Even small health insurance bills can cause healthy low-income people to drop coverage

Even small health insurance bills can cause healthy low-income people to drop coverage

The study has implications for other states that require low-income people to pay for their Medicaid coverage, or may be considering such a requirement if they expand Medicaid. It also has importance for the plans sold on the national and state Marketplaces to people who buy their coverage directly. Impact of monthly fees

While people leave Medicaid for a number of reasons, the study found a 2.3 percentage point jump in disenrollment at the federal poverty level, which the researchers attribute to the imposition of premiums.

The analysis was done by a team from the U-M Institute for Healthcare Policy and Innovation, which has conducted a formal evaluation of the program for the Michigan Department of Health and Human Services. Betsy Q. Cliff, Ph.D., now at the University of Illinois Chicago, led the analysis during her doctoral training at the U-M School of Public Health. Given a baseline disenrollment of about 20% over 6 months of the program, the study finds 12% more participants dropped off the Healthy Michigan Plan after they began owing monthly fees. The amount someone had to pay also mattered: Disenrollment rose by nearly 1 percentage point for every dollar charged monthly. The study used data from the inception of the program in March 2014 and followed participants through September 2016.

Fees, formerly called contributions and similar to the monthly premiums that people with other forms of insurance pay, are only charged to those have a household income above the federal poverty level. The program is open to adults making up to 138% of the federal poverty level, a cap of about $17,700 for a single-person household in 2021. The new findings come from Michigan’s Medicaid expansion program, called the Healthy Michigan Plan, which was one of the first in the nation to require some low-income participants to pay monthly fees and most participants to pay co-pays for services they receive. Nearly 906,000 Michiganders get their health coverage through the program.

“Disruptions in Medicaid coverage — also known as churn — can lead to worse quality care, higher administrative costs and less chance for the population to receive needed but non-urgent preventive services,” says Cliff, now an assistant professor at UIC’s School of Public Health. Michigan’s cost-sharing requirements for people in the Healthy Michigan Plan kick in after a person has been in the program for six months. An individual on the program with an income just above the poverty level – around $12,900 a year in 2021 – might be charged about $20 a month, though this amount can be reduced by engaging in a discussion with their physician about healthy behaviors. The monthly amount goes up as income increases.

Signs of “adverse selection”
Indeed, previous work by the IHPI team to survey past participants in the Healthy Michigan Plan showed that 81% had access to no other form of insurance before they joined the program, and that 55% went uninsured for the three months after they left it.

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