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

Abstract

To determine the impact of introducing copayments on medical care use and expenditures for low-income, adult Medicaid beneficiaries. The Oregon Health Plan (OHP) implemented copayments and other benefit changes for some adult beneficiaries in February 2003. 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. 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. 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). 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.