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Why Medicaid is Good – Part 1

Why Medicaid Is Good – Part 1

Over the past many weeks and months, we have written about the Obamacare repeal and replace saga that is gripping Washington, D.C., and the country. In many of our blogs we have opined, in part, that the biggest issue with both the House and Senate bills is not so much the Exchange reforms but what is slated for Medicaid. In an effort to clearly articulate our position on Medicaid, we have chosen this week to use the rather humdrum headline: “Why Medicaid is Good.” It may not be artful or worthy of literary award, but we hope our point gets across.

This blog has come a long way over the years to endorse Medicaid. It is not so much about what we have today, but that we believe Medicaid represents the most cost-effective and stable way to deal with two issues:

  • An uninsured crisis that has meant terrible suffering for the up to 50 million people without coverage at various points in time and plagued American competitiveness.
  • The aging demographic and looming long-term care crisis soon to hit this country.

In short, we don’t see any other system that could adequately deal with these issues in the future. Our “Why Medicaid is Good” declaration is premised on a few assumptions:

  • If health care is not a right, it is downright close to it. We believe that a civilized society owes to all citizens the ability to access quality health care.
  • The most affordable way to ensure access to quality health care is to ensure upfront health insurance access. Today, the American healthcare system has so many coverage gaps that tens of millions access care at the most expensive settings (e.g., the emergency room and inpatient settings). In the end, this is more costly, is an extremely poor use of precious resources and does little to nothing to emphasize quality, care management, and prevention.
  • Unless we provide affordable insurance and reap all the benefits of upfront coverage, we will see the amount of our gross domestic product (GDP) going to healthcare hit hard and well exceed 20 percent. Already, we are a huge outlier among developed nations, which average between 10 and 12 percent of GDP going to healthcare. In short, we believe policy-makers are being penny wise and pound foolish when they think of reform in a static way (cut here or there to meet a bottom line) as opposed to dynamically (what system will it take to transform the paradigm to emphasize quality, prevention and care management and coordination – which will ultimately bend the cost curve).
  • The aging demographic of this nation is the next looming healthcare crisis, if it hasn’t already arrived. Grandparents, and in time this author himself, will need billions of dollars in long-term care services. The nation is ill-prepared to meet the challenge. The number of elderly will double over the next 40 years. About 70 percent of those older than 65 will need some sort of long-term care services in their lifetime. The likelihood of use of long-term care services increases demonstrably as people get older. If some people doubt the moral imperative of ensuring affordable coverage for all Americans, far fewer will argue that Grandma and Grandpa should be thrown out on the street because they saved an inconsequential amount to cover their home care, assisted living or nursing home costs.
  • While we will always need it and we need to craft something better than we have today, the so-called Exchange or Marketplace construct will likely be a place of high costs, adversity and instability in many states no matter how well-engineered.
  • Medicaid expansion costs have come in well above original estimates. In 2014, the average cost of expansion enrollees was $5,488 annually. Actuaries expected this number to drop in 2015 as healthier people enrolled. Instead, costs increased 16 percent to $6,366 (not the 22 percent drop forecast). This is actually a 49 percent difference. 2016 figures are not out yet. But consider how much it would be to cover a person in the Exchanges. Study after study shows that real costs for covering Medicaid populations in private insurance would cost between 25 percent and 40 percent more without accounting for out-of-pocket differences and benefit design. And the current Medicaid costs are before the state and federal government aggressively deal with Medicaid fraud, waste and abuse, which some estimates suggest add up to as much as 10 percent of total spending.
  • While Medicaid has many warts, at least it is a proven delivery mechanism that is relatively financially stable. With reform, it is capable of delivering the type of care Americans need in the future. It, too, is the place where all of our challenges, now and in the future, come together.
    • Almost 75 million people rely on Medicaid today, most of the them include the working poor.
    • Medicaid covers the deliveries of about half of all babies in the nation. It can do the most to lower infant mortality and morbidity and ensure a solid start for our children.
    • Medicaid already serves as a safety net for many who face financially catastrophic health events. Medicaid picks up the costs of these events for a temporary period of time.
    • Medicaid provides critical programs and coverage for the most vulnerable in our society. No one can question the moral imperative to serve them.
    • In the next decade, Medicaid long-term care costs will double. Already, Medicaid covers 40 percent of all long-term care costs in the nation.
    • Acute and long-term care services are fragmented and uncoordinated. Medicaid is the program that can best build a true continuum of care and manage both types of services effectively.
    • Dual eligibles are individuals that qualify for both Medicare and Medicaid. They are about 20 percent of each program but account for more than 40 percent of total spending. This will only rise in the future. Medicaid will help coordinate Medicaid and Medicare funding streams, too.
    • About 17 million people have obtained Medicaid coverage since late 2013, about 14 million of them due to the Obamacare expansion. They are relatively happy consumers. Contrast this with just over 12 million in 2017 on the Exchanges, with many of them at risk of losing coverage next year.
  • Given the overlapping populations, a properly funded Medicaid program also safeguards the Medicare program.
  • Last, people forget the Supreme Court Olmstead decision and numerous additional lawsuit decisions that essentially dictate that Americans have a right to safely live in the community and avoid institutionalization. For the most part, money is no object in these decisions. Without a strong Medicaid program, how would the nation meet these new and emerging mandates? And wouldn’t the costs of these mandates ultimately accrue?

Join us next week for Part 2 of our discussion as we define a clear path for lawmakers to solve the Medicaid dilemma.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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