BEYOND THE NUMBERS
Wisconsin Imposing Nation’s Harshest Medicaid Premiums on People in Poverty
In a move that will likely have deeply harmful effects, Wisconsin next week will become the first state to implement a policy to take Medicaid away from people in poverty who don’t pay premiums — and the latest to impose harmful barriers on health coverage for those in or near poverty.
Federal law requires that a state waiver of Medicaid law, like the one Wisconsin obtained, “promote the objectives of the Medicaid program.” But evidence shows that Wisconsin’s policy will almost certainly do the opposite by taking coverage away from eligible low-income individuals and sowing confusion among beneficiaries and providers. Wisconsin's legislature should follow the lead of other states that are reconsidering harmful Medicaid changes and repeal the state law requiring the policy along with other harmful restrictions.
Under the Wisconsin policy, individuals who aren’t taking care of children and have incomes above 50 percent of the poverty line (about $500 per month) — and who don’t pay $8 monthly premiums — will lose Medicaid and can’t re-enroll for six months unless they pay all past-due premiums. Beneficiaries will also owe $8 copayments for non-emergency use of the emergency room, which will likely lead some low-income people to avoid the hospital even in an emergency. We estimate that about half of adult Medicaid enrollees without dependents, or about 80,000 people, will face the new premium and cost-sharing requirements.
Even relatively small dollar requirements can create insurmountable barriers for people with incomes that often don’t cover basic needs like food and housing. Moreover, beneficiaries and providers often don’t fully understand policies like premiums and cost sharing, and that confusion can cause a loss of coverage or inability to access care.
That’s why studies consistently find that premiums and cost sharing significantly reduce Medicaid participation. “Premiums serve as a barrier to obtaining and maintaining Medicaid and [Children’s Health Insurance Program] coverage among low-income individuals,” concluded a Kaiser Family Foundation review of 65 papers on the effects of premiums and cost sharing. “Even relatively small levels of cost sharing in the range of $1 to $5 are associated with reduced use of care, including necessary services.”
Evidence from Wisconsin supports these findings. After the state imposed premiums on adults with family incomes between 150 percent and 200 percent of poverty in 2008, adults with incomes just above 150 percent of poverty were 12 percentage points less likely to stay enrolled for a full year than those with incomes just below 150 percent of poverty, research found. Wisconsin’s new premiums apply to adults with far lower incomes, so they’ll likely prove even more harmful.
While premiums’ damaging effects are well documented, they have no demonstrated benefits. Wisconsin’s Medicaid waiver proposal claims that “establishing premiums will encourage [beneficiaries] to place increased value on their health care and utilize it more effectively” but offers no evidence. Indeed, there’s no evidence that premiums improve beneficiaries’ health behaviors.
Premiums and cost sharing also can be complex to administer, with implementation costs that can exceed the revenue they collect from beneficiaries. For example, in the 18 months after Arkansas began requiring beneficiaries to make monthly contributions to “independence accounts,” the state paid over $9 million in contracts to manage the accounts but beneficiaries contributed only about $426,000.
While Wisconsin’s affected enrollees must pay premiums beginning this month, the state won’t end their Medicaid coverage until the next time they must renew it, so the coverage losses won’t begin until 2021. In the meantime, Wisconsin and independent groups should carefully monitor how many beneficiaries don’t pay monthly premiums and thus risk losing coverage at renewal. And even those data may understate the impact of the policy, which will likely cause significant confusion that could deter eligible people from signing up for Medicaid in the first place.