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

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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.