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Cost-Sharing to Reduce Medicaid Costs in Maryland

By Marc Kilmer
Published on Tuesday, October 31, 2006
MARYLAND POLICY UPDATE

In February of 2005, the Deficit Reduction Act (DRA) was signed into law by President Bush. Among the many features included in the bill were provisions allowing states to take steps to reduce Medicaid spending. Unlike some other states, Maryland has not yet utilized these opportunities to help control its rising Medicaid expenditures.  

One of the most significant provisions in the DRA is the allowance of limited cost-sharing for Medicaid beneficiaries. States that choose these cost-sharing options will recoup some of the costs for providing Medicaid services. More importantly, these states will also reduce utilization of services. Some may view this reduction as a negative consequence of cost-sharing, but evidence indicates that the reduction in services is not accompanied by a reduction in a person’s health quality. Instead, the reduction in services will reduce over-utilization.

Maryland’s Governor and General Assembly should consider implementing the cost-sharing provisions in the DRA. Although this should not replace movements to fundamentally reform Maryland’s Medicaid program, it would help to slow its growth and would provide lawmakers with more opportunities to pursue further reforms.

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