Study finds even small Medicaid fees can cause high disenrollment

May 10, 2021

A new study co-authored by John Z. Ayanian, director of the U-M Institute for Healthcare Policy and Innovation (IHPI) and Ford School courtesy faculty, warns state and federal governments about implementing cost-sharing requirements for Medicaid health insurance plans. Betsy Q. Cliff, assistant professor at the University of Illinois - Chicago who received her Ph.D. from the U-M School of Public Health, led the research. It focused on the Healthy Michigan Plan, which was an expansion of Michigan’s Medicaid. 

Ayanian and his colleagues concluded that “healthier low-income individuals may be sensitive to even modest health insurance premiums, and that premiums may induce adverse selection in Medicaid plans.” They found that after the Healthy Michigan Plan required monthly fees, 12% more people left the plan. Further, “disenrollment rose by nearly 1 percentage point for every dollar charged monthly.”

Overall, the authors urged governments to consider the study when planning Medicaid spending, even under pressure from citizens to cut costs. Implementation of cost-sharing could limit low-income people’s access to health coverage and care, resulting in a disruption of the health insurance market. 

The news release can be read here and the full article can be read here