of publicly insured children would be in families for whom out-of-pocket medical spending consumed 10% of their family income.
The percentage rises to 16.3% among families with incomes below the federal poverty level, versus 5.6% of families with income above 200% of the federal poverty level.
Enforcing caps is one way to reduce the burden on families, Selden says. "The logistical challenge, however, is for states to implement caps so that cost-sharing is eliminated once the cap is reached, which may prove difficult given the limitations for tracking families' incomes and their spending on medical care."