More proof that hiking Medicaid copays doesn’t add up

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by June 24th, 2014 Posted in ,

Photo by Robert Neff used under a Creative Commons license.

As we’ve discussed before in this blog post and fact sheet, the Oklahoma Health Care Authority is considering hiking copayments for Medicaid patients to get a prescription or doctor’s visit, as a way to partially cover Oklahoma’s Medicaid funding shortfall. However, the best evidence shows that the promised savings won’t be realized. Research shows that even modest copay increases contribute to worse health outcomes for patients and don’t generate significant savings in the long run.

Unfortunately, the Health Care Authority (OHCA) does not seem to have taken this research into account when developing their plan.  OHCA documents estimate the plan will save $3.1 million for the state ($8.3 million including federal funds). However, that estimate assumes that utilization of services would remain constant, despite the fact that they would now cost significantly more.

This is not a realistic assumption. A 2003 study of copayment increases in Oregon concluded, “applying copayments shifted treatment patterns but did not provide expected savings.” In fact, total expenditures per person rose slightly (+ 2.2 percent). This is because when patients had to pay more for prescriptions, the use of pharmacies decreased, but inpatient and hospital outpatient use and cost increased. As the study’s authors put it, “The policy did reduce overall use of services, but in some cases shifted treatment patterns…in ways that are not inherently aligned with the most cost-efficient or effective care.” In other words, increasing copayments substituted expensive hospital treatment for relatively inexpensive (and much less traumatic) medication.

This is entirely consistent with other research on the topic. Study after study has shown that when people cannot afford care, as consistently happens when states increase copayments, they don’t access that care until they don’t have any other choice. Minor health issues become major health emergencies. For example, instead of a diabetes diagnosis that leads to regular care, patients may have renal failure from untreated diabetes. Any savings from the higher copays will be lost due to the cost of increased hospitalization and doctor’s office visits.

This is not a matter of whether Medicaid recipients should pay more for care – after all, they’re not choosing to forgo their health out of some misplaced sense of spite when payments increase. They are forced to choose between buying medicine or buying groceries, between getting a gallon of milk or getting a breast lump checked. When people can’t afford health care, they don’t buy health care. And that’s something the state didn’t take into account.

The Oklahoma editorial board recently attempted to argue that this “outcry” is unwarranted. We couldn’t disagree more. Copayment increases would inflict substantial harm on our poorest and sickest citizens, with no net gain for state budgets.

The Oklahoma Health Care Authority Board will decide whether to adopt an emergency rule increasing copayments at a meeting this Thursday, June 26 at 1pm. If you wish to make your opinion known on this issue, please contact the OHCA Board prior to the June 26 meeting by e-mailing Board Secretary Lindsey Bateman (  You can address your communication to: Oklahoma Health Care Authority Board Members.

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