Slavitt A, Wilensky G. Reforming Medicaid. JAMA Forum Archive. Published online July 11, 2017. doi:10.1001/jamahealthforum.2017.0033
We are 2 former Administrators of the Medicare and Medicaid programs, under Presidents Barack Obama and George H. W. Bush. Although we represent different political parties, we take pride in the accomplishments of these 2 programs, which collectively help millions of US residents get the health care they need.
Medicaid has become a major focus in the debate over repealing the Affordable Care Act (ACA), because the proposed replacement bills go beyond the ACA into the underlying Medicaid program that was originally passed by Congress in 1965. As we have overseen the Medicaid program at various stages, we are familiar with its successes, its areas for improvement, its effect on state budgets, and its importance to millions of ordinary people who count on the program and will need it in the future.
That is why we are calling for Congress to separate reforms to the Medicaid program from the most pressing task at hand—stabilizing and improving the nongroup market. Given the divergent views on appropriate Medicaid changes, we recommend initiating a 12-month bipartisan review process that focuses on long-term reforms to improve care and reduce costs. Such a process would benefit from broad stakeholder involvement and expert feedback, gathered outside of the heat of the current political environment. Changes to the individual market alone have a greater chance of receiving bipartisan support while substantive work on Medicaid is under way.
Many in the United States benefit from Medicaid without knowing it. One reason is that Medicaid often goes by many different names in different states, such as Tenncare in Tennessee, and beneficiaries often receive insurance cards and localized services from managed care plans just like people with other forms of insurance. The program serves more than 70 million people in 4 categories: children and mothers, seniors in nursing homes and community-based settings, people living with disabilities, and low-income people of all ages. As much as 70% of the program’s resources are devoted to people who have disabilities or live in nursing homes. However, most Medicaid beneficiaries are children and mothers and, after passage of the ACA, low-income adults and families. A state-federal partnership, Medicaid policies are driven at the state level through waivers and State Plan Amendments submitted to the federal government.
Cost neutrality requirements and the growth of capitated managed care have been effective in controlling per capita Medicaid’s costs, with medical cost growth rates per capita lower than per capita spending by Medicare and private payers between 2007 and 2014. Despite manageable per capita growth, Medicaid does consume a growing share of a state’s budget as the number of Medicaid enrollees has grown from both traditional and newly covered populations.
The potential opportunities to improve care coordination, substance use, and mental health services and to serve individuals and their families at home and in the community are significant, particularly with low-income, chronically ill, and frail elderly populations. Such efforts are beginning to gain traction. Conservative innovations such as health savings accounts in Indiana and Arkansas’ use of adequately funded (affordable for low-income people) private plans to deliver care, as well as delivery system reforms across states, represent new approaches for Medicaid to deliver results. There is an important opportunity to measure the effects of many state experiments, to build on what works and to improve what doesn’t.
There is a growing recognition that the entire health care system needs to become more outcome-based, accountable, and patient-centered. Medicaid, along with Medicare, is participating in this shift, and public policy should accelerate these opportunities. Addressing the patchwork of laws and rules that currently regulate the Medicaid program can help develop a higher-quality, more accountable, modern, and accessible system.
We’d like to suggest 6 categories of policy that can be improved.
Making Medicaid a more outcomes-based program. Medicaid could be altered to focus on outcomes, as Medicare and commercial programs are aiming to do. Metrics such as the early diagnosis of illness, incidence of low-birth-weight infants, maternal mortality, and the efficiency of care delivered could form the basis of such measures. Although there has been some recent progress identifying a core set of measures for children and adults, a scorecard on a core set of metrics would have to be developed for this purpose.
Improving Medicaid financing. How Medicaid is financed is ripe for reform. Too much funding comes from large supplemental pools (such as Medicaid disproportionate share hospital [DSH] payments and uncompensated care pools) that go to states. These pools decrease accountability because they are allocated without regard to patient care or even the numbers of people treated. Any additional monies from reducing these pools should be transferred into the base rate physicians and hospitals are paid for seeing Medicaid patients, although the elimination of the special funding will need to occur gradually. Although the 2 of us differ on the appropriate future of federal matching in Medicaid, we agree that the federal government needs to review allowable state funding for Medicaid in a thoughtful manner. Finally, we support financing strategies that would encourage investments in the social determinants of health, which are the cause of so many health disparities and undesirable outcomes.
Ensuring proper access to care. There’s been an often-quoted statistic that one-third of physicians won’t see Medicaid patients. Although this is only slightly higher than other insurance programs, there is appropriate concern about access to specialists and home-based and community-based services, which varies broadly by state and is of particular concern in rural areas and where reimbursement rates are too low. Eliminating nonaccountable pools of funding would allow states to improve their reimbursement rates to specialists and help to expand access. Access challenges, where they continue to exist, should be targeted and fixed, just as they are in other insurance programs.
Investing in a data, technology, and analytics infrastructure. For Medicaid to deliver on its potential, the program needs to use best practices in home-based and community-based care and other programs that use social workers, home care attendants, and other resources to keep families together, coordinate care, and allow people to be treated in the most comfortable, cost-efficient settings. To do this, Medicaid needs a more up-to-date, sophisticated cloud computing infrastructure for data, technology, and care coordination. These investments can be made in ways that allow each state to benefit from national investments but are customized to meet local challenges.
Coordinating programs for dual-eligible beneficiaries (who qualify for both Medicaid and Medicare) and other populations. There are growing, expensive populations that do not fully benefit from investments in care coordination commonly used in the private sector. The relationship between the Medicare and Medicaid program for US residents who are served by both programs should be improved, just as the relationship between Medicaid and private programs should be made more fluid for people who have fluctuating incomes. Efforts to increase coordination between Medicare and Medicaid would benefit from the federal government sharing more of any resulting savings with the states than it has historically.
Reducing administrative burden on states and allowing for more rapid innovation. Medicaid is a highly flexible program, with a variety of different approaches designed to serve the frail elderly, provide substance abuse treatment, create innovative payment approaches, and capitalize on mobile technology. We support the ability of states to innovate more rapidly through thoughtful reform of the waiver process and the process of submitting State Plan Amendments, as the current Centers for Medicare & Medicaid Services administrator proposed in her March 17 letter to states. Allowing states to move more quickly is laudable, but we must also be sure to have guardrails to ensure that federal tax dollars are being used to improve the health of target populations, that the results of innovations are measured, and that best practices can be spread between states.
Medicaid is a successful program. Even though it focuses on the most challenging problems in health care, support for the program is more than 70%, beneficiary satisfaction is high, and most US adults don’t want to see the program cut.
Congress can and should commit to improving and modernizing Medicaid, but the process will take time to develop bipartisan support for the changes that are needed and should not be rushed. We believe the reforms laid out herein could receive bipartisan support. The Medicaid review we have proposed should focus on how to modernize Medicaid in substantive ways that get at the cost drivers, capitalize on innovations in the private sector, and allow states the flexibility to innovate within safeguards that protect beneficiaries and taxpayers.
We believe these changes will allow Medicaid to continue to meet new challenges and act as a potential vehicle to expand coverage if states choose to go that direction. Cost savings to Medicaid can best be achieved through substantive reform, rather than cuts that do not focus on changes to the underlying program.
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Gail Wilensky, PhD Gail Wilensky, PhD, is an economist and Senior Fellow at Project HOPE, an international health foundation. Dr Wilensky previously directed the Medicare and Medicaid programs and served in the White House as a senior adviser on health and welfare...
Andy Slavitt, MBA Andy Slavitt, MBA, is Distinguished Health Policy Fellow at the Leonard Davis Institute of Health Economics, University of Pennsylvania, and Founder and Board Chair of United States of Care. He previously served as the Acting Administrator for...