Tag: Medicaid

Medicaid Buy-In: A sensible approach for coverage and cost

January 23rd, 2019 by
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Show me the coverage!

The term ‘Medicare for All’ is being bandied about as the campaign for the Democratic Presidential nomination gets underway. Declared and potential candidates are warming to the idea.

It’s easy to see why:

  • After years of trying to defend complex, compromised Obamacare from GOP rhetorical attacks and legislative and administrative undermining, Democrats are going with a program that is popular and well funded
  • Medicare especially appeals to the middle-aged and older population, who tend to vote. There’s no stigma attached to it
  • It could be funded and implemented as a sweeping program at the federal level, which is ideal for a Presidential candidate to talk about.

However, I’d much rather see attention turn to continued expansion of Medicaid, specifically by offering people the opportunity to “buy in” to Medicaid coverage. This has real advantages:

  • It’s the prices stupid,” we have been told since 2003. Price, not utilization, is the main reason the US spends so much more than other countries. By design, Medicaid puts the squeeze on costs through lower reimbursement rates
  • Medicaid has provisions to squeeze drug prices, too, something Democrats and Republicans favor
  • Medicaid coverage is more holistic than Medicare. It includes programs to address social determinants of health, and is suitable for younger people including parents and children
  • Medicaid is a partnership between the states and federal government, enabling individual states to craft solutions that fit their specific populations

Several states are already looking at Medicaid expansion as a way to address their specific issues. For example, New Mexico (a purple state) is getting serious about further use of Medicaid. The state has some distinctive characteristics:

  • Medicaid is by far the largest player already, covering 40% of the population
  • The uninsurance rate remains stubbornly high at 9%
  • There are many undocumented and mixed status families who are shut out of the current coverage system

New Mexico is studying four approaches. (You can read the assessment here.)

  1. Targeted Medicaid buy-in: Medicaid-style coverage to those ineligible for Medicaid, Medicare, or the Obamacare marketplace. The state would subsidize premium costs
  2. Qualified health plan public option: A variant on the program originally proposed in Obamacare, with coverage on the marketplace in partnership with an insurer
  3. Basic Health Program: An Obamacare option already
  4. Medicaid buy-in for all: An off-marketplace program available to anyone except Medicare eligibles

The analysis leads me to the idea of starting with Option 1 as a trial run for Option 4. The advantage of Option 1 is that it doesn’t require federal approval, would bring uninsured people into the system who are currently discriminated against, and provide a test bed for further expansion. It would not disrupt the current market by drawing away healthy people, because it is only open to those currently outside the system.

Option 4 could come into force after the 2020 election, when the federal environment is more favorable and once New Mexico has learned from its initial experience.

Sometime down the road, an even more radical version would shift everyone into Medicaid. Private health plans would still have a role since everyone could be enrolled in Medicaid managed care. Providers and drugmakers won’t like the compressed reimbursement, but maybe it will encourage them to innovate on efficiency.

All of these proposals can be combined with value based approaches, which enable the efficient, high quality providers to succeed while containing costs and potentially boosting the patient experience and outcomes.

For now, I’d like to see the debate start up as part of the presidential race. Candidates visiting early primary and caucus states should dig in. In Iowa, for example, Medicaid for all is being discussed by local Democrats.

By healthcare business consultant David E. Williams, president of Health Business Group.

Will single-payer go mainstream in 2019?

January 9th, 2019 by
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The Democrats are braying

I have long predicted (Goodbye Obamacare? More like hello single payer) that if the GOP succeeds in undermining the Affordable Care Act it could hasten the move toward single-payer. Well, the undermining has been reasonably successful. And I think 2019 will shape up as the year that formerly taboo proposals like single payer health insurance go mainstream.

Despite what opponents say now, the Affordable Care Act was a moderate bill that sought to work within the existing system and incorporate bipartisan elements, including 188 Republican amendments. Before the individual mandate was pilloried as a threat to freedom, it was upheld as a virtuous plan of personal responsibility by the Heritage Foundation and American Enterprise Institute. Democrats tried to get Republican votes for the ACA. It was a GOP strategy to refuse.

When Republicans tried Repeal and Replace, they didn’t even pretend to include Democrats in their solutions. And of course, Candidate Trump’s promise to replace Obamacare with “something great” was a lot of nonsense.

With all this history, mainstream Democrats are feeling freer to jump to more radical and comprehensive proposals. After all, the ACA was complicated, messy, and full of compromises largely because of its attempt to be bipartisan and incrementally change the existing system. Why not jump to something purer and simpler that doesn’t need GOP input?

As the race for President gets underway, Democrats will start to feel their way on healthcare. Defense of the ACA is a pretty modest, minimum requirement. You can expect to hear calls for Medicare for All, which is a way to offer a popular benefit to more people without creating a whole new system.

But I’m also on the lookout for more radical approaches and it looks like we won’t even need to wait for the Presidential campaign to heat up in order to hear about them. Newly installed California Governor Gavin Newsom is ready to take on Donald Trump directly, calling for a single-payer system, mandatory coverage, expanding access for undocumented immigrants, and regulating drug prices. California is holding an early primary this cycle, so the ideas Newsom is setting out now will influence the debate.

I’d like to see serious discussion of Medicaid for All (rather than Medicare for All). Medicaid pays providers and drugmakers less and is also more comprehensive than Medicaid and better suited for younger adults and children. It’s a more affordable way to provide coverage, provides discretion to the states, and would drive down overall costs by driving down reimbursement rates. Medicaid for All would be a mixed bag for providers and pharma, so would unleash a very passionate debate.

A likely compromise is to offer Medicaid to everyone as a fallback, while retaining commercial and Medicare coverage for those who are eligible and want it.


By healthcare business consultant David E. Williams, president of Health Business Group.

How to solve America’s health care price problem? Maybe Medicaid

March 28th, 2018 by
Putting on the squeeze

The Affordable Care Act continues to be controversial, eight years after its passage, and a hostile Administration and Congressional majority have managed to undermine it, even if they haven’t been able to repeal it. Regardless, the ACA (aka Obamacare) has shifted the discussion on health insurance. Policy makers and the public increasingly assume that affordable coverage should be available to everyone and that pre-existing conditions should not be a factor in rate-setting or eligibility.

With uncertainty and dysfunction at the federal level, states are looking into using Medicaid “buy-in” as a way to achieve their policy goals. There are two main approaches being discussed: allowing individuals to enroll in traditional Medicaid by paying a premium or allowing individuals to buy Medicaid managed care policies on the marketplace.

A Health Affairs blog post provides a framework for evaluating these buy-in proposals. They outline six goals that policymakers may have in mind when instituting these programs:

  1. Improve coverage for the current individual market
  2. Provide options for people living in regions with limited choices of health plans
  3. Improve the viability of the private insurance marketplace
  4. Reduce premiums for consumers in the private insurance market
  5. Provide people with a guarantee of coverage with state-mandated consumer protections
  6. Improve the financial viability and contracting power of the Medicaid Agency

These are all worthy goals, but I would add another, systemic one. We read over and over again that the main reason healthcare spending is so much higher in the US than elsewhere is that prices are so much higher. Private health plans and Medicare haven’t done much to address this issue. Only Medicaid consistently pays low rates, so it seems that a way to bring down overall spending is to pay Medicaid rates, something that all of these buy-in approaches would achieve.

Providers won’t be happy with Medicaid rates and I don’t blame them. But a “Medicaid reset” would do the job of price reduction more than any other policy I can think of.

By healthcare business consultant David E. Williams, president of Health Business Group.

CHIPping away at the social contract

December 20th, 2017 by
And then there were none

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.

Could Medicaid for all be the answer?

June 14th, 2017 by
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Putting it all together

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.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

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