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Addressing the Needs of the Uninsured in a Challenging Economic Environment

Slide Presentation by Anne Markus, J.D., Ph.D.

On March 14, 2002, Anne Markus, J.D., Ph.D., made a presentation in a Web-assisted teleconference at Session 3, which was entitled "Stretching Scarce Resources: State Strategies to Design Effective, Affordable Benefit Packages."

This is the text version of Dr. Markus's slide presentation. Select to access the PowerPoint® slides (289 KB).

Stretching Scarce Resources: State Strategies to Design Effective, Affordable Benefit Packages

Anne Markus, J.D., Ph.D.
Senior Research Scientist
The George Washington University Medical Center

Slide No. 1


  • Premium: Set amount of dollars per defined payment period (usually monthly) paid to obtain health insurance coverage.
  • Cost-sharing: Patient exposure to out-of-pocket costs associated with health service delivery. Includes:

Slide No. 2

Purposes of Cost-sharing

General reasons:

  • Enticing families to be more cost conscious in seeking care
  • Fostering a sense of ownership/personal responsibility
  • Directing consumers toward more cost-effective care
  • Deterring unnecessary utilization
  • Raising revenues to reduce sponsor costs of health care coverage

Slide No. 3

Purposes of Cost-sharing (cont.)

Additional reasons for states:

  • Making public health insurance programs aimed at the poor look more like private insurance
  • Limiting substitution and crowd-out of private insurance

Slide No. 4

Recent Trends

  • Private sector
      -No significant changes to contribution strategies, but changes to benefit structure
  • Medicaid/SCHIP (State Children's Health Insurance Program)
      -HIFA (Health Insurance Flexibility & Accountability) initiative
  • Medicare
      -Pharmacy Plus initiative

Slide No. 5

Cost-sharing Rules in Public Programs


  • Premiums prohibited with some exceptions
  • "Nominal" cost-sharing allowed with some exceptions
  • No overall cap specificed


  • Premiums allowed
  • Cost-sharing allowed
  • Overall cap of 5% of family income

State employee benefit plans:

  • Premiums allowed
  • Cost-sharing allowed
  • May or may not impose overall cap

Slide No. 6

Medicaid and SCHIP Waivers

  • Medicaid cost-sharing waivers:
      (1) inappropriate use of ER (emergency room)
      (2) 2 year demonstration program
  • Section 1115 waivers:
      (1) waiver of Medicaid and/or SCHIP cost-sharing requirements as part of a 5-year
            demonstration program
      (2) streamlined waiver process and increased flexibility to design cost-sharing rules under HIFA

Slide No. 7

Effect of Premiums

  • Premiums influence participation in insurance programs
  • As premiums increase, participation rates decrease

Slide No. 8

Effects of Cost-sharing

Use of services

  • Cost-sharing influences the use of services
  • As cost-sharing increases, use of services decreases
      -outpatient care
      -inpatient care
      -preventive services
      -emergency room

Health outcomes

  • Cost-sharing may have an effect on health outcomes
  • In general, cost-sharing has been found to have a minimal or no effect on health outcomes except for the poorest populations

Slide No. 9

Effect Across Population Groups

  • Research shows that cost-sharing has a deterrent effect across the board:
      -children and adults
      -people who are healthy and people who have chronic conditions
      -rich and poor
  • Existing body of knowledge also suggests that cost-sharing may have a more pronounced negative effect on low income people:
      -studies on premiums in state programs
      -non-Medicaid studies on cost-sharing
      -Medicaid studies on cost-sharing

Slide No. 10

SCHIP Experiences

  • All States with separate SCHIP programs have some form of cost-sharing
  • Research in this area thus far focuses on the effect of premiums on initial participation but also on continued participation in program
  • Anecdotal evidence also suggests that collecting and processing premiums and other cost-sharing contributions is administratively burdensome and/or not worth the cost

Slide No. 11


  • Income-related, sliding scale of premium and cost-sharing schedule
  • Low premiums
  • Limited cost-sharing
  • Broaden the definition of preventive services exempt from cost-sharing
  • Individuals with special needs

Slide No. 12

HIFA Cost-sharing Rules

  • Mandatory eligibility groups (e.g., all children up to 100% FPL): same rules as Medicaid
  • Optional eligibility groups (e.g., children beyond the mandatory eligibility levels): no cost-sharing rules specified other than an annual cap of 5% of family income for deductibles, copayments and coinsurance
  • "Expansion" eligibles (e.g., nondisabled single working age adults, childless couples): no cost-sharing rules specified

Slide No. 13

Examples of State Flexibility Under HIFA

  • Arizona (approved HIFA waiver):
      -Childless adults <100% FPL (Federal Poverty Level): same cost-sharing as Medicaid, i.e., $1-$5 except prenatal care, EPSDT
       services, family planning
      -Parents of SCHIP and Medicaid children 100-200% FPL: same cost-sharing as SCHIP, i.e., family
       premiums up to $25 per month, $5 non-emergency use of emergency room, overall limit of 5% of annual
       family income
  • California (approved HIFA waiver):
      -Parents of SCHIP and Medicaid children <200% FPL: similar to cost-sharing under SCHIP, e.g.,
       monthly premiums of $10 or $20, copays

Current as of July 2002

Internet Citation

Stretching Scarce Resources: State Strategies to Design Effective, Affordable Benefit Packages. Presentation by Anne Markus at Web-Assisted Teleconference, "Addressing the Needs of the Uninsured in a Challenging Economic Environment". July 2002. Agency for Healthcare Research and Quality, Rockville, MD.

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