When Medicaid has premiums, enrollees drop out

A few states aim to expand Medicaid on their own terms, and are exploring the idea of charging some enrollees a small premium for the public program.

Those terms, it turns out, could scare new enrollees off.

Charging Medicaid patients monthly premiums — even if those premiums are as low as $10 — causes people to disenroll, according to a new study in the Journal of Health Economics.

Researchers looked at enrollment trends in Wisconsin, which introduced monthly premiums for Medicaid beneficiaries living above 150 percent of the federal poverty line. The premiums started at $10 per month and increased with income.

The study found that the premium requirement itself — not the size of the required monthly payment — is what discourages enrollment. Introducing a $10 premium makes enrollees 12 to 15 percentage points more likely to exit the program. Though premiums got more expensive as enrollee income increased, these changes had little or no effect on enrollment.

This matters because a handful of states pursuing alternative Medicaid expansions have proposed premiums for enrollees between 100 and 138 percent of the federal poverty line. This Medicaid expansion population is poorer than the enrollees studied in Wisconsin, meaning they could be even more sensitive to required monthly payments.

So far, four states have requested to impose premiums on their Medicaid expansion populations who have incomes above the poverty line, and two — Iowa and Michigan — have already received permission to do so. Iowa is authorized to charge premiums for enrollees up to $10. Michigan expects enrollees to pay 2 percent of income each month into a health savings account, which enrollees can use to pay for care later.

Indiana and Pennsylvania are still in negotiations with the Department of Health and Human Services to expand Medicaid. Under its proposed expansion plan, Pennsylvania wants to charge premiums of $13 per month for single adults and $17 per month for families. Under Governor Pence’s “Healthy Indiana” plan, Hoosiers between 100 and 138 percent of the federal poverty line will be required to make monthly contribution of $3 to $25, depending on income.

And it’s not clear that these token monthly payments offer any benefit for Medicaid enrollees or the Medicaid program itself.

Unless the program receives enough money from premiums to offset the administrative costs of collecting that money, “small premiums seem difficult to justify as anything other than a measure to discourage enrollment,” the authors write.