Cost sharing schemes can reduce over-utilization of health care services. Implementation of copays in the Alabama CHIP program demonstrated savings when patients and taxpayers shared the responsibility to pay for care.
The passage of the Children’s Health Insurance Program (CHIP) and the Children’s Health Insurance Program Reauthorization Act (CHIPRA) by Congress has allowed uninsured children in families with low to modest incomes to become eligible for federal and state funded health insurance even though they may be ineligible for Medicaid based on their family level of income. Recently, there has been more emphasis placed on shared financial responsibility (i.e. copayment) that must be paid by families prior to receiving health care services. The increased financial responsibility imbued by co-payments should decrease over-utilization of health care services and thereby can decrease the funding required by federal and state governments. But, as proven by the RAND Health Insurance Experiment, cost sharing can cause families to forego much needed health care services due to the increased burden of costs on a tight family budget.
This study evaluates longitudinal data from fiscal years 1999 to 2009 for enrollees in the Alabama CHIP program, ALL Kids. An increase or addition of a copayment for health care services was initiated by the program for enrollees at the beginning of FY 2004. Changes in health care utilization for services were evaluated using a covariate-adjusted segmented probabilistic regression. The data showed a significant (p<0.01) decrease in the population of enrollees utilizing the following services at the initiation of the policy change: brand name drug use declined by 25.58 percent, generic drug use by 19.91percent, physician outpatient visits by 24.62 percent, inpatient services utilization by 7.80 percent, and well child visits by 9.35 percent.
Twelve months after the policy change, there were still continued significant (p<0.01) decreases in the utilization of brand name drugs (down 52.05 percent), physician outpatient visits (down by 3.78 percent), physician outpatient visits (down by 3.78 percent), and inpatient services (down by 6.64 percent). However, there were some significant (p<0.01) increases in population utilization for generic drug use by 30.63 percent and well child visits by 5.32 percent.
The continuation of federal and state public funding of programs providing health care services to uninsured children is vital; however, this financial burden must be shared by both the public and those families entitled to benefits. When the receivers of health care are completely insulated from the financial burden of the services being provided, the utilization of these health care services can be abused and overused.
Years of evidence have shown that preventative services and prescribing generic drugs versus brand name equivalents can be cost effective. Problems develop when program officials, patients, and families do not realize how these cost-saving measures impact the bottom line. Just as some would argue that government health programs should include seemingly expensive preventative health services to help lower the overall longitudinal costs of health care, it is equally valid to ask that individuals and families take some modest fiscal responsibility in order to avoid over-utilization. In so doing, we can ensure that societal costs remain within feasible budgetary constraints.
Tyree Winters, DO