Premiums and Cost-Sharing in Medicaid
Medicaid, the nation’s public health insurance program for low-income people, now covers nearly 60 million Americans, including many working families, low-income elderly, and individuals with disabilities. Medicaid beneficiaries tend to be poorer and sicker than those enrolled in private insurance. Given these characteristics, federal law limits the extent to which states can charge premiums and cost-sharing, particularly for pregnant women, children and adults but allows flexibility for individuals with incomes above 100% of the federal poverty level.
Over the years, Medicaid premiums and cost sharing have been used to limit state program costs, encourage more personal responsibility over health care choices and to better align public coverage with private coverage where states have expanded coverage. However, research shows that premiums and cost sharing can act as barriers to obtaining, maintaining and accessing health coverage and health care services, particularly for individuals with low-incomes and significant health care needs. State savings from cost-sharing and premiums may accrue due to declines in coverage and utilization more so than from increases in revenues. This brief reviews three key questions: What are the current rules about cost-sharing?; What is the status of premiums and cost-sharing in Medicaid today?; and What are the new proposed rules for premiums and cost-sharing?