For the Poor, Even a Small Medical Bill Can Trigger Coverage Loss

WEDNESDAY, May 12, 2021 (HealthDay News) – When people with low incomes are asked to help pay for their health insurance, some drop their coverage, even when bills as low as $20 per month arrive.

That's the upshot of a new study of Medicaid expansion in the state of Michigan.

Leaving the insurance plan means people may miss out on preventive care or timely treatment of illnesses. It could also saddle the insurance company with a sicker pool of patients, according to researchers, who said their findings have implications for other states that require low-income people to pay for Medicaid coverage or are considering doing so.

"Disruptions in Medicaid coverage -- also known as churn -- can lead to worse quality care, higher administrative costs and less chance for the population to receive needed but non-urgent preventive services," said lead author Betsy Cliff, who led the study as University of Michigan doctoral student. She's now an assistant professor of public health at the University of Illinois Chicago.

For the study, her team examined Michigan's Medicaid expansion program -- dubbed the Healthy Michigan Plan -- which provides health coverage to nearly 906,000 people.

It was among the first in the United States to require some low-income participants to pay monthly fees. Most also have co-pays for services.

The program is open to adults making up to 138% of the federal poverty level — about $17,700 for a single-person household in 2021.

Those whose income exceeds the poverty level ($12,880 for one-person household) pay the fees, starting six months after enrollment. An individual at the poverty line might be charged $20 per month, though the amount can reduced by adopting healthy behaviors after a talk with the doctor.

The study used data from March 2014, when the program began, and followed participants through September 2016.

Over six months, about 20% of participants left the plan. And once they began owing monthly fees, 12% more left. Disenrollment rose by nearly 1 percentage point for every dollar charged monthly, the study found.

For members who had no chronic disease care or whose spending was below the median (meaning half spent more, half spent less), a premium increased the odds of disenrollment by about 3 percentage points. Disenrollment did not increase among those who received care or had higher health care spending in their first months with insurance.

Those who stopped their coverage had medical spending in their first six months of enrollment that was 40% lower than spending for those who stayed in. Being billed for co-pays did not seem to impact leaving the program.

The findings were recently published as a working paper through the National Bureau of Economic Research, ahead of publication in the American Journal of Health Economics.

More information

The Kaiser Family Foundation has more research on the gap in health care coverage.

SOURCE: Michigan Medicine – University of Michigan, news release, May 10, 2021