Governor Gina Raimondo isn’t exactly reinventing Medicaid by proposing elderly and/or impoverished Rhode Islander’s pay increased healthcare costs, as her proposed budget proscribes through new Medicaid copays.
Cost sharing has been a part of socialized medicine in America since 1965, when President Lyndon Johnson signed Medicaid and Medicare legislation into law. Even Vermont Senator Bernie Sanders toyed with the idea of a copay in his universal healthcare legislation. “Probably,” according to this copay critique in Jacobin, “for the same reason that economists like them: they drive down health care usage and costs.” Ultimately, both the House and Senate versions of the Medicare for All bills expressly forbid copays.
“Cost sharing reduced the use of both highly effective and less effective services in roughly equal proportions,” according to the RAND Health Insurance Experiment, one of the most comprehensive and oft-cited studies of healthcare in America.
Never-the-less they are quite popular. Of the 33 states that offer expanded Medicaid coverage, Rhode Island is one of only eight that doesn’t allow for a co-pay. Massachusetts does, Connecticut does not. Neither do Delaware, D.C., Hawaii, Oregon, Washington, Nevada, or New Jersey. New Mexico considered adding Medicaid copays last year, and scaled the proposal back in December.
Raimondo’s proposed budget seeks to raise $3.2 million by implementing copays on about half of the 300,000 Rhode Islanders in the Medicaid program. Children and people with disabilities are exempt from such copays. All 74,191 who participate in the Medicaid expansion would be responsible for copays, as would another 58,000 poor adults who were previously income eligible for Medicaid and between 8,000 and 10,000 elderly Medicaid recipients. Inpatient hospital visits would have a $3.00 copay, non-emergency visits to the emergency room an $8.00 co-pay, non-preventative physician visits would have a $3.00 co-pay, and prescription drugs would carry a $2.50 co-pay for generics and $4.00 for brand names.
One reason copays remain popular is because the seminal 1970’s RAND study also found that “cost sharing did not significantly affect the quality of care received by participants.” This was the prevailing wisdom on Medicaid copays for decades. Then came the 2008 Oregon Health Study, which cast some doubts on the RAND findings.
“In the Oregon Medicaid program applying copayments shifted treatment patterns but did not provide expected savings,” it found. “Policy makers should use caution in applying copayments to low-income Medicaid beneficiaries.”
More specifically, the study said, “Our results indicate that copayments for low-income adults in the OHP did not reduce expenditures for the remaining covered benefits as intended. The policy did reduce overall use of services, but in some cases shifted treatment patterns, such as the relative increase in inpatient care, in ways that are not inherently aligned with more cost-efficient or effective care. Overall, the study results suggest that both intended and unintended effects of copayments were at play, and at the level of total expenditures canceled each other out. Effects within and among the specific service types are consistent with both unintended demand and supply-side effects.”
This study was particularly significant because Oregon had long been regarded as a national leader in providing socialized medicine to needy residents. In 1993, the Oregon Health Plan became the first Medicaid expansion in the nation, after Bill Clinton signed a special waiver. The health plan, which now covers a quarter of Oregon’s 4 million residents, charged a copay from 2003 until 2016. It eliminated the copay on January 1, 2017.
“Part of the consideration was that there was no evidence that having copays in place was improving the way Medicaid participants accessed or engaged in care,” a spokeswoman told me. “Rather, a number of reports suggested the opposite.”