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States Shouldn’t Impose Medicaid Premiums, Co-pays

In seeking to expand Medicaid under health reform, some states are asking the federal government for permission to charge very poor people premiums and co-pays.  But doing so hurts the poorest and most vulnerable, as a new Department of Health and Human Services (HHS) report confirms.

ASPE — HHS’ Office of the Assistant Secretary for Planning and Evaluation — issued a report last week that explains why poor families cannot afford to pay for health care services.  ASPE looked at the incomes of people below the poverty line and found that poor families often don’t have enough money to cover even their most basic needs for food, clothing, housing, and utilities.  That’s especially true for families in deep poverty (those with incomes below 50 percent of the poverty line), many of whom make ends meet by borrowing or living off their savings.  Poor adults are also less healthy than higher-income adults, which means they have a greater need for health care. 

But charging premiums and co-pays may make them less likely to receive that needed care.  A robust body of research shows that cost-sharing discourages low-income people’s use of necessary health care, as both we and ASPE have pointed out.  ASPE’s new report reinforces these findings.  It’s simple:  people in poverty can’t afford to pay for their health care after paying for food and housing. 

States have lots of flexibility in Medicaid to ensure that that beneficiaries use the health care system appropriately, such as not going to an emergency room when they don’t need one.  Our report shows many states are doing just that — without keeping people out of care by charging them premiums and co-pays they can’t afford.