5 things to know about the Medicaid coverage 'cliff'

Thirty percent of Medicare beneficiaries are near-poor and may experience what is called a Medicaid coverage "cliff," according to a study in Health Affairs

Five things to know about the Medicaid coverage cliff:

1. The Medicaid coverage cliff is when beneficiaries have incomes that exceed the limit for Medicaid supplemental coverage, but don't make enough to afford private supplemental insurance.

2. The income eligibility threshold for Medicaid supplemental insurance is 100 percent of the federal poverty level. Near-poor Medicare beneficiaries who make slightly more than that but not enough to buy additional coverage are 26 percentage points less likely to have supplemental coverage. As a result, they can experience higher cost-sharing.

3. In a study published in Health Affairs, researchers from the University of Pittsburgh and Harvard Medical School in Boston estimated that 73.3 percent of Medicare beneficiaries whose incomes were just below the threshold had some type of supplemental coverage. In contrast, only 47.5 percent of beneficiaries with incomes just above the threshold had supplemental coverage.

4. Researchers found beneficiaries who experienced this coverage cliff saw $2,288 in additional out-of-pocket spending over the course of two years and were 33.1 percentage points more likely to see catastrophic healthcare spending. The researchers defined catastrophic spending as two-year out-of-pocket costs exceeding $2,000.

5. "We found that this supplemental coverage cliff was associated with lower use of some outpatient services and with spillovers on prescription drug use. Expanding Medicaid supplemental coverage to this near-poor population, coupled with policies to increase enrollment in the low-income subsidy, would lessen cost-related barriers to healthcare use among near-poor Medicare beneficiaries," the researchers concluded. 

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