The Benevolent Butcher of Healthcare

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  • 07/11/2013

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest." - Adam Smith

Good reporting from MedPage Today – demonstrating once again that, when it comes to lowering healthcare costs and improving healthcare outcomes, the free market trumps Big Government.

More Choice More Common in Medicaid Plans

States are increasingly moving to privatized managed care programs for their Medicaid recipients as state lawmakers look to change the safety-net system despite objections from naysayers, members of Congress were told Monday.

Kansas, Louisiana, and, most recently, Florida have received federal OKs to offer expanded managed care programs that allow patients to choose from a list of plans with varying benefits.

"The states set the floor of the benefits on those plans, but then the plans can add additional benefits on top of that using the savings they create by better coordinating care," Tarren Bragdon, chief executive of Foundation for Government Accountability, a conservative think tank in Naples, Fla, said after a House Energy and Commerce Health Subcommittee hearing Monday examining Medicaid.

Privatized plans include traditional Medicaid managed care programs and provider-driven plans. Florida, which had its federal waiver approved last month, offered 13 plans and 31 benefit packages in its five-county pilot program, Bragdon said.

"Patients like this choice, with 70% to 80% of Medicaid patients proactively choosing the plan rather than being automatically assigned to one," Bragdon told lawmakers.

States spend between a quarter and a third of their budgets on Medicaid, surpassing the amount spent on education, and they can expect that amount to grow under the Affordable Care Act's expansion program, which opens the program up to all those making up to 138% of the federal poverty level.

States like Florida, Louisiana, and Kansas can expect to save money, Bragdon said, making states like North Carolina, Texas, and Utah consider similar moves. The states believe they can generate greater savings through managed care for more expensive patient groups like the elderly and disabled.

The plans have risk-adjusted capitated rates so they earn more money to enroll sicker patients and have incentives to improve patients' health, Bragdon said. Competing for enrollment, plans are forced to improve benefit packages and improve access to specialists. Plans must publicly report outcomes and conduct consumer-satisfaction surveys annually.

In Louisiana, patients have the choice to opt back to traditional Medicaid. But of 900,000 Medicaid patients, only 3,000 took that option.

"The Florida reform pilot outperformed on health outcomes in 64% of the cases," Bragdon said.

But opponents of privatizing Medicaid cite a lack of accountability over the plans.

"The pilot program for Medicaid privatization [in Florida] was known as a real disaster," Rep. Kathy Castor (D-Fla.) said during Monday's hearing. "The state's own study condemned the results."

Several plans dropped out of the pilot citing an inability to make money, and patients complained of bouncing from plan to plan creating lapses in care.

She called the final waiver approved for the state-wide program "night and day" different from the pilot. The statewide program has new consumer protections, penalties for providers who back out, and medical loss ratios, Castor said.

"While these programs have been controversial in some instances, they reflect a desire by states to utilize care coordination and care management methods and move away from Medicaid's fee-for-service history," Alan Weil, executive director of the National Academy for State Health Policy in Portland, Maine, told lawmakers.

All but three states have at least some Medicaid managed care in their state, and Weil said two-thirds of Medicaid patients receive most or all of their benefits through managed care.

"States are increasingly relying on mandatory managed care programs in Medicaid for more complex populations such as children with special healthcare needs and people of all ages with a variety of healthcare needs," Weil said.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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