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Improve Medicaid with these simple steps

Arvind Cavale, MD
Policy
August 14, 2017
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Recently, the Republicans’ health insurance bill was withdrawn, partly because of some Senators’ fear of underfunding Medicaid. The media and Democrats have clearly identified Medicaid as a wedge issue that divides Republicans. Unfortunately, those Republicans that have chosen to support conventional Medicaid, as opposed to supporting a much-needed revamp of this program, have succumbed to false advertisements. So let me review some facts, and suggest some common sense changes that will bring medical care to the poor and disabled, as well as those that are at the low end of the income spectrum.

As Charles Blahous writes in this article, projected Medicaid expansion costs continue to rise way above what CMS predicted several years ago. Worse news is that this rise in Medicaid costs will continue at least through 2022. CMS now expects that through 2022, Medicaid expansion costs will be $7,436 per person, more than 50 percent higher than the $4,875 projected in 2013. What was thought to be “pent up demand” by its proponents, now appears to be a permanent feature of Medicaid expansion. Why this is viewed as a surprise, is surprising to me! What bothers me is that per capita expenditures for covering the expansion Medicaid population are now projected to grow more rapidly than they are for Medicaid’s more vulnerable historically eligible population of pregnant women, poor children, seniors and disabled.

Allysia Finley’s Wall Street Journal article demonstrates how Medi-Cal has failed to fulfill its stated goal of improving health care access for the indigent and disabled, despite bringing in an additional 6 million enrollees and nearly $20 billion in additional federal funds. She quotes a recent report from a Santa Clara County Civil Grand Jury: “You’ve Got Medi-Cal, but Can You Get Medical Care?”

How could a “smarter” Medicaid be created? In a few simple steps. First, loosen insurance regulation that prevents entry of new insurance companies or existing companies to develop innovative insurance products.

Next, allocate $5,000 per year per enrollee and deposit this amount into an HSA in the enrollee’s name. This amount is more than the projected amount but less than the actual amount Medicaid spends per person. Importantly, this fixes the federal and state governmental obligations on a yearly basis. Let Medicaid enrollees purchase new and innovative or existing private insurance plans and/or pay directly for medical services, with this money, which not only makes them the purchasers but also signals to insurers that they have a whole new set of customers, whose business they can bid for. Having private insurance plans moves them up the ladder when it comes to finding new primary care and other physicians, and physicians don’t have to worry about being short-changed by Medicaid; in fact they won’t know the difference.

Finally, create a small non-governmental agency funded by state medical societies and insurance companies that serves as a Better Business Bureau for patients.

Once this model is up and running, it will provide a great deal of security to patients, financial stability for physicians and budgetary stability for government.

Arvind Cavale is an endocrinologist who blogs at Rebel.MD. He can be reached on Twitter @endodocPA.

Image credit: Shutterstock.com

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