A smart question was asked on Twitter last night:
Which begs the question: why didn't GOP just propose a bill that moves Medicaid patients onto individual market? That would have been doablr
— Matthew Martin (@hyperplanes) June 28, 2017
I agree that this proposal looks seemingly attractive. It would not receive much or any opposition from Democrats as long as evidenced by the national level of not complaining about Arkansas’s private option expansion and the continual votes of Arkansas Democrats for that plan. And it would put Medicaid onto the private market where magic works. I am having a hard time seeing how moving the P&L responsibility of care for an individual on Medicaid in Pittsburgh from the 9th floor of the UPMC complex where I used to sit to the 10th Floor where the Individual market team sits leads to magic but maybe there is something in the elevator shaft that makes Medicaid Managed Care run by competing insurers far less effective than individual market policies that they sell as well.
And then we look at reality. Doing this is expensive because private plans pay significantly more than Medicaid plans in most instances. Arkansas needed to make absurd assumptions to achieve budget neutrality on their waiver application. HHS stretched discretion to the utmost to accept those assumptions. Adrianna McIntyre at The Incidental Economist has been bird-dogging this for years. Here is a post from September 2014:
On Monday, the Government Accountability Office issued a report taking HHS to task for failing to assure budget neutrality in Arkansas’s Medicaid expansion, which uses Medicaid dollars to fund enrollment in private plans through the state exchange.
Excerpted from the report (emphasis added):
In approving the demonstration, HHS did not ensure budget neutrality. Specifically, HHS approved a spending limit for the demonstration that was based, in part, on hypothetical costs—significantly higher payment amounts the state assumed it would have to make to providers if it expanded coverage under the traditional Medicaid program—without requesting any data to support the state’s assumptions. We estimated that, by including these costs, the 3-year, nearly $4.0 billion spending limit that HHS approved for the state’s demonstration was approximately $778 million more than what the spending limit would have been if it was based on the state’s actual payment rates for services provided to adult beneficiaries under the traditional Medicaid program.
Though $778 million may be an eye-popping sum, this isn’t really news. People who have tracked the Arkansas expansion closely have long been skeptical (see Austin’s post from last year) that any state could expand through private coverage at or below the cost of expanding through the traditional program. There’s just no getting around the fact that private insurers offer higher reimbursements—and that means higher costs.
If you do the math, that $778 million represents a 24 percent increase over the traditional-expansion hypothetical—the precise difference between Medicaid that David Ramsey wrote about in the Arkansas Times last year:
Arkansas’s traditional Medicaid program actually pays their doctors comparatively well. Kaiser Family Foundation shows that nationally, Medicaid tends to pay 66% of Medicare on a state by state basis. Arkansas in 2014 paid their providers 80% of Medicare. This data also implies that the on-Exchange policies that Arkansas used for their private option are paying their providers somewhere between 102% and 110% of Medicare fee for service.
Moving payments from an average of 66% of Medicare to an extremely optimistic 110% of Medicare would by a 67% pay bump for providers. Paying providers is the biggest cost of claims. There are utilization management tools that private insurers can use such as narrower networks and tiered networks to more discretely control costs as well as the black box of pharmacy pricing that I don’t understand. But an estimated incremental cost to receive the same actuarial value from private insurance instead of Medicaid fee schedule based services will be extraordinarily expensive.
And for what gain?
The appropriate song is under the fold:
Mathguy
“… the black box of pharmacy pricing that I don’t understand.”
If you don’t understand it, mere mortals are completely screwed.
Katdip
This reveals the whole fallacy of the R’s approach to privatizing Medicaid. For people obsessed with the fiscal responsibility, they seem to be consistently willing to pay more for less, in knee jerk support for “private enterprise”. I remember listening to the news when NH considered this approach to expansion, and an R legislator stammering when asked why the tight-fisted NH taxpayer should pay more to cover fewer people in the name of supporting insurance companies.
Ryan
@Katdip: They only claim to be obsessed with fiscal responsibility, we’ve seen this show on other issue before. What I don’t get is the apparent inability to grasp that this money, Medicare money, Social Security money, transportation money, nearly all of it ultimately gets spent purchasing private services and goods. Their black/white divide as to whether a dollar is or has ever been under the control of the Federal government eludes me. Of course, I assume a rational belief system, which is probably not the case.
Ohio Mom
As they say, tl;dr, so may not be relevant, but in Ohio, Medicaid patients are forced to enroll in a managed care plan. There are five plans and if you don’t choose one, the Ohio Dept of Medicaid chooses one for you.
The one exception is if you are already on a DD Waiver (developmental disability), then signing up for a managed care plan is optional.
My kid is on a Waiver, so Whew. Before I found out about this loophole, I was in a tizzy about that earlier this month.
The managed care options are: Buckeye Community, Caresource, Molina, Paramount Advantage, and UHC.
Like Katdip, I wonder about what actual savings there are when profit has to be added to the calculations. Maybe the appeal for Republicans is fewer unionized state workers administering things?
I also had a moment wondering what might have happened if my family would have been forced to choose and we had chosen the UHC plan. My kid’s primary insurance is my husband’s plan through work, which is UHC. Would this have resulted in two different UHC departments arguing with each other?
WereBear
Such a dollar is less available for them to steal. SATSQ.
Mark B
@Ryan: Capitalism as an empty shibboleth has become a religion, and Trump is their L. Ron Hubbard.
Gretchen
I listened to my rep, Kevin Yoder’s, telephone town hall last night. He insisted that 15 million of the people who would lose insurance are “choosing” that because of the individual mandate going away. Fox News is pushing this talking point too. He also talked about John Conyers’ Medicare for all plan, and said it would cost as much as the entire federal budget and would require doubling of federal taxes to pay for it. What’s the truth about these points?
Villago Delenda Est
@Mark B: Adam Smith, were he alive today, would be rolling his eyes around the world at this.
DBaker
It is the true key to why Republicans such as “Dr.” Tom Price (in quotations b/c IMO a doctor actually cares for the sick) are against Medicare/Medicaid and the VA – they believe (rightly or wrongly – I don’t have the real data on that) that they are being squeezed by those institutions and have to take cuts on what they bill because there are caps on what is paid out.
I used to work at a major hospital as a data person in the trauma unit. The doctors all have this god complex where they believe they get to be compensated at top dollar and anyone who impedes on their god given right to be highly compensated is to be fought. While ACA has managed to bend the cost curve to a degree, medical and pharmaceutical costs in this country have continued to grow at a rate higher than inflation because of monopolization and lack of competition for drug companies because Medicaid/Medicare is prohibited from negotiating drug prices like the VA is. If you look what the complaints by doctors against “socialized” medicine – look no further than this.
d58826
OK confession, I had trouble with 6th grade arithmetic so when they get into the mechanics of the healthcare debate I am lost. But Sen. Corker is now saying the tax cuts will come out of Trumpcare. Now whither they can sell that in the Senate, let alone the House is a political question.
My question is if you leave the tax cuts alone, then you don’t have to gut medicaid and all you really have to do is make a few technical fixes that we have known about since 2014. seems to simple/ what am i missing. Oh yes rename the program to Trumpcare to satisfy the raging ego
David Anderson
@d58826: pretty much