New Premiums Prompt Some Michigan Medicaid Recipients to Drop Out, Study Finds

Imposing premiums on healthy Medicaid enrollees in Michigan caused an uptick in dropouts in the first six months of enrollment, according to a recent study.

Charging premiums increased the percentage of healthier Medicaid enrollees leaving the program from 25% to 28% in the six months after enrollment, the study found.

Michigan charges premiums ranging from $12 to $29 a month for Medicaid enrollees with incomes at or above the federal poverty line.

Furthermore, additional poor residents might never have enrolled in the first place because of the premiums, said the authors of the working paper, which was published last week by the National Bureau of Economic Research, a private, nonpartisan organization based in Cambridge, Massachusetts.

Premiums did not prompt less healthy Medicaid beneficiaries—such as those with chronic medical conditions—to leave, the researchers found.

The researchers from the University of Michigan and the University of Illinois at Chicago said the exodus could result in lower overall spending by Michigan’s Medicaid program, but could also lead to higher costs per member because those remaining in the program are likely to require more care. That could be a problem for Medicaid managed care plans, which operate on relatively slim margins, the researchers noted.

The departures from Medicaid also might increase state spending at hospitals and community health clinics, which treat uninsured patients.

The study analyzed Michigan Medicaid enrollee data from 2014 to 2016.

Michigan was one of the first states to require beneficiaries to pay some out-of-pocket costs as part of its decision to expand Medicaid to all low-income adults under the 2010 Affordable Care Act. The state can charge premiums of up to 2% of a beneficiary’s monthly income.

Four other states also impose premiums, according to the Kaiser Family Foundation: Arkansas, Indiana, Iowa and Montana. Twenty-two states, including Michigan, require copayments from some beneficiaries.

Many of the states asked the federal government for permission to introduce cost-sharing as a prerequisite for expanding their Medicaid programs. In Michigan and some other states, beneficiaries can reduce their cost-sharing burdens by completing health risk assessments with their physicians.

States justified their cost-sharing requirements as a way to promote personal responsibility and encourage Medicaid enrollees to make better health care decisions. Critics said the extra costs burdened disadvantaged people while also discouraging them from getting needed care.

In Michigan, Medicaid enrollees cannot be removed from the program for not paying their premiums, although money can be withheld from tax refunds or lottery winnings. They also cannot be denied care because they haven’t paid.