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How Effective Are Copayments in Reducing Expenditures for Low-Income Adult Medicaid Beneficiaries? Experience from the Oregon Health Plan

Authors

  • Neal T. Wallace,

    1. Division of Public Administration, Mark O. Hatfield School of Government, Portland State University, P.O. Box 751, 506 SW Mill Street, Portland, OR 97207-0751,
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    • Address correspondence to Neal T. Wallace, Ph.D., Division of Public Administration, Mark O. Hatfield School of Government, Portland State University, P.O. Box 751, 506 SW Mill Street, Portland, OR 97207-0751. K. John McConnell, Ph.D., is with the Center for Policy and Research in Emergency Medicine, Department of Emergency Medicine, Oregon Health & Sciences University, Portland, OR. Charles A. Gallia, Ph.D., is with the Division of Medical Assistance Programs, Human Services Department, Salem, OR. Jeanene A. Smith, M.D., M.P.H., is with the Office of Oregon Health Policy and Research, Salem, OR.

  • K. John McConnell,

    1. Center for Policy and Research in Emergency Medicine, Department of Emergency Medicine, Oregon Health & Sciences University, Portland, OR
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  • Charles A. Gallia,

    1. Division of Medical Assistance Programs, Human Services Department, Salem, OR
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  • Jeanene A. Smith

    1. Office of Oregon Health Policy and Research, Salem, OR
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Abstract

Objectives. To determine the impact of introducing copayments on medical care use and expenditures for low-income, adult Medicaid beneficiaries.

Data Sources/Study Setting. The Oregon Health Plan (OHP) implemented copayments and other benefit changes for some adult beneficiaries in February 2003.

Study Design. Copayment effects were measured as the “difference-in-difference” in average monthly service use and expenditures among cohorts of OHP Standard (intervention) and Plus (comparison) beneficiaries.

Data Collection/Extraction Methods. There were 10,176 OHP Standard and 10,319 Plus propensity score-matched subjects enrolled during November 2001–October 2002 and May 2003–April 2004 that were selected and assigned to 59 primary care-based service areas with aggregate outcomes calculated in six month intervals yielding 472 observations.

Results. Total expenditures per person remained unchanged (+2.2 percent, p=.47) despite reductions in use (−2.7 percent, p<.001). Use and expenditures per person decreased for pharmacy (−2.2 percent, p<.001; −10.5 percent, p<.001) but increased for inpatient (+27.3 percent, p<.001; +20.1 percent, p=.03) and hospital outpatient services (+13.5 percent, p<.001; +19.7 percent, p<.001). Ambulatory professional (−7.7 percent, p<.001) and emergency department (−7.9 percent, p=.03) use decreased, yet expenditures remained unchanged (−1.5 percent, p=.75; −2.0 percent, p=.68, respectively) as expenditures per service user rose (+6.6 percent, p=.13; +7.9 percent, p=.03, respectively).

Conclusions. In the Oregon Medicaid program applying copayments shifted treatment patterns but did not provide expected savings. Policy makers should use caution in applying copayments to low-income Medicaid beneficiaries.

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