Medicaid on the Oregon Trail
A few days ago, I wrote an article suggesting that an effective post-Obamacare reform would be difficult to bring about as long as anti-Obamacare reformers (especially yours truly) stuck to the simple argument that being on Medicaid is as bad (or even worse) than being uninsured. The reason is that the Medicaid beneficiary does not sign up for a national health plan called Medicaid. Instead, he is increasingly likely to sign up for a managed-care plan that contracts with the state to provide Medicaid benefits. Readers retorted that the nail in Medicaid’s coffin was driven by the Oregon Medicaid experiment, a randomized, controlled trial (sometimes described as “gold standard” which it could not have been, because it was not double blinded). This blog has agreed that the Oregon Medicaid experiment demonstrated the ineffectiveness of Oregon’s Medicaid expansion. However, I am not sure that leads to a general theory of Medicaid’s overall ineffectiveness.
According to the Kaiser Family Foundation’s statehealthfacts.org, 98.2 percent of Oregon’s Medicaid dependents were in managed-care plans in 2011. Oregon ranked sixth in the proportion of Medicaid dependents enrolled in managed care, instead of fee-for-service. Over half a million were enrolled in prepaid ambulatory health plans (which do not cover hospitalization), and a similar number were enrolled in prepaid inpatient health plans. Somewhat fewer than half a million were enrolled in 13 different comprehensive managed-care plans, according to the Kaiser Family Foundation. Small numbers were enrolled in other types of plan, including commercial HMOs. None of this is reflected in the research on Oregon’s Medicaid lottery, which refers simply to an undifferentiated Medicaid, as if it were a health plan, instead of a benefit. So, we have no idea which health plans the lottery winners chose (if they had a choice). Post-Obamacare reformers have no trouble differentiating between Medicare Advantage plans and Medicare fee-for-service. The reason is that we want to erase the segregation of retired people from working-age people, and this requires a large proportion of Medicare beneficiaries to be enrolled in Medicare Advantage plans (or something similar), before that reform. The same is true of Medicaid. Some Medicaid managed-care organizations have launched Obamacare exchange plans, in anticipation of dependents churning between the two markets. It makes sense: According to Optum Health, the average period an adult is covered by Medicaid is only 8.5 months a year. A large number of Medicaid beneficiaries will surely spend some time in exchange plans, as they work for a few months in low-wage jobs. These Medicaid managed-care organizations want dependents to maintain the same coverage during periods of employment. That is a reasonable goal, and one that the next round of health reform should keep in mind.
A reasonable goal indeed. This is the type of rhetoric we need for states to make practical adjustments going forward.
“Post-Obamacare reformers have no trouble differentiating between Medicare Advantage plans and Medicare fee-for-service. The reason is that we want to erase the segregation of retired people from working-age people, and this requires a large proportion of Medicare beneficiaries to be enrolled in Medicare Advantage plans (or something similar), before that reform.”
Well said. This is a practical, common-sense reform proposal.
Thank you. I want to be careful I don’t get a head of myself. There have also been successful efforts at Medicaid reform that puts money directly in patients’ hands, such as Indiana’s POWER accounts, whhih I have not discussed here.
Interesting! I didn’t know there was a distinction myself.
Sorry but I don’t understand the “segregation of retired people…” statement that Amber thinks is a “common sense reform proposal.” Are you arguing for the so-called “privatization of Medicare” (e.g., Wyden-Ryan) or for managed care for all or for so-called “Medicare for All” (I would think not given the PNHP’s constant attacks on Part C) or just for better data so as to better understand how the Medicare market works (that understanding to be applied to the rest of the insurance market) or for ?????
Only guessing that you means the first of these options (privatization), I believe your “segregation…” statement illustrates a continuing lack of understanding of how we people on Medicare protect ourselves against health/accident-related financial catastrophe. This is a problem among the academic community in general and on this blog in particular.
— Seniors on public Part C Medicare Advantage health plans already represent a “large proportion” of Medicare beneficiaries.
— As a group we are second in size only to Medicare beneficiaries on group retiree insurance (much of which is “something similar” to Medicare Advantage).
— In fact, if you subtract the roughly 10% of Medicare beneficiaries totally dependent on Medicaid and the 10% of Medicare beneficiaries still only on Original Medicare (just A or just B, but mostly A and B, with no supplement at all) typically because they are 65 but not yet retired, I would guess the split between Medicare beneficiaries with fee for service insurance and those with capitated fee insurance is pretty even proportionately.
So if that is a large enough proportion for you, what’s your post-Obamacare reform proposal?
Thank you. NCPA has long promoted a universal, refundable credit that people use to buy their own insurance. Employer-based benefits would be taxable. There is not a bill currently in Congress that reflects this.
What this blog entry addresses is the involuntary segregation of people into different insurance markets based on income, employment status, and or age. It attempts to identify a way to get insurers comfortable with the notion of individually owned health insurance.
If I am 64 and happy with my employer-based health plan which is offered by Assurant Health, when I turn 65 I will likely seek out an Assurant Health Medicare Advantage plan.
I do not believe that health plans market Medicare Advantage plans more strongly in areas where they also have a strong position in the employer-based market. However, if they do have a business strategy of keeping members as they roll off employer-based benefits into Medicare, they will be more comfortable with the reforms we propose.
This blog entry is more in the “how do we get there from here” line of work.
Thanks. So you are the guys giving the word “voucher” a bad rap 🙂
Speaking as a SHIP volunteer, please be aware that you can keep your employer-based insurance when you turn 65 if you plan on working still. Whether you even have to sign up for Medicare at all depends on how big your employer is. (It is almost always — but not always — sensible to sign up at least for A at 65 no matter what your employment status.)
Speaking as someone from Massachusetts, the four major insurers here — with big individual and group books of ESI — do also strongly market both capitated fee and FFS Medicare supplements. They are comfortable with both types of business (and the big Medicare guys like AARP and Humana do very little business here) but I don’t believe any insurers are allowed to individually market the Medicare supplements the way you suggest however (as a rollover). Further many providers that accept the ESI or individually purchased insurance of people not yet on Medicare do not accept the Medicare supplements of the same insurer. So many people are forced to switch insurers.
Thank you. That is a very good comment. I wrote elsewhere about an AETNA group Medicare product that has a two-year term (http://tinyurl.com/oxvz92x).