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Medicaid/SCHIP Cuts And Hospital Emergency Department Use
This paper uses data from the 2000–01 and 2003 Community Tracking Study household surveys to examine how decreases in enrollment in Medicaid and the State Children’s Health Insurance Program (SCHIP) and increases in the number of uninsured people would affect the volume and distribution of emergency department (ED) use among low-income people. A decrease in Medicaid/SCHIP enrollment would lead to an increase in ED visits by the uninsured but little change in overall ED volume. The results suggest that cost containment efforts that reduce eligibility and enrollment will achieve cost savings largely by reducing access and shifting costs away from Medicaid/SCHIP.
AS THE BUSH ADMINISTRATION AND CONGRESS consider fundamental changes to Medicaid, many state and local officials and health care providers are concerned that large cuts in Medicaid funding will simply shift the cost of caring for low-income people onto state and local governments and providers in the form of uncompensated care. In particular, there is concern that cuts in Medicaid could lead to increases in use of hospital emergency departments (EDs), many of which are already experiencing problems with overcrowding.1 Because the uninsured are already more dependent on EDs for their care compared with their insured peers, Medicaid cuts that raise the number of uninsured people could result in a surge of uncompensated care by EDs. The effects would be particularly high on public hospitals and other "safety-net" hospitals that provide a disproportionately large amount of care to uninsured and low-income people.2 Other cost containment efforts also could inadvertently increase ED use. Many physicians are already reluctant to accept Medicaid patients because of low reimbursement, and further cuts could reduce the number of physicians who care for Medicaid patients, resulting in increased use of EDs.3 And although the availability of community health centers (CHCs) and other free clinics could mitigate the effects of lower access to office-based physicians, reductions in Medicaid revenue—from which CHCs derive more than one-third of their total revenue—could reduce CHC capacity in a given area and increase use of the ED.4 In this paper I examine the possible implications of Medicaid cost containment efforts on ED use among low-income people. Specifically, how would decreased enrollment in public programs (such as Medicaid/SCHIP) and increased uninsurance affect overall levels of ED use? How would such changes in coverage affect the relative proportion of ED visits by insured versus uninsured people? What are the implications of reductions in Medicaid acceptance rates by physicians and CHC capacity for ED use by Medicaid and SCHIP enrollees?
Data. The main data source is the 2000–01 and 2003 Community Tracking Study (CTS) household surveys. The surveys were designed to produce representative estimates of health insurance coverage, access to care, use of services, and perceived quality of care for the U.S. population and sixty randomly selected communities in thirty-four states and the District of Columbia.5 The overall sample for the surveys includes about 60,000 people in the 2000–01 survey and about 46,600 people in the 2003 survey. This study focuses on nonelderly people (younger than age sixty-five) with family incomes below 300 percent of the federal poverty level.6 The combined sample for this study is about 34,500 people. Measures of utilization. Respondents were asked to report on the number of visits to hospital EDs in the twelve months prior to the interview. The study focuses on ED visits that did not result in a hospital inpatient stay, which was ascertained in the survey. The analysis also includes measures of visits to other physicians in the previous twelve months. These physician visits include those that took place in a physician’s office, clinic, hospital outpatient department, or any other ambulatory setting other than an ED. Measures of coverage. Type of insurance coverage was ascertained based on the day of the interview.7 Four types of coverage are distinguished in this study: private insurance (including employer-sponsored and nongroup policies); Medicaid/SCHIP; other coverage types (generally Medicare disability, military coverage, and Indian Health Service); and uninsured. The analysis focuses primarily on ED use by Medicaid/SCHIP enrollees, the privately insured, and the uninsured. Estimating the effect of coverage changes on ED use. I used regression-based methods to account for the fact that the observed differences in ED use by insurance coverage could reflect differences in individual characteristics (such as health status) as well as other health system factors. I then used the results from this regression to predict changes in aggregate ED use associated with a decrease in Medicaid/SCHIP enrollment.8 The regressions include a comprehensive range of factors known or likely to affect ED use, including characteristics of individuals, key health system factors that reflect proximity to EDs and other providers, and community characteristics. Despite the extensive set of control variables, differences in ED use by insurance coverage might be correlated with unobserved factors that affect the choice of insurance status (that is, selection bias). However, attempts to account for the possible selection bias resulted in regression coefficients that had a low level of statistical precision, and the differences with the estimates in this analysis were not statistically significant.9 I used the regression results to simulate the effects of a 25 percent decrease in Medicaid/SCHIP enrollment on aggregate ED use.10 The analysis assumed that the enrollment decreases are due to programmatic changes (for example, decreases in eligibility, increases in premiums, or enrollment barriers), rather than changes in individual or family circumstances that affect access to other sources of coverage. A 25 percent reduction in enrollment is consistent with actual or planned enrollment reductions in several states, including Oregon, Tennessee, and Texas.11 Sizable reductions in federal support for Medicaid also were being discussed as of this writing, although it is too early to know the possible effects on Medicaid enrollment nationwide.12 Because the effects of an enrollment decrease on ED use might differ depending on the particular Medicaid/SCHIP groups targeted, I performed separate simulations assuming that enrollment reductions are concentrated among adult Medicaid enrollees, adults in fair or poor health (for example, if Medically Needy programs were targeted), and children. The simulation analysis assumed that most of the 25 percent of Medicaid/SCHIP enrollees who lose coverage would become uninsured. CTS data show that about 12 percent of adults and one-fourth of children enrolled in Medicaid/SCHIP have access to employer-sponsored coverage, through either their own job or a spouse or parent’s job (although it is not known specifically whether they have access to family coverage and how affordable the coverage is to low-income families). In the simulations, it is assumed that those who lose Medicaid/SCHIP coverage and have access to employer coverage would enroll in private insurance.13 Estimating the effects of other factors. The regression analysis also included health system factors that could be affected by Medicaid cost containment efforts. In particular, it included a measure of the percentage of office-based physicians in the community accepting Medicaid patients, which previous research has shown to be strongly influenced by Medicaid reimbursement rates.14 This measure is based on the 2000–01 CTS physician survey, which includes representative samples of physicians in each of the sixty CTS sites.15 The regression analysis also included a measure of CHC capacity, defined as total CHC revenue per poor person (that is, income below 100 percent of poverty) within five miles for each sample person. CHC revenue data were obtained from the Health Resources and Services Administration (HRSA) and linked to the CTS data by ZIP code.16 The measure allows for an assessment of the effects of changes in CHC revenue (which could be attributable to changes in Medicaid revenue) on ED use by Medicaid/SCHIP beneficiaries.
Enrollee characteristics. Compared with privately insured and uninsured people, Medicaid/SCHIP enrollees are much younger, poorer, more likely to be in single-parent families, and more likely to have health problems (Exhibit 1  ). Differences in health status for adults are especially notable. About 40 percent of adults with Medicaid/SCHIP describe their health as fair or poor, compared with 25 percent for uninsured and only 13 percent for privately insured people. Also, more than one-fourth of adult Medicaid/SCHIP enrollees report multiple chronic conditions, compared with 5.9 percent for uninsured and 9.5 percent for privately insured adults. The high rate of health problems among adult Medicaid/SCHIP enrollees likely reflects the fact that many qualify for Medicaid through disability and Medically Needy programs, while most children qualify based on income eligibility.
ED use by low-income people. Higher rates of health problems by Medicaid/SCHIP enrollees likely account for at least some of their higher levels of ED use compared with other low-income people (Exhibit 2 ). More than one-third of Medicaid/SCHIP adult enrollees had an ED visit in the previous year, compared with about 20 percent of both uninsured and privately insured adults. Overall, ED visits per adult Medicaid/SCHIP enrollee are 2.5–3 times those of privately insured and uninsured adults. Although adults in fair or poor health have higher levels of ED use across all coverage groups, ED use for Medicaid/SCHIP adults in fair and poor health is still about twice as high as for their privately insured and uninsured peers.
ED use for Medicaid/SCHIP and uninsured children is more similar and somewhat higher than it is for privately insured children, which may in part reflect the fact that Medicaid/SCHIP and uninsured children are more similar in their health status than they are to privately insured children. As with adults, ED use by low-income children in fair and poor health is much higher than for all children.
High ED use by Medicaid/SCHIP enrollees is consistent with their high use of health care in general. Physician visits for adults with Medicaid/SCHIP are on average about twice as high as for privately insured adults and almost four times higher than for uninsured adults (Exhibit 2
Insurance-related differences in ED use.
ED use by Medicaid/SCHIP adults is still higher than for privately insured and uninsured adults, even after health status differences, other individual characteristics, and health system factors are extensively controlled for (Exhibit 3
Adult Medicaid/SCHIP enrollees would still have about 0.25 visits per person more than uninsured and privately insured adults, even after the adjustments. In other words, differences in health status and other factors account for more than half of the differences in ED use between Medicaid/SCHIP adults and uninsured and privately insured adults. These results suggest a net decrease in ED use for adults who lose Medicaid coverage, although the decrease will be much smaller than implied by the actual differences in ED use. Differences in individual and health system factors account for less of the difference in physician use between Medicaid/SCHIP and uninsured adults (about one-third). The adjusted results suggest that Medicaid/SCHIP adults who lose coverage would decrease their use by about 3.6 physician visits per person if they became uninsured, and about 2.3 visits per person if they gained private insurance. For privately insured people who become uninsured, the number of physician visits would decrease by about 1.4 per person. Somewhat surprising is that both ED and physician use continues to be higher for Medicaid/SCHIP adults than privately insured adults, even after individual characteristics and health system factors are controlled for. Also, use differentials between privately insured and uninsured adults are much smaller than those between Medicaid/SCHIP and uninsured adults. This might reflect the fact either that Medicaid/SCHIP enrollees have no copayments and deductibles for medical care use, or that the copayments are nominal compared with those for privately insured people (generally three dollars or less per visit). For low-income people with private insurance, sizable deductibles and copayments could be a major dis-incentive to use services, especially for EDs, where copayments tend to be higher than for office-based services.
The effects of Medicaid/SCHIP enrollment cuts on total ED use.
A sizable reduction in Medicaid/SCHIP enrollment would have little impact on overall ED use among low-income people, although it would greatly increase the proportion of visits made by uninsured people. Exhibit 4
To the extent that enrollment reductions are concentrated on people in fair or poor health—for example, if changes were made to the state’s Medically Needy program—then the decrease in ED volume would be about one-third larger (about 900,000 visits). However, the increase in both the number and proportion of ED visits by uninsured people would also be larger, comprising about 30 percent of all visits by low-income people. The increase in the proportion of ED visits by the uninsured would be even greater if Medicaid/SCHIP enrollment reductions were focused on children, which reflects the fact that average ED use between Medicaid/SCHIP and uninsured children is more similar than for adults. While overall ED volume among low-income children would be virtually unchanged, the proportion of visits by uninsured children would increase nine percentage points, from 15 percent of all ED visits to 24 percent. Effects on Medicaid acceptance rates and CHC capacity. Medicaid cost containment efforts might inadvertently increase ED use other than through reductions in enrollment. For example, the results show that a decrease in Medicaid acceptance rates by physicians—which could be caused by cuts in reimbursement rates for physicians—is associated with a higher probability of ED use by Medicaid/SCHIP adults (findings not shown).17 A 10 percent decrease in acceptance rates increases the probability of ED use by about four percentage points. The results also show that reductions in CHC capacity increases the probability of ED use for both adult and child Medicaid/SCHIP enrollees, although the effects do not appear to be as great as those for Medicaid acceptance rates by office-based physicians. The results show that a 10 percent decrease in CHC capacity increases the probability of an ED visit by less than one percentage point. The lack of a larger effect of CHC capacity could reflect the fact that about half of Medicaid/SCHIP enrollees do not live close to CHCs (within five miles) and therefore would be unaffected by any changes in capacity. Also, reductions in CHC capacity might have greater effects on access to primary care—which tends to the main focus of most CHCs—whereas ED use might be more sensitive to the availability of specialty care in the community to Medicaid/SCHIP enrollees.
The high use of hospital EDs by Medicaid/SCHIP enrollees reflects a number of factors, including high need and overall use of medical care, low cost sharing, and lower access to office-based physicians (because of relatively low reimbursement levels). Although the uninsured are dependent on EDs for their care to a much greater degree than low-income insured people, they still use EDs less often than Medicaid/SCHIP enrollees as a result of fewer health problems, an overall lack of financial access to medical care, and concerns about incurring high medical bills. Thus, cost containment efforts that lead to decreases in Medicaid/SCHIP enrollment and increased uninsurance are likely to lead to a small net decrease in ED visits, rather than a net increase. However, the aggregate decrease in ED visits is much smaller than might be expected, given that ED use among Medicaid/SCHIP adults is almost three times that of uninsured adults. ED volume will not decrease as much as might be expected because those who lose Medicaid/SCHIP coverage and become uninsured are likely to have much worse health and higher need than those who are now uninsured. Also, a loss of coverage results in a more severe loss of access to office-based physicians, resulting in greater dependence on EDs as one of the few sources of care available to uninsured people. Many hospitals will likely see a sizable shift in visits from Medicaid to uninsured clients, which will probably increase uncompensated care levels in EDs. The effects will likely be more acutely felt in urban public and other "safety-net" hospitals, which tend to have disproportionately large numbers of both types of patients. For example, after Oregon eliminated the state’s Medically Needy program, ED visits at a large urban hospital increased 17 percent for uninsured people and decreased 20 percent for enrollees in the state’s Medicaid program.18 A limitation of this analysis is that it assumes no other policy or health system changes in response to cost containment strategies that reduce Medicaid/SCHIP enrollment. To counter a surge in demand for ED care by uninsured people, some hospitals—particularly private hospitals with no obligation to serve the uninsured—could seek to limit the amount of care they provide in the ED to uninsured people or implement more stringent eligibility standards for charity care. This could lead to an increasing concentration of uninsured people seeking care at public or other safety-net hospitals, which could strain these facilities’ capacity and lead to long waiting times and reduced access. At the same time, concern about ED overcrowding, increased uncompensated care caseloads, and reduced access to care among the low-income population could compel policymakers and providers to lobby for more public funds to offset funding cuts in Medicaid and SCHIP, such as bolstering access to primary care for uninsured people through increased funding of CHCs. Cost containment measures that simply restrict or reduce eligibility and inhibit access to primary medical care could reduce Medicaid program costs, but much of these cost savings are likely to be shifted to safety-net providers and other state or local programs in the form of higher costs of caring for the uninsured. Although ED volumes and overcrowding might not increase, the loss of Medicaid revenue and increase in uncompensated care could reduce hospitals’ ED capacity and their ability to respond to public emergencies. At the same time, access to care among Medicaid/SCHIP enrollees—especially many adult enrollees with high medical needs—will be severely diminished. The high use of EDs by Medicaid beneficiaries should be of concern to policy-makers, especially since about half of ED visits are for nonurgent medical problems.19 Redirecting much of this care into more appropriate primary care settings not only will save on program costs, but also could lead to improved access to and quality of care. Moreover, reducing nonurgent ED use and making care delivery more efficient are much more likely than enrollment reductions to achieve cost savings without shifting these costs elsewhere.
Peter Cunningham (pcunningham{at}hschange.org) is a senior health researcher at the Center for Studying Health System Change in Washington, D.C. This research was funded by the Kaiser Commission on Medicaid and the Uninsured and by the Robert Wood Johnson Foundation through its support of the Center for Studying Health System Change. The author thanks the following people for their helpful comments on earlier drafts: David Rousseau, Barbara Lyons, Diane Rowland, Paul Ginsburg, Len Nichols, and two anonymous reviewers. Beny Wu of Social Scientific Systems Inc. provided excellent programming support.
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