Results of the Study "The Use of Sliding Scale Premiums in Subsidized Insurance Programs"

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Results of the Study "The Use of Sliding Scale Premiums in Subsidized Insurance Programs"

TennCare [http://www.state.tn.us/tenncare/] (a Section 1115 Medicaid demonstration project): Utilized sliding scale premiums between 100 and 400 percent of Federal poverty level (FPL). Full premiums were collected from families above 400 percent FPL. Copayments were also imposed for all recipients above the FPL.

Hawaii QUEST [http://www.hmsa.com/healthplans/quest/default.aspx] (also a Sec. 1115 project): Instituted sliding scale premiums for participants between 100 and 300 percent of FPL. Later imposed full premiums for families above 100 percent of FPL.

Washington Basic Health Plan [http://www.basichealth.hca.wa.gov/] (a separate State-funded program): Applied sliding scale premiums for coverage of adult participants between 0 and 200 percent of FPL. No premiums imposed for children under 200 percent FPL because of Medicaid tie-in. Full premium imposed for families above 200 percent of FPL.

MinnesotaCare[http://www.dhs.state.mn.us/hlthcare/asstprog/mncare/default.htm] (a separate State program): Instituted sliding scale premiums for families with children between 0 and 275 percent of FPL, and for childless adults between 0 and 135 percent of FPL. Families above 275 percent of FPL and childless adults above 135 percent of FPL are not allowed to participate.

The following charts show the 1995 monthly premiums by poverty level for individuals vs. a family of four for each of the healthcare programs reflected above:

In analyses of the relationship between premiums and participation among these four programs, a clear pattern emerged: "As premiums consume an increasing share of income, participation declines." Investigators caution readers that the analyses performed in the study were simple and the results should be viewed as preliminary, especially considering the "limited nature of the data and the uniqueness of each of the programs."

As shown in the chart to the right, as premiums in the healthcare programs in Washington, Hawaii and Minnesota increased, the level of participation decreased dramatically.