Increased Medicaid Cost-sharing Will Increase Healthcare Costs

National Council Fact Sheet

The introduction or increase of Medicaid cost-sharing for persons wth mental illnesses will discourage them from seeking or continuing treatment. This will result in significant burden and costs to the general healthcare system.

• Increased cost-sharing leads to poor health outcomes, increased emergency room visits, hospital care, and institutionalization.ⁱ
  
  A large study looking at the situation before and after coinsurance was introduced found that emergency department (ED) use increased by 88% and poor outcomes such as hospitalization, institutionalization and death increased by 78%.ⁱⁱ
  
  
• Cost-sharing is a dangerous option because consumers lack the clinical knowledge needed to make informed choices.ⁱⁱⁱ
  
  The RAND health insurance experiment found that cost-sharing results in a reduction of the use of care and less effective care.
  
  
• Increased cost-sharing for prescription drugs reduces the use of essential drugs that are vital to disease management and prevention.^iv
  
  A focus group found that participants had "difficulty affording co-payments and described instances in which they were unable to obtain prescription drugs because they could not pay. As one participant remarked, 'Being able to afford $2 is a lot of money when you have absolutely nothing.'" ^v
  
  In 2001, it was estimated that people with mental illness on Supplemental Security Income (SSI) received, on average, $517 per month.^vi  This money is often used to cover housing, food, and medical needs.
  
  
• Reduction in medication usage results in increased Emergency Department visits by people with mental illnesses, increasing the burden on the healthcare system.
  
  "There was an increase in the rate of adverse events and ED visits related to reductions in essential drug use." Also, "much of the savings in prescription drug costs may therefore be counteracted by increases in other healthcare costs".^vii
  
  In a recent national survey, 60% of the physicians surveyed said that the increase in psychiatric patients seeking care at emergency departments (ED) is negatively affecting access to emergency care for all patients by generating longer waiting times and limiting the availability of ED staff and ED beds for other patients.^viii
  
  
• Cost-sharing reduces the total amount of state expenditure on Medicaid, thus reducing the federal matching funds received by the state.
  
  When cost-sharing is used, only a portion of the funds benefit the state government, while the rest of the savings are passed on to the federal government.^ix

Questions? Call Allison Fort at 301.984.6200, ext. 235 or email AllisonF@nccbh.org.

The National Council for Community Behavioral Healthcare is a no-for-profit, 501(c)(3) association of 1,300 behavioral healthcare organizations. Our members offer medical, social, psychological, and rehabilitation services in community settings to help people with mental illnesses and addiction disorders recover and lead productive lives. Medicaid pays or up to 75 percent of the services our members provide to six million adults, children, and families in communities across the country.

References
ⁱ Institute of Medicine Report, pg. 285
ⁱⁱTamblyn, R. et al., "Adverse Events Associated with Prescription Drug Cost-Sharing among Poor and Elderly Persons," Journal of the American Medical Association, 285(4):421-429, January 2001.
ⁱⁱ Ku, L., "Charging the Poor More for Health Care: Cost-Sharing in Medicaid," Center on Budget and Policy Priorities, May 2003.
^iv Tamblyn et al.
^v Artiga, S. and O'Malley M., "Increasing Premiums and Cost Sharing in Medicaid and SCHIP: Recent State Experiences," Kaiser Commission on Medicaid and the Uninsured, May 2005
^vi Testimony of Andrew Sperling before the U.S. House of Representatives Subcommittee on Housing and Community Opportunity, April 23, 2002
^vii Tamblyn, et al.
^viii Institute of Medicine Report, "Hospital-based Emergency Care: At the Breaking Point," pg. 48
^ix Ku, L.