Effect of Low-Income Elderly Insurance Copayment Subsidies

By Parente, Stephen T.; Evans, William N. | Health Care Financing Review, Winter 1998 | Go to article overview

Effect of Low-Income Elderly Insurance Copayment Subsidies


Parente, Stephen T., Evans, William N., Health Care Financing Review


INTRODUCTION

The Medicare program's cost-sharing provisions--its premiums, deductibles, and copayments--can present a substantial financial hardship for low-income beneficiaries. To alleviate some of this burden, Congress enacted the QMB program. Under this program, implemented in 1990, State Medicaid programs are required to pay Medicare premiums, deductibles, and copayments for beneficiaries with incomes at or below the Federal poverty level(1) (FPL) and assets not exceeding twice the resource limits for Supplemental Security Income (SSI).(2) Since the program began, policymakers and advocates for the elderly have been concerned about low program participation.

BACKGROUND

Despite attempts by a variety of public and private organizations to inform eligible seniors about the benefits, many eligible individuals are not participating in the program. A recent study by Families USA (1998) reported that approximately 1.9 million of the 2.4 million low-income elderly and disabled persons who are eligible do not participate in the QMB program. Reports by the U.S. General Accounting Office (1994) and Neumann et al. (1994) confirmed the general accuracy of this estimate.

Neumann et al. (1994) analyzed the barriers to entry into the QMB program. The authors reached three general conclusions: First, the program is not serving many individuals for whom it was intended. Well over 2 million eligible elderly beneficiaries are not participating, and participation remains low even among truly needy individuals. More than 50 percent of those reporting incomes under $1,000 and more than 50 percent of those with at least one hospital visit over the previous 1.5 years do not participate. The data also suggest that a number of persons eligible for the QMB program, both enrolled and not enrolled, are purchasing supplemental insurance coverage, despite the fact that the QMB program was designed to cover most of their out-of-pocket health costs.

Second, beneficiaries who are enrolled as QMBs tend to be those most in need of the program. Beneficiaries enrolled in other government assistance programs, for example, are very likely to participate in the QMB program. Among those eligible for the QMB program, the two subgroups most vulnerable to Medicare out-of-pocket costs--lower income beneficiaries and those with poorer health status--are more likely to enroll in QMB than are higher income seniors and those in good or excellent health. Participation is also higher among black persons and Hispanic persons, those with less education, and those reporting few social contacts (e.g., those reporting no contacts with friends or family members during the previous 2 weeks; widowed, divorced, or never-married individuals; and geographically isolated beneficiaries). Those residing in rural areas and those living far from their usual source of care have higher participation (Neumann et al., 1994).

The third finding to emerge from Neumann et al.'s 1994 study was that most eligible beneficiaries are ill-informed about the QMB program. Only 7 percent of those eligible had ever heard of the program; of the 91 percent who had not heard of the program, almost 40 percent were actually enrolled. Among eligible non-enrollees, the most frequently provided reasons for not enrolling were that they do not believe they need the program (33 percent), they do not think they qualify (27 percent), or they are not aware of it (16 percent).

This study's purpose is to compare the health expenditures of the QMB-enrolled population with those elderly Medicare beneficiaries who are eligible for but not enrolled in the program. Specifically, the study addressed three research questions:

* Is the health care utilization of QMB enrollees significantly different from that of eligible non-enrollees? If so, are differences specific to Medicare Part A or Part B services?

* Is there evidence of adverse selection with respect to enrollment in the QMB program? …

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