Academic journal article Health Care Financing Review

Medicaid Consumers and Informed Decisionmaking

Academic journal article Health Care Financing Review

Medicaid Consumers and Informed Decisionmaking

Article excerpt


To spend Medicaid dollars more efficiently, CMS has encouraged Medicaid directors to adopt value-driven health care (VDHC) initiatives. These initiatives include improving informational systems, providing health care cost and quality information to consumers, and developing incentives to encourage consumers to make high value health care choices (Smith, 2007). The intent is to catalyze Medicaid consumers to make cost-effective decisions to best meet their individual health care needs and preferences, which, in turn, is expected to control health care costs and raise quality.

Florida's Medicaid Program was one of the first to comprehensively embrace VDHC principles with its 2006 reform, although elements of this policy direction had already been implemented in other Medicaid Programs (Felt-Lisk et al., 2007; Greene, 2007; Milligan et al., 2006). One key component of Florida's reform was requiring beneficiaries to enroll in health plans that offered different additional benefits. For non-pregnant adults these plans additionally differed in terms of cost-sharing requirements and benefit limitations. (1) A Medicaid agency document explained: "The standard state plan package is no longer considered the perfect fit for every Medicaid beneficiary, and the beneficiaries are getting new opportunities to engage in decision-making responsibilities relating to their personal health care" (Agency for Health Care Administration, 2008).

Inherent in Florida's Medicaid reform, and in the larger VDHC policy direction, is the assumption that, when consumers are provided with comparative information and differentiated choices, they will make more informed health care decisions. In the context of Florida's Medicaid reform, consumers are expected to weigh the differences in health plan benefits and cost-sharing requirements in order to select the health plan that best meets their needs. In the first year of the program, which operated in two counties, this meant choosing from among 13 and 7 plans in Broward and Duval Counties, respectively.

Some have questioned how well equipped vulnerable populations like Medicaid consumers are to take advantage of health care report cards (Davies, Washington, and Bindman, 2002; Rice, 2003). According to the 2003 National Assessment of Adult Literacy, Medicaid consumers have health literacy levels approximately 80 percent the level of those with employer-sponsored health insurance (Kutner et al., 2006). Most Medicaid consumers (60 percent) have either basic or below basic health literacy, which means they are not able to use charts and graphs for tasks such as determining the healthy weight range for someone given their height, or the age at which a child should receive a vaccine.

Not surprisingly, there is a linkage between skills in literacy, numeracy (the ability to reason with numbers and other mathematical concepts), or health literacy (which combines literacy and numeracy in a health context) and consumers' ability to comprehend health-related information and make informed choices. Studies have found, for example, that those with lower skill levels were less likely to comprehend quality differences between hospitals, to understand prescription drug warning labels, and to distinguish the differences between a health savings account plan and a traditional health plan (Davis et al.; 2006, Greene, Hibbard, and Tusler, 2005; Greene et al., 2008; Hibbard et al., 2007; Peters et al., 2007).

Little research has focused specifically on how well Medicaid consumers make informed health care choices. One study found that Medicaid consumers were less likely to use comparative plan information than those with private coverage (63 versus 80 percent) and that they were considerably less sure of their health plan choice (Farley Short et al., 2002). In two field-based experiments, researchers found that sending quality health plan report cards did not influence Medicaid consumer health plan choices (Farley et al. …

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