By: Dave Trabert
Word Count: 567
December 20, 2012
Kansas was spared the recent devastating impact of Hurricane Sandy, but there’s another perfect storm that has the state dead in its sights. This one is called Medicaid.
Medicaid has steadily consumed larger portions of general fund revenue and is on track to swamp the state budget. In 1998, Medicaid absorbed 3.7 percent of general fund revenues but by 2012 it had climbed to 17.8 percent. By 2023, Medicaid will devour at least 23 percent of General Fund revenues; if Governor Brownback and the Legislature decide to voluntarily expand Medicaid under Obamacare, Medicaid will grab 31 percent of revenue. And that is a fairly conservative estimate, based on the work of a member of the Social Security Advisory Board who studied Kansas’ Medicaid challenge.
The crowding-out effect on other state spending that’s been underway for several years will only get exponentially worse without substantive Medicaid reform. Governments have typically ‘reformed’ Medicaid by cutting provider payments, reducing enrollments or services but such actions have not stopped the cost increases. This does nothing but negatively impact patients because they were government-focused, not patient-focused.
Real Medicaid reform comes from seeking better service for patients at a better price for taxpayers. That’s exactly what states like Florida and Louisiana have done and is now the model for KanCare. Instead of treating patients like second-class citizens, Medicaid patients are empowered with real choices to make their own health care decisions.
Instead of only having access to a single plan with services determined (and rationed) by government, Medicaid patients get to choose between multiple private-insurance plans and make their own medical arrangements – just like everyone else on private plans. Patients aren’t forced to go only to doctors that accept Medicaid; they can choose any participating doctor or facility in the private insurance plan of their choice.
Medicaid patients get better service and taxpayers get a better price. Some of the savings comes from eliminating layers of government bureaucracy but even more comes from changing the culture. Fee-for-service care is replaced by an outcomes-based system that emphasizes quality and price. Medicaid reforms being implemented in Kansas and other states also place heavy emphasis on the most complex, expensive patients and provide individualized care coordination to ensure better outcomes at better prices.
Louisiana’s experiences demonstrates that when presented with a choice Medicaid patients rush to choose a private insurance plans instead of staying with “old” Medicaid. In fact, 99.8% of Louisiana Medicaid patients voluntarily left Old Medicaid in favor of a private plan. Patients feel empowered by utilizing a private plan and having a stake in their own well-being.
Florida’s Medicaid Reform Pilot has been a decided success. During its five years of operations, it improved the health of enrolled patients, achieved high patient satisfaction, and kept cost increases below average, saving Florida up to $118 million annually. Since then, Florida has passed its Statewide Reform, which promises to extend these benefits throughout the state, build on the lessons learned from the pilot program, and save up to $901 million annually.
Kansas is a smaller state but the savings are still substantial; KanCare, approved by the feds last week, is expected to save a little more than one billion dollars over five years, while also adding new benefits for basic dental, bariatric coverage and heart transplants.
‘Better service, better price’ is the key to reforming Medicaid, as well as other major budgetary challenges in Kansas.
Read a version of this commentary in the Wichita Eagle here.