Long before the arrival of the Obama Administration with its explicit goal of expanding health insurance coverage to everyone, the country had achieved consensus on the need to insure all children. The Children’s Health Insurance Program (CHIP), first enacted in 1997, enables relatively low income families who don’t qualify for Medicaid to get low cost, high quality insurance for their kids.
Congress let funding for the program expire at the end of September. CMS and the states have been scrambling to shift other funds around to keep the program going. But time is now running out.
Alabama looks to be the first state that will have to close its CHIP program, according to Kaiser Health News. Seven thousand kids will be tossed off on January 1 (Happy New Year!) and tens of thousands more would exit a month later. Within a few months, all 9 million CHIP-covered kids across the US will be gone.
CHIP has had a dramatic effect in lower income states like Alabama, where the childhood uninsured rate dropped from 20 percent in 1997 to under 3 percent in 2015. Prior political fighting over CHIP funding back in 2004 led to long-lasting damage to the program, and we can expect the same or worse this time.
I cheered the election of Doug Jones in Alabama, and find it notable that his first pronouncement was a plea to Congress to fund CHIP even before he is seated. If everyone looked out for their constituents the way Doug does, this wouldn’t be an issue at all.
The Affordable Care Act is a complex law, but for a major piece of legislation that actually made it all the way through a very open legislative process, it’s remarkably coherent. Republicans have tried to sabotage it since before it was passed, and yet it still managed to succeed while a Democratic Administration remained in power. I have predicted in the past that if Republicans actually managed to poison Obamacare that they would come to regret it, because it would lead eventually to the rise of a single payer (i.e., truly socialist) system.
I assumed that the move toward single payer would take a generation to happen and would be driven at the federal level. But Nevada’s quick embrace of Medicaid for everyone surprised me, and it looks like a good option that addressed a lot of tough healthcare financing problems. Even if this Nevada plan ultimately dies on the vine, it provides a template for other states.
Here’s the basic story behind the Nevada Care Plan: Obamacare supporters are worried about what will happen to people who use the exchanges/marketplaces if Trump or Congress is successful in destroying the markets. Trump has been wreaking havoc on the marketplaces by threatening to cut off the subsidies that make premiums and out-of-pocket expenses affordable. The American Health Care Act (AHCA), aka Trumpcare, Ryancare, etc. would be the death knell. As a result, millions of people who get insurance through exchanges today would be out of luck.
A Medicaid for all approach enables people at any income level to buy into Medicaid, paying premiums if their income is too high to qualify under current rules or if they are are otherwise ineligible. Medicaid provides a very comprehensive set of benefits –broader, in some ways, than commercial plans or Medicare. Prescription drugs are covered, and so is nursing home care. Even better for the patient, there are no co-pays or deductibles. Cost per patient is lower than commercial plans or Medicare because Medicaid pays physicians and hospitals rock bottom rates, and by law Medicaid gets the best pricing on drugs.
Interestingly, many of the insurance companies that have succeeded on the exchanges are Medicaid managed care plans like Centene and Molina that have adapted their products to the Obamacare population.
Medicaid for all would not preclude private plans from participating in the market. In fact, its existence could pave the way for a variety of supplemental or upgraded plans that could be purchased by individuals or offered by employers. That approach is similar to what happens in other rich countries like the UK.
In summary, Medicaid for all has some really good features:
It bends the cost curve considerably by forcing lower prices on hospitals, physicians and other providers. The main reason healthcare spending is higher in the US than in other rich countries is because unit prices are higher here. In one fell swoop that could be addressed, even if providers aren’t entirely pleased.
Drug pricing, which is such a lightning rod, could also be addressed quickly by bringing prices into the Medicaid framework, the one place where they are reasonably well controlled.
It would enable everyone who wants to be covered to be covered.
It would eliminate the vagaries of the exchanges. No one would need to worry about whether insurance companies would offer plans from year to year.
In theory, it could enable states to innovate, assuming that they are given the freedom to modify benefits around the edges.
Admittedly, Medicaid for all might dampen innovation by reducing the financial incentives for the introduction of new drugs and devices and placing more control in the hands of government. But frankly commercial health plans have not done a good job of spurring innovation or cutting costs; few people are likely to shed a tear if their role is reduced.
The old Republican idea of replacing Medicaid with block grants to the states is back on the front burner. In general I oppose it because it is likely to be used as a backdoor way to screw people with low incomes by reducing available funding. And I also fear it will increase healthcare disparities in many states where the commitment to universal coverage is low. Read(Everything you need to know about block grants – The Heart of GOP’s Medicaid Plans) from Kaiser Health News for the ins and outs.
But a shift to block grants would be fine for Massachusetts. It might be preferable to the status quo, even with the threat of a slowdown in funding.
In particular, Massachusetts is operating under a waiver from the Centers for Medicare and Medicaid Services (CMS) that will enable the commonwealth to shift Medicaid recipients into accountable care organizations (ACOs). We need permission from the feds to tackle Medicaid reform, and have had to argue with CMS to get funding for priorities that the state government thinks are important, such as directing funding to providers for the uninsured.
Under a block grant program, Massachusetts (and other states) could do as they please. In Massachusetts, I’m confident that we’d do the right thing. Frankly, under the current system I worry that the Trump Administration could decide to punish Massachusetts and our level-headed, bi-partisan oriented Governor by yanking the waiver.
I’ll go a step further and say it would also be fine for Massachusetts if the whole Affordable Care Act were repealed and not replaced. Even though Obamacare was based on Romneycare, there are enough differences that it has caused painful adjustments in the Massachusetts market that we could do without.
As long as we are exploring radical ideas, we could go a step further and establish that each state receive back from the federal government the same share as it pays in from taxes. Instead of redistributing revenues from Democratic states like Massachusetts and California to Republican ones like Mississippi and Alabama as we do now (ironic isn’t it), we could even things out. That’s kind of agains the ethos of our republic, but hey, times are changing.
In any case, while block grants and repeal of the ACA are bad ideas that will hurt the country as a whole if enacted, in Massachusetts we should be just fine.
“As More Join Medicaid, Health Systems Feel Strain.” That’s the striking and counterintuitive headline on the front page of the Wall Street Journal. The Affordable Care Act is injecting billions upon billions of dollars to provide Medicaid to previously uninsured people. More money should help healthcare providers’ finances, not hurt them. So what’s going on?
To summarize, Medicaid reimburses for services at only about half the rate of what commercial health plans pay. A doctor in the article receives just $80 to see a Medicaid patient compared to $160 for a commercial patient. That’s typical.
If all providers had the same mix of patients, this wouldn’t be such a problem. Well reimbursed commercial patients would make up for poorly paid Medicaid patients. But in today’s world, that’s not how it works. Some health systems concentrate their resources in wealthy communities with lots of commercial patients. Other providers end up with a much higher share of Medicaid patients and enter a vicious cycle that depresses their earnings, makes it hard for them to compete, and leads eventually to financial distress. To make matters worse, some of these “Medicaid” hospitals receive lower rates from commercial plans than fellow hospitals who avoid Medicaid. This is the scenario we face in Massachusetts (see Healthcare Inequality in Massachusetts: Breaking the Vicious Cycle) and elsewhere.
Still, I don’t accept the Journal’s implicit conclusion that the Medicaid expansion is bad for hospitals and physicians overall. For any given patient, a provider would much rather get reimbursed by Medicaid than try to collect from an uninsured patient. And since the US spends double per person what other rich countries spend on healthcare, even stingy Medicaid budgets should suffice.
It’s notable that the Journal article says next to nothing about solutions to the problem. All of the examples they cite assume a fee-for-service system. The very first example –Medicaid paying for robotic surgery for a patient– reminds me of the US system’s penchant for high-tech interventions that are expensive but not necessarily better.
Solutions are at hand, if we would be bold enough to embrace them:
Reduce disparities in reimbursement rates. Is there a defensible rationale for paying different rates for Medicare and Medicaid beneficiaries? For that matter, why should commercial plans pay a different rate?
Consider payer mix when setting reimbursement rates. If we’re stuck with differential rates between Medicaid and commercial –which we probably are– we should at least not penalize providers who take care of a lot of Medicaid patients. Their commercial and/or Medicaid rates should be adjusted so they don’t have to turn away Medicaid patients to survive.
Shift to risk-based payment models. Fee-for-service is wasteful and provides incentives for volume and high acuity care rather than value. Why not encourage the use of Medicaid Accountable Care Organizations and other risk-bearing approaches that give providers responsibility for costs and quality?
The sooner we have a serious discussion about Medicaid policy in this country the better.
Medicaid beneficiaries deserve the same access to healthcare services and products as people with commercial insurance or Medicare. But since Medicaid pays doctors and hospitals 27 to 65 percent less than commercial health plans (according to a new GAO report), it makes it awfully difficult for providers to be payer agnostic. Sure enough, we see even supposedly mission-driven non-profit healthcare systems looking to maximize their share of the commercial population by catering to that group.
That’s a real public policy problem as the proportion of patients with Medicaid increases, and it presents providers with an unreasonable dilemma. In many states, doctors or hospitals that take care of a high proportion of Medicaid patients will find themselves in financial distress. That’s not fair to them or the Medicaid recipients. Frankly it’s also unfair to the commercial customers who may be overpaying to compensate for Medicaid underpayments.
Compare Medicaid with the Supplemental Nutrition Assistance Program (SNAP), aka Food Stamps. SNAP recipients don’t bankrupt supermarkets. That’s because the government pays the same price for groceries as any other customer. The SNAP program doesn’t demand that the grocery store sell products below cost, nor should it. SNAP recipients have to be savvy about how they use their benefit, seeking out high value products and retailers to stretch their dollar.
Realistically we won’t see the disparity between Medicaid and commercial payment rates erased any time soon. It would be just too expensive. But there are steps that can and should be taken:
Narrow the gap over time from the current 27 to 65 percent to something more like 10 to 15 percent
Introduce more progressive payment mechanisms –like Medicaid Accountable Care Organizations– that provide health systems with incentives to contain costs and improve quality. Healthcare systems that figure out how to help Medicaid members become healthier for a lower cost will prosper –analogous to what Walmart does with SNAP payments
Provide incentives for Medicaid beneficiaries to seek lower cost, higher quality care. Let’s not be paternalistic and assume that people on Medicaid aren’t capable of identifying high quality, low cost services.. I’ll venture to say that many lower income Americans are savvier shoppers than average consumers, if only due to necessity
The GAO report should be a wakeup call. It’s time to do something about these disparities beyond simply shrugging our shoulders.