The insurance industry for decades has designed coverage where a user of health care makes small payments at the time of service, but only recently has that crossed over from private to government insuring. The goal remains the same regardless of sector: create a disincentive for the consumer to access health care frivolously while lowering the insurer’s exposure slightly. With that in mind, legislators filed a number of bills for the regular session of the Louisiana Legislature, requirements in Medicaid co-payments both to put a dent the huge cost increases coming from program expansion and to inspire increased personal responsibility from clients.
However, in the case of public-backed insurance, unlike with private insurance where overuse turns back the inefficiency onto the ratepayer utilizing the service with an increase in premiums, the exposure falls on the taxpayer, not the user who pays little or no taxes. Thus, policy-makers eye the co-payment requirement not just as a method to connect the client’s demand to the cost of the service in the hopes of limiting consumption for trivial reasons or in inefficient ways, but also as a way to raise some funds to ameliorate the impact of the transfer of wealth forced to fund the program.
Unfortunately, the culture of poverty intervenes. Policy-makers often fail to understand that poverty comes not from a lack of resources, but from the antecedent condition that certain attitudes of individuals lead to certain actions that prevent the accumulation of resources. While some of the poor, often labelled the “deserving poor,” live in poverty even holding and acting on attitudes that encourage wealth creation because they have such marginal talents to contribute to society and thereby receive small compensation for their efforts, others, termed the “undeserving poor,” have attitudes that act out to squander their abilities to contribute, if they even try. These attitudes relate to a present orientation, summarized as a living for today that eschews the notions of personal responsibility, of acknowledging consequences to actions, and of valuing future costs and benefits more than those in the present.
This explains why co-payments in the private insurance market composed of largely non-impoverished families do have the effect of containing costs and usage, while among the largely impoverished users of Medicaid this tactic shows no such impact with adults. That is, Medicaid clients generally overuse and inefficiently consume health care when provided to them absolutely free, but when attaching even the smallest co-payment to its provision – about a large cup of coffee – instead of cutting out trivial usage they reduce health care consumption dramatically; although not in the case of their children, where they followed the privately-insured pattern of accessing needed services for children regardless of the small charge.
They act in this fashion not because of the trivial cost, but from their mentality: they receive so much in the way of government benefits for nothing, this reinforces the culture that creates poverty. They think they should not have to contribute anything to what they get and they would rather retain the small amount to spend on other things that they want, discounting severely the future costs and benefits of potential ill health relative to the present cost of the co-payment and present benefit of some alternative use of the funds. While for some the couple of dollars actually may make a such a difference in paying a bill for something essential and thereby as a result would not access health care, most of the poor do not face such draconian circumstances and instead would prefer to hold onto the cash to purchase something relatively less needed but more greatly desired.
Therefore, government policy must take into account this way of thinking when designing user reimbursement policies for Medicaid, and some states have. Rather than charge a co-payment for a service when rendered, including a fee for nonessential emergency medicine utilization, policies that rebate for successful behaviors have proven to work – a model also used in the private market.
For example, Medicaid would charge a low premium each month, but waive it if a client met certain benchmarks that contribute to healthy behavior, such as annual primary care physician visits and engaging in wellness practices. In states adopting this approach the fees gathered from failure to do these things raise around $1 million or fewer, but this strategy doesn’t strive to gather revenue from Medicaid clients but instead wishes to lower the costs their behaviors otherwise trigger.
Thus, Louisiana needs to institute the approach of collecting something from those using Medicaid, but not in the form of co-payments that tend to discourage adults consuming for themselves even when necessary. The state could impose co-payments for children (despite expansion apparently on the way children by far still will comprise the largest set of Medicaid beneficiaries), and for adults or the family charge a low premium that it waives if clients behave to meet healthy benchmarks.
This will cause less money spent on the program not because the state would collect much in premiums and co-payments, but because usage patterns would shift to contain costs. Undoubtedly the current model that demands no patient responsibility lends itself to runaway expense, but curbing that will happen only by creating smart incentives to engender that responsible behavior.