Mars and Venus on Medicaid
A version of this Health Alert appeared at Forbes.
I will be participating in Medicaid Health Plans of America’s annual conference in Washington, DC from October 26 to 28. So, I thought I’d prepare for it by reviewing the research on health outcomes for patients on Medicaid. What a tangled web!
According to evidence cited by Forbes opinion editor and Manhattan Institute Senior Fellow Avik Roy, “[P]atients on Medicaid have the worst health outcomes of any insurance program in America ― far worse that those with private insurance and, strikingly, no better than those with no insurance at all.” On March 10, 2011, the Wall Street Journal published a column by Forbes contributor and American Enterprise Institute Resident Fellow Scott Gottlieb, MD, which concluded that “Medicaid coverage is worse than no coverage at all.”
Yet, others resist these conclusions. The federal and state governments spent $460 billion on Medicaid last year. Is it really feasible that this buys nothing? Gottlieb’s article prompted two scholars affiliated with the Kaiser Family Foundation to publish a paper “setting the record straight on the evidence.” Julia Paradise and Rachel Garfield conclude that “…the Medicaid program, while not perfect, is highly effective…Furthermore, despite the poorer health and the socioeconomic disadvantages of the low-income population it serves, Medicaid has been shown to meet demanding benchmarks on important measures of access, utilization, and quality of care.”
Can these differences be reconciled? The evidence cited by Roy and Gottlieb shows poor outcomes for various cancers, major surgical procedures, coronary angioplasty and lung transplants. The evidence cited by Paradise and Garfield emphasizes preventive and primary care (including blood pressure and PAP smears), birth outcomes, heart attack, congestive heart failure, diabetes management and pneumonia.
Although there is some overlap in the cardiovascular area, Roy and Gottlieb focus on catastrophic illnesses and procedures, whereas Paradise and Garfield focus on non-catastrophic care. If one only had recourse to these sources, one would be tempted to over generalize that Medicaid is ineffective for very sick people but okay for people who are not very sick.
What does not come out is that Medicaid is not a health plan. To describe it as a “program” is accurate insofar as it is a budgetary item in federal and state accounts, cocooned in mind-numbing regulations. However, Medicaid dependents do not enroll in some national, or even state, health plan. Most are enrolled in private health plans, which contract with the states. These are categorized as either managed-care organizations (MCOs) or primary-care case management (PCCM).
The Government Accountability Office (GAO) sorts states into four categories, reporting that 18 states use PCCM, 16 use both MCOs and PCCM, 12 use MCOs and five could not be categorized.
According to the Kaiser Family Foundation, over 300 MCOs provide comprehensive Medicaid benefits for a capitated fee, bearing the financial risk of excess costs. About half of Medicaid MCO enrollees are in for-profit plans. Dependents generally have a choice between at least two plans. (I doubt most readers with employer-based benefits have a choice of at least two plans!)
In 2012, over 26 million Medicaid dependents were enrolled in MCOs and 8.8 million were enrolled in PCCM. However, enrollment is not randomly distributed among the Medicaid population. Although they comprise two thirds of Medicaid dependents, they only account for one fifth of Medicaid spending, “because disabled and elderly beneficiaries, who account for most Medicaid spending, largely remain in fee-for-service (FFS)…” This means that MCOs and PCCMs mostly cover pregnant women, children and their parents.
States have been using private plans to provide benefits to healthier Medicaid dependents and leaving sicker ones to the FFS system, where governments pay providers according to bureaucratically determined fee schedules. That seems to be the wrong way around and may explain why outcomes are very bad for the sickest Medicaid dependents, as discussed by Roy and Gottlieb. Paradise and Garfield, on the other hand, are likely discussing evidence from private health plans serving Medicaid patients. So, we should not be surprised that some outcomes are similar as they are for other privately insured.
Where do we go from here? Reformers who want to increase patient choice and reduce the power of the federal government over health care recommend block grants, vouchers or refundable tax credits for Medicaid dependents to buy their own private coverage. These will be positive reforms, but they are not going anywhere for the next few years. Medicaid managed care, on the other hand, is an open door that is swinging wider.
Avalere Health estimates that 75 percent of Medicaid dependents will be enrolled in MCOs by 2015, up from 63 percent in 2012. The Kaiser Family Foundation anticipates that a “sharpened focus on high-cost/high-need beneficiaries” will lead states to enroll more of the sickest Medicaid dependents into private plans.
If done properly, this should improve outcomes for those patients. Medicaid managed care blurs the line between the Medicaid “ghetto” and private choice. When the opportunity for post-Obamacare health reform arises, its success will make patient-centered reforms to the whole system easier to bring about.
This article appears to me also to be a generalization, some how it missed the important article in the New England Journal of Medicine describing the Oregon experiment demonstrating the lack of benefit of Medicaid on several medical measures, (http://www.nejm.org/doi/pdf/10.1056/NEJMsa1212321 ) but did promote a better sense of well being. The authors failed to mention the article by Avik Roy documenting the success of the Indiana Medicaid program utilizing HSAs & HDHPs, http://www.forbes.com/sites/aroy/2011/11/11/obama-administration-denies-waiver-for-indianas-popular-medicaid-reform/
Thank you. I think I’ll write more about the Oregon Medicaid experiment, because it illustrates the problem I address in this article.
Hi John,
One need only come to California to see the disparities between health care and Medicaid (MediCal). We have the lowest reimbursement rates in the country and hence the lowest participation rate. Access, therefore, is abysmal. Once in the door, the patient is usually relegated to a clinic setting with care rendered mostly by mid-levels.
Now there are some exceptions, but to think we do not have two-tiered care in this country is fantasy.
The intriguing fact is that even the most conservative thinkers are awakening to the connection between social conditions and health outcomes. As a result we see programs like Jeff Brenner’s Hot Spotting (See Gawande’s article in the New Yorker, Jan. 2011) and Rebecca Ohne’s Health Leads (see one of the best TED talks ever done by Rebecca).
We cannot go to extremes, however, and try to remedy all social inequalities in the name of lowering health costs. We can, however, change the culture for all patients-rich and poor–to teach them to take responsibility for their own well-being and to incentivize them to do so.
Likewise, everyone–rich and poor–can learn, not only to take care of themselves, but to become involved in taking care of their neighbors. This cultural change will not only cut health care costs by many percentage points but will rebuild the American spirit of community–because in the end, it is our health, our health care system, and when we are sick or injured we must rely first on ourselves to do all we can do, and in many cases we will need to rely on others. The social imperative for the Baby Geezer generation must be to embrace the health policy so succinctly articulated in the parable of the Good Samaritan.
Medicaid–and all health care–should not be an “entitlement.” It should be earned and valued as a participatory part of American life. When we begin to view our health system through the lens of individual responsibility and joint communitarianism all the shuffling of money–cost-shifting, etc.–becomes nothing more than a mere shell game.
We are all in this together, and that Medicaid patient may turn out to be your daughter or nephew or even you. In the exercise of compassion for all, we need to create a new self-reliant health care culture that looks to us–not big institutions–to take care of us.
Have a superb day!
Charlie Bond
2 quick points before I study this more:
1. About 2/3 of Medicaid spending is for desperately poor elderly in nursing homes,
and for severely disabled persons plus the blind.
To say that this large bloc of care does no good is obtuse. The frail elderly and the disabled would makes their relatives depressed and poor without Medicaid.
These are persons who are already sick and disabled. Medicaid saves them a ton of money.
2. For the Medicaid eligible who are not old and disabled, Medicaid keeps them from going broke or being deep in debt over health care.
This is going to sound snarky, but some respondents to this blog have large savings account and have never experienced medical debt. This makes them insensitive about what Medicaid accomplishes.
Poor young workers are never going to be models of health. Medicaid keeps them from one kind of debt. This is nothing to sneeze at.
Thank you. I think we have to treat the different categories of Medicaid differently. Here, I am just discussing acute care for the young and working-age population. Long-term care and people eligible for both Medicaid and Medicare are also significant challenges. Our Pam Villarreal has addressed the former issue.
Great information. Thank you.
Mr. Roy overstates the case. The populations have been quite different with respect to behaviorial characteristics known to influence health. This may change with Obamacare given the size of the population that is going to be forcibly enrolled.
I think that some of the more interesting findings are those that show that Medicaid programs tend to send patients to lower quality hospitals.
The problem with the Indiana results is that those who behaved according to the rules were a self-selected population.