The budgetary impact of adult Medicaid beneficiaries with disabilities places them at the center of ongoing health care redesign efforts across the country.(17
) However, evaluations of these reforms often lack an examination of cost-related barriers to care despite the sensitivity of AWDs to the accessibility of their health systems.(18
) In this study, we examine one potential measure of cost-related barriers to care, out-of-pocket health care spending. We find that such spending is prevalent among AWDs, although the annual level is modest for most beneficiaries and concentrated on prescription medications. However, it is also highly skewed, with 10% of beneficiaries, approximately 182,000 beneficiaries spending more than $1200 annually.
The substantial out-of-pocket expenditures that we observe for prescription drugs is not altogether surprising. While all Medicaid programs provide coverage for prescription medications, they also commonly implement co-payments, limits on the number of prescriptions, and utilization management strategies (e.g., prior authorization practices and preferred drug lists) to contain costs.(20
) Co-payments alone are unlikely to explain substantial out-of-pocket spending, as they typically do not exceed $3 per prescription (even after the Deficit Reduction Act’s authorization of higher and enforceable co-payments(21
)). The prescription limits, prior authorization policies and/or preferred drug lists that operate in 42 state Medicaid programs(21
) may offer a more plausible explanation for personal spending on prescription drugs. These cost-containment policies are relatively effective at reducing the payer’s, and increasing the individual’s, spending on prescription medications.(22
) However, within the Medicaid population, they are also associated with treatment discontinuity, unfavorable clinical outcomes and increased expenditures for other health care services.(23
) Given the magnitude of out-of-pocket spending on prescription medications, comparative state policy evaluation is a necessary next step in understanding how policymakers may mitigate this burden among AWDs.
We observe a strong association between poor physical health and functional status and high out-of-pocket spending. The cross-sectional design of our study prevents us from determining whether poor health precipitates, or results from, the high spending. Nor are we able to observe how OOP spending influences subsequent health care outcomes, such as access to needed medical care and medications. Longitudinal research that dually considers the predictors and effects of out-of-pocket spending on health, care access and resource use in Medicaid’s AWD population is needed, so that programs can evaluate the costs and benefits of their beneficiary cost-sharing policies.
Our results should be interpreted in light of the study’s strengths and weaknesses. While we observe the presence or absence of out-of-pocket spending, we do not observe the extent to which community-dwelling beneficiaries with disabilities can or do substitute medical care for other basic goods and services, such as food and utilities. Thus, low (or no) OOP spending may reflect an individual’s limited resources, rather than indicate that medical needs are satisfied at little or no cost to the individual.(8
) Similarly, high OOP spending may indicate that needed medical care is obtained, but basic goods are forgone in the process. A growing body of research examines such trade-offs between medical and other goods for the older Medicare and Medicaid enrollees.(26
) Parallel research specific to Medicaid-only disabled beneficiaries has not yet emerged.
The causes and consequences of high out-of-pocket spending among community-dwelling AWDs merit particular attention in light of the severe budget constraints that states face and the limited options at their disposal to reduce Medicaid spending. Recent federal legislation, both the American Recovery and Reinvestment Act and the Patient Protection and Affordable Care, require states to maintain Medicaid eligibility criteria for most populations.(28
) Thus, to combat growth in Medicaid spending, states are reducing covered benefits and provider payments.(11
) In late 2009, almost 30 state Medicaid programs expected to make cuts in benefits or provider payments within the fiscal year.(31
) The unique health and socioeconomic profile of community-dwelling Medicaid AWDs calls for examination of how these programmatic changes may impact their personal spending burden and potential downstream consequences.