Cost-Sharing Burden Limits Access to Care for Medicare Members

Those enrolled in Medicare who are ineligible for Medicaid are less likely to have supplemental coverage, leading to high cost-sharing limiting patient access to care, according to a new study published in Health Affairs.

Researchers identified a significant supplemental coverage “cliff” among Medicare beneficiaries whose incomes slightly exceed Medicaid’s supplemental coverage eligibility threshold.

According to the study, 73.3 percent of Medicare beneficiaries whose incomes were just below Medicaid eligibility had supplemental coverage (either from Medicaid, an employer, or a Medigap plan). Meanwhile, 47.5 percent of beneficiaries whose incomes were slightly above this threshold had additional coverage, amounting to nearly a 26 percentage point difference in rates of supplemental coverage.

While beneficiary incomes differ only slightly from those who qualify for Medicaid’s supplemental coverage, they incur an additional $1,100 in out-of-pocket healthcare costs every year.

What’s more, Medicare members who did not qualify for Medicaid utilized outpatient services 55 percent less often than those with Medicaid coverage. The study also found that Medicare members who did not qualify for Medicaid filled fewer prescriptions.

“Lower prescription drug use was partly driven by low take-up of Part D subsidies, which Medicare beneficiaries automatically receive if they have Medicaid,” the study authors wrote. “Expanding eligibility for Medicaid supplemental coverage and increasing take-up of Part D subsidies would lessen cost-related barriers to health care among near-poor Medicare beneficiaries.”

The study results also illustrate that out-of-pocket expenses are a care access barrier among near-poor Medicare beneficiaries.

In previous cost-sharing studies, including the RAND Health Insurance Experiment, researchers estimated price elasticities of demand of approximately -0.2, the Health Affairs article authors noted. This means that a 10 percent increase in prices lead to a 2 percent reduction in use.

The Health Affairs analysis of outpatient and management visits suggests that sensitivity to cost among near-poor Medicare beneficiaries is two times as large, with a -0.4 price elasticity of demand.

“This greater sensitivity to out-of-pocket prices underscores the economic burden of Medicare’s cost-sharing for near-poor beneficiaries who lack supplemental coverage and demonstrates the importance of Medicaid in mitigating barriers to care related to cost,” the study authors wrote.

The researchers came to similar conclusions when analyzing cost-sharing among Medicare beneficiaries with disabilities, except the supplemental coverage cliff was greater among beneficiaries with disabilities versus those members without disabilities, “highlighting the importance of Medicaid as a supplemental insurer for beneficiaries with disability and institutionally linked pathways to Medicare and Medicaid enrollment for low-income and disabled populations."

Additionally, the study authors noted that among Part D enrollees with disability who did not qualify for Medicaid, there was lower medication use without a discontinuity in low-income subsidy enrollment.

“We found a larger discontinuity in supplemental coverage among beneficiaries with versus without disability (47.1 versus 14.9 percentage points),” the study authors noted. “This finding suggests that mechanisms other than receipt of the low income subsidy, such as the improved ability to afford prescriptions when Medicaid covers Parts A and B cost-sharing, may also affect medication use.”

“Expanding Medicaid supplemental coverage to this near-poor population, coupled with policies to increase enrollment in the Low-Income Subsidy, would lessen cost-related barriers to health care use among near-poor Medicare beneficiaries,” the authors continued.

Specifically, they explained that cost-sharing subsidies could be provided to the near-poor Medicare population on a sliding scale. Limiting costs to a fixed proportion of a member’s income may also control out-of-pocket costs.

This study’s results are consistent with prior research on Medicare beneficiaries that has linked private supplemental coverage to increased use of medical services. Additionally, the research reinforces prior work that has connected Medicaid enrollment to a lower probability of avoiding physician visits due to cost.

However, the findings differed from several other studies that have connected higher cost-sharing for outpatient care and prescription drugs to increased hospital utilization.

“We did not find an effect of the supplemental coverage cliff on hospital use, although this may be because beneficiaries without supplemental coverage also face higher cost-sharing for hospital care, whereas prior studies examined variation in cost-sharing that was limited to outpatient care and prescription drugs.”