"The special deal for Nebraska was wrong; expanding it makes it even worse. Even today, Medicaid struggles to serve those already on its rolls, and a full 40 percent of doctors refuse Medicaid patients because the federal government can't foot the bill. Adding 18 million more people to an already limping program is not the reform Americans want and would have tremendously serious consequences." – Senator Mike Johanns (R), Nebraska Managed Care Firms and the Incentives for Medicaid Expansion Managed Care Organizations are chomping at the bit as the prospect of expanded state Medicaid programs, positioning themselves to reap the benefits that such an expansion would create for capitated health management businesses. In 2009 the health insurance industry lobby, America’s Health Insurance Plans, released a Lewin Group report to substantiate cost‐saving claims made by MCO’s in various Medicaid programs. The report, Medicaid Managed Care Cost Savings – A Synthesis of 24 Studies, while not the most unbiased document ever written on the topic of Medicaid cost savings, nonetheless reveals a great deal about the strategic aims of the managed care industry as it seeks to position itself to favorably benefit from potential changes to the public insurance market. Unsurprisingly, many of the current woes experienced by MCO’s serving Medicaid populations would be redressed to varying degrees by expanding Medicaid: 1.
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Transitory Enrollment – Since many Medicaid MCO enrollees are covered by the Transitional Assistance to Needy Families program (TANF), their short enrollment periods cause churning and raise administrative costs for the group as a whole. Expanded Medicaid ranks would obviously reduce this churning and help to flatten the cost curve beyond the few months of eligibility currently enjoyed by TANF beneficiaries. Oddly enough, AHIP lists poverty as a barrier to MCO’s ability to coordinate care – Language barriers, lack of transportation, and other poverty‐related issues pose a hindrance to care management in the opinion of the Lewin Group. The Senate
Democratic bill in its current form would standardize Medicaid eligibility at 133% of the Federal poverty line, combined with the increased overhead from such an expansion, this could help dedicate more resources to the neediest enrollees. 3.
Prescription Drug Rebates – MCO’s do not qualify under the Medicaid Drug Rebate Program, meaning drug companies don’t need to grant them the ‘lowest price,’ as a state Medicaid agency would be able to obtain. Expanding Medicaid, along with granting MCO’s ‘most favored’ status, would give MCO’s more bargaining power and lead to reduced pharmaceutical costs. 7
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