State Medicaid Expansion–  An opportunity to learn and build a better mouse trap

The 2012 Supreme Court ruling changed the ground rules for the ACA with Medicaid.  States now have the ability to accept or decline the Federal ACA Medicaid expansion.  As of the end of this year, 27 states have opted into the Federal ACA Medicaid expansion program.  Many of the remaining 23 who did not are in various stages of implementing or contemplating new Medicaid programs that hope to achieve the goal of pulling Federal dollars into the program and yet not have to go with the original ACA program design.  This is a great opportunity to field test innovative new Medicaid models.

For many states, participating in Federal Medicaid has become a strong political as well as social discussion.  As a rule many Republicans talk about the total repeal of Obamacare and Democrats are nervously holding on to maintaining the program in some form or another.  Let’s try to take the politics out of the equation and look at the issues:

For any state, there is a reasonable segment of the population that is above the FPL below the income level to qualify for the  exchanges.  These unfortunate people in this gap remain uninsured if their state chose not to participate in the expansion.  In these 23 states, patients needing hospitalizations and other emergency care have to fend for themselves.  Hospitals and physicians are left holding the bag.  This is especially upsetting to hospitals as they agreed upon a pay cut at the initiation of the ACA with the hope of receiving future income from the expanded coverage.  This insurance gap is believed to cost the state of Texas over 5 billion dollars in uncollected revenues for hospitals alone, a substantial “cost” of not participating.

Data has shown that the states that did expand coverage saw a decrease in the percent uninsured in their states.  States which did not participate showed a minimal decrease due to the exchanges.

More Americans need to get health insurance.  The Americans in this insurance gap need to get coverage.  But with all the flaws in the present Medicaid system, one can understand why many states simply do not want to sign up for a program that they believe is already fundamentally faulty and inefficient.

Also, insurance does not equal access.  Many providers do not accept Medicaid in the first place.  Any Medicaid expansion without a provider network expansion will only create patients that have insurance, but no place to go.  Medicaid rates tend to be low and not very palatable to many providers.  Any part of true Medicaid reform must deal with network issues of coverage, remuneration and the increased usage of non-physician providers.

Numerous states that elected NOT to participate are developing innovative programs that they feel would be successful… a better mousetrap than standard ACA Medicare.  States such as Arkansas, Indiana, Tennessee, Iowa, Michigan, Pennsylvania, New Hampshire and others are either beginning to implement or at least planning a state Medicaid program that they hope will be able to receive the Federal dollars as a waiver.

Although each state program is unique, they share some important commonalities:  the privatization of services, more competition,  cost sharing, copayments for Medicaid participants, healthy behavior incentives, just to name a few.  For the most part, these are missing in the Federal ACA program.  We now have the opportunity to look at very innovative programs and test them in the individual states.

I believe that these new programs will bring a long overdue rush of new ideas into the cumbersome and inefficient system we now call Medicaid.  Although not all of these new concepts will work, I believe that they will bring new changes in thinking that will translate into a more efficient delivery of health care.  We will be able to observe over the next several years and better determine what benefit structures are most successful.

Stay tuned to this one.

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