The Effects of Premiums and Cost Sharing on Low-Income Populations: Updated Review of Research Findings

Table 3: Effects on State Budgets & Providers

State Studies

Table 3: Effects on State Budgets & Providers
Citation Data Study Population(s) Study Focus and Major Findings
State Specific Studies
Bisakha Sen, et. al., “Health Expenditure Concentration and Characteristics of High-Cost Enrollees in CHIP,” Inquiry 53 (May 2016):1-9. Claims data, 1999 – 2011 Alabama: Children enrolled in CHIP
  • Determines whether expenditures for high-cost enrollees in a state public health program change in response to changes in cost sharing policies. In October 2003, Alabama raised premiums and copayments for most non-preventive services for children in its CHIP program.
  • Nominal increases in cost sharing are likely to have minimal effects on cost containment. Results show that cost sharing had limited impact on utilization among high-cost enrollees. Increased cost sharing does not reduce cost concentration or average expenditure among high-cost utilizers.
Marisa Elena Domino, et. al., “Increasing Time Cost and Copayments for Prescription Drugs: An Analysis of Policy Changes in a Complex Environment,” Health Services Research 46, 3 (June 2011):900-919. Medicaid claims data from the Centers for Medicare & Medicaid Services (CMS), 2000- 2002 North Carolina: Nonelderly adults enrolled in Medicaid
  • Estimates the effects of policy changes in the North Carolina Medicaid program on medication adherence and expenditures. The North Carolina Medicaid program decreased the allowable supply per prescription from 100 days to 34 days on July 1, 2001, and then increased the copayment for brand name drugs in October 2001.
  • The copayment policy resulted in a net increase in Medicaid expenditures. Costs increased in five of the six examined drug classes, with increases ranging from 0.4% to 8.0%. This reflected increased probability of using services in four of the six drug categories, and increases in the level of spending among service users in two categories.
Maryland Department of Health and Mental Hygiene, Estimated Medicaid Savings and Program Impacts of Service Limitations, Copayments, and Premiums, (Baltimore, MD: Maryland Department of Health and Mental Hygiene, December 2010),
2009 state Medicaid data Maryland: Medicaid and CHIP enrollees
  • Estimates potential state savings of implementing copayments in the Maryland Medicaid program.
  • After excluding exempt populations, increased copayments could be applied to only 21% of total Maryland Medicaid enrollees.
  • The maximum potential gross savings accrued from applying the highest allowable cost sharing across all categories of enrollees is estimated to be $8.5M in state funds. However, the study notes that this amount overestimates potential actual savings because it does not reflect the cap on cost sharing of 5% of household income, decreased or delays in utilization of essential and preventive health services that may result in increased utilization of more expensive services later on, or additional administrative costs of implementing new copayment requirements.
Stephen Zuckerman, Dawn M Miller, and Emily Shelton Page, “Missouri’s 2005 Medicaid Cuts: How Did they Affect Enrollees and Providers?,” Health Affairs 28, 2, (2009):w335-w345. State administrative data; Current Population Survey (CPS) data, 2005-2007; provider utilization and financial reports; and structured interviews Missouri: Nonelderly adults and children in Medicaid and CHIP
  • Examines the effects of a broad range of policy changes in Missouri Medicaid and CHIP coverage, including new monthly premiums for CHIP. In 2005, Missouri adopted large policy changes to Medicaid and CHIP, including new monthly premiums of 1-5% of family income for children in CHIP with incomes above 150% FPL.
  • Community health centers saw a shift in patients from those covered to those who were uninsured, with the drop off most pronounced for CHIP, which experienced large enrollment declines following introduction of the new premiums. The number of CHIP visits to community health centers declined by about 25%, while the number of visits by uninsured patients increased 29%.
Robert A Lowe, et. al. “Impact of Medicaid Cutbacks on Emergency Department Use: The Oregon Experience,” Annals of Emergency Medicine 52, 6 (December 2008):626-534. Hospital billing data from 26 Oregon emergency departments, 2002-2004 Oregon: Emergency department visits
  • Examines effects of benefit reductions in Oregon’s Medicaid program on emergency department use. In 2003, Oregon made a range of policy changes to its Medicaid program, the Oregon Health Plan (OHP), which included benefit reductions, increased premiums and cost sharing, and stricter premium payment policies for adults enrolled in its OHP Standard program. Enrollees in OHP Plus continued to receive benefits similar to the original OHP.
  • After the changes, there was an abrupt 20% increase in emergency department utilization by uninsured individuals, while there was a decrease in visits with OHP coverage. The increase was even larger among uninsured individuals with behavioral health conditions.
  • The proportion of emergency department visits that resulted in hospital admission also increased.
Health Management Associates, Co-pays for Nonemergent Use of Hospital Emergency Rooms: Cost Effectiveness and Feasibility Analysis, Prepared for the Texas Health and Human Services Commission, (Austin, TX: Health and Human Services Commission, May 2008). N/A Texas: Medicaid enrollees
  • Fiscal analysis on the cost effectiveness of charging a co-pay for non-emergency use of the emergency room in the Texas Medicaid program.
  • The savings that would likely be obtained from diversion from and avoidance of the emergency room would likely be less than the cost of administering the policy. The study estimated the state would save about $153,000 over a two-year period from emergency room diversions, but it would have cost the state $2.9 million to collect the payments.
Neal T Wallace, et. al., “How Effective are Copayments in Reducing Expenditures for Low-Income Adult Medicaid Beneficiaries? Experience from the Oregon Health Plan,” Health Services Research 43, 3 (April 2008):515-530. Medicaid eligibility, claims and encounter data, November 2001-October 2002 and May 2003-April 2004 Oregon: Nonelderly adults enrolled in Medicaid
  • Determines the impact of introducing copayments on medical care use and expenditures for low-income adult Medicaid beneficiaries in Oregon. In 2003, Oregon made a range of policy changes to its Medicaid program, the Oregon Health Plan (OHP), which included benefit reductions, increased premiums and cost sharing and stricter premium payment policies for adults enrolled in its OHP Standard program. Enrollees in OHP Plus continued to receive benefits similar to the original OHP.
  • Total expenditures per person remained unchanged despite reductions in use. Use and expenditures per person decreased for pharmacy but increased for inpatient and hospital outpatient services. Ambulatory professional and emergency department use decreased, but expenditures remained unchanged as expenditures per service user rose.
  • Authors conclude that applying copayments shifted treatment patterns but did not provide expected savings.
Gina A Livermore, et. al., “Premium Increases in State Health Insurance Programs: Lessons from a Case Study of the Massachusetts Medicaid Buy-in Program,” Inquiry 44 (Winter 2007):428-442. 2002-2003 Medicaid Management Information System (MMIS) and administrative data Massachusetts: Enrollees in the Massachusetts CommonHealth-Working (CH-W) Medicaid buy-in program for people with disabilities
  • Evaluates the impact of premium increases on disenrollment in a state-funded Medicaid buy-in program for people with disabilities in Massachusetts. In 2003, monthly premiums for the Massachusetts CommonHealth-Working (CH-W) program increased from $37 to $51.
  • The revised premium schedule resulted in an estimated 39% increase in CH-W premium revenues during the six-month period following the change. Revenues increased without a significant reduction in enrollment.
  • Authors suggest that several aspects of the program may contribute to the limited impact on disenrollment, including it being a longstanding program, the changes increasing existing premiums rather than introducing new premiums, the exemption of enrollees with incomes under 150% FPL from premiums, the analysis accounting for the movement of enrollees to other categories of Medicaid coverage, and other administrative procedures, including processes designed to minimize disenrollment due to nonpayment. Further, people with disabilities may be less price-sensitive to premiums given their significant health care needs.
Genevieve Kenney, et. al., “Assessing Potential Enrollment and Budgetary Effects of SCHIP Premiums: Findings from Arizona and Kentucky,” Health Services Research 42, 6 Part 2 (2007):2354-2372. State administrative data, 2001 to 2004/2005 Arizona and Kentucky: Children enrolled in CHIP with family incomes between 101-150% FPL in Arizona and 151-200% FPL in Kentucky.
  • Assesses whether new premiums in CHIP affect rates of disenrollment and reenrollment in CHIP and whether they have spillover enrollment effects on Medicaid. In July 2004, Arizona introduced CHIP premiums ranging from $10-$15 per month for families with incomes between 101-150% FPL. In December 2003, Kentucky introduced a premium of $20 per month per family for children in CHIP with family incomes between 151-200% FPL.
  • The amount of premiums collected net of the costs associated with administering premiums is small in both states. The maximum amount of projected state-level savings implied by this analysis represented just 1.2% of SCHIP spending in Arizona and 6.8% of SCHIP spending in Kentucky. Further, if premiums increase enrollment in other programs that would further limit savings to states.
Arizona Health Care Cost Containment System, Fiscal Impact of Implementing Cost Sharing and Benchmark Benefit Provisions of the Federal Deficit Reduction Act of 2005, (Phoenix, AZ: Arizona Health Care Cost Containment System, December 2006),
N/A Arizona: Medicaid program
  • Assesses fiscal impacts associated with implementing premiums and cost sharing as allowed under the Deficit Reduction Act in the Arizona Medicaid program.
  • The maximum amount that could be captured from premiums and cost sharing after accounting for the federal share would be significantly less than administrative costs.
  • Imposing additional cost sharing on enrollees receiving long term care services may have an adverse fiscal impact on the state; members unable to pay cost-sharing may need to forego necessary medical services while others may choose to move into nursing facilities.
  • New premiums may increase disenrollment, resulting in more uninsured and increased uncompensated care for the state’s hospitals.
  • Premiums can lead to high member turnover, making care management difficult.
Tricia J Johnson, Mary Rimsza, and William G Johnson, “The Effects of Cost-Shifting in the State Children’s Health Insurance Program,” American Journal of Public Health 96, 4 (April 2006):709-715. Yuma HealthQuery (YHQ) community health data, 2001 Arizona: Children in Yuma County, Arizona who received non-traumatic care at an emergency room and were enrolled in CHIP or uninsured
  • Simulates the effects of increasing CHIP premiums on health care use and public costs using data for children in Yuma, Arizona.
  • Estimates that a $10 increase in monthly premiums for CHIP would induce 10% of CHIP children to disenroll, resulting in a 6% increase in public expenditures. Specifically, it is estimated that increases in the number of uninsured children would increase emergency department visits and inpatient hospitalization visits, and decrease the number of physician visits.
Mark Gardner and Janet Varon, Moving Immigrants from a Medicaid Look-Alike Program to Basic Health in Washington State: Early Observations, (Washington, DC: Kaiser Family Foundation, May 2004). State administrative data, key informant interviews, a focus group, and interviews, September 2002-September 2003 Washington State: Immigrant families moved from Medicaid to Basic Health in Washington State
  • Assesses the impact of changes in coverage options for low-income immigrants in Washington State. In 2002, Washington State eliminated three state-funded programs for individuals whose immigration status prevented them from qualifying for Medicaid. Instead, “slots” were set aside for them in the state’s Basic Health program, which charges premiums and has more limited benefits than Medicaid.
  • Providers saw a substantial increase in the demand for charity care and emergency services after more than half of families lost coverage during the first few months of the transition.
John McConnell and Neal Wallace, Impact of Premium Changes in the Oregon Health Plan, Prepared for the Office for Oregon Health Policy & Research, (Portland, OR: Oregon Health & Science University, February 2004. State administrative data, January 2002 – October 2003 Oregon: Adults with incomes below 100% FPL who disenrolled from Medicaid
  • Examines the effects of changes to Oregon’s Medicaid program on enrollment and highlights the effects for enrollees at different income levels. In 2003, Oregon made a range of policy changes to its Medicaid program, the Oregon Health Plan (OHP), which included benefit reductions, increased premiums and cost sharing and stricter premium payment policies for adults enrolled in its OHP Standard program. Enrollees in OHP Plus continued to receive benefits similar to the original OHP.
  • Potential premium revenues fell from approximately $800,000 per month to $500,000 per month in late 2003 due to large coverage losses following the premium increases. As such, potential premium revenues after the premium increase were equal to approximately 65% of potential revenues prior to the change.
Steven Crawford and Garth L Splinter, It’s Health Care, Not Welfare: Appropriate Rate Structure for Services Rendered and Estimated Percent of Co-Pays Collected Under the Medicaid Program, Prepared for the Oklahoma Health Care Authority, (Oklahoma City, OK: Oklahoma Health Care Authority, January 2004). Survey of physicians and other providers in Oklahoma Oklahoma: Physicians and other health care providers
  • Estimates the percentage of allowed copayments collected by Medicaid providers in Oklahoma.
  • On average, providers collected only 29% of the copay amounts from Medicaid recipients.


Pamela Hines, et. al., Assessing the Early Impacts of OHP2: A Pilot Study of Federally Qualified Health Centers Impact in Multnomah and Washington Counties, Prepared for Office for Oregon Health Policy & Research, (Salem, OR: Office for Oregon Health Policy & Research, December 2003). Interviews with health center administrators and physicians in the Portland, Oregon metropolitan area. Oregon: Health center administrators and physicians in the Portland, Oregon metropolitan area.
  • Assesses the impacts of changes in the Oregon Medicaid program on federally qualified health centers in the Portland, Oregon area. In 2003, Oregon made a range of policy changes to its Medicaid program, the Oregon Health Plan (OHP), which included benefit reductions, increased premiums and cost sharing and stricter premium payment policies for adults enrolled in its OHP Standard program. Enrollees in OHP Plus continued to receive benefits similar to the original OHP.
  • Administrators and physicians reported diverting considerable clinic resources to finding resources for patients who lost their Medicaid coverage following the premium increases and noted that copayments were causing an increased number of “no shows,” which also wastes resources and can contribute to provider revenue shortfalls.
  • Respondents indicated that limited resources intended to help the uninsured were stretched to meet the new gaps in coverage. For example, when Portland area physicians saw that many of their Medicaid patients were not filling their prescriptions due to copayments, they diverted some of the funds for the uninsured to help these patients.


Table 2: Effects of Cost Sharing

KFF Headquarters: 185 Berry St., Suite 2000, San Francisco, CA 94107 | Phone 650-854-9400
Washington Offices and Barbara Jordan Conference Center: 1330 G Street, NW, Washington, DC 20005 | Phone 202-347-5270 | Email Alerts: | |

The independent source for health policy research, polling, and news, KFF is a nonprofit organization based in San Francisco, California.