THE EFFECTS OF COST-SHARING ON USE OF SERVICES AND CONSUMER CHARACTERISTICS IN A STATE'S CRIPPLED CHILDREN'S DIVISION

The present study analyzed some of the effects of imposing a cost-sharing requirement on users of a state's health service program. The study population consisted of people who were in diagnosed medical need and included, but was not limited to, people in financial need.^ The purpose of the study was to determine if the cost-sharing requirement had any detrimental effects on the service population. Changes in the characteristics of service consumers and in utilization patterns were analyzed using time-series techniques and pre-post policy comparisons.^ The study hypotheses stated that the distribution of service provided, diagnoses serviced, and consumer income levels would change following the cost-sharing policy.^ Analysis of data revealed that neither the characteristics of service users (income, race, sex, etc.) nor services provided by the program changed significantly following the policy. The results were explainable in part by the fact that all of the program participants were in diagnosed medical need. Therefore, their use of "discretionary" or "less necessary" services was limited.^ The study's findings supported the work of Joseph Newhouse, Charles Phelps, and others who have contended that necessary service use would not be detrimentally affected by reasonable cost-sharing provisions. These contentions raise the prospect of incorporating cost-sharing into programs such as Medicaid, which, at this writing, do not demand any consumer payment for services.^ The study concluded with a discussion of the cost-containment problem in health services. The efficacy of cost-sharing was considered relative to other financing and reimbursement strategies such as HMO's, self-funding, and reimbursement for less costly services and places of service. ^