What happens to Medicaid is literally an issue of life and death for many New Mexicans since it covers health costs for about a quarter of the people in our state.
State Secretary of Human Services Sidonie Squier announced this summer that her department was contracting with a private firm to redesign the state’s massive Medicaid program.
When the public was given its opportunity to comment at a late-July hearing in Albuquerque, many responded with fear and anger. “Why are you messing with this program that my family depends on so desperately?” was the message from more than 200 people who attended.
This is not simply another discretionary government expenditure that could be improved with some pruning. Tampering with it sets off alarms for hundreds of thousands of people, and not just the poorest. For a lot of middle-income households, Medicaid also pays for nursing home care, drug and alcohol treatment, and services for the developmentally disabled.
But with a $3.7 billion price tag in New Mexico, it has become the cute little foundling cub that ate its way to grizzly menacehood. Medicaid has to be dealt with one way or another. So Squier determined we must “redesign” it.
But with a $3.7 billion price tag in New Mexico, it has become the cute little foundling cub that ate its way to grizzly menacehood.
Suggestions have included cutting reimbursements to providers, limiting eligibility or requiring patient co-payments. But simply reducing costs won’t do the job. We must transform our delivery system to solve the underlying problem.
The overhaul of this program takes place in the shadow of a larger national phenomenon: the implementation, by 2014, of Obamacare. That change will add many thousands of people to the already lengthy queues seeking doctor, hospital and nursing home care.
We have made it worse by the peculiarly American way we conceptualize health care. It’s an industry dependent on public money, but one that pretends an imaginary marketplace is magically involved in its operation.
That’s a fabrication—health care as an Adam Smith-like marketplace akin to the one that drives shoe production or corn futures. And it causes the one consistent feature of health care in America: Cost grows steadily at more than double the rate of inflation.
We must seize this opportunity to restructure Medicaid—not to crudely “save money” by taking a meat cleaver to the budget.
This is why in our Medicaid-dependent state, the program has grown enormous. It swallows almost 20 percent of our budget, even though we get three federal dollars for every state dollar. Add in that federal bonanza, and more is spent on Medicaid than on K-12 and higher education combined ($3.7 billion on Medicaid; $3.12 billion on all education). It is a major driver of our economy.
Under the coming federal program, newly eligible people are covered entirely by the feds for the first three years. After that, the state will take in $9 for every $1 it spends on the new patients. Does it make fiscal sense for New Mexico to deliberately draw down fewer federal dollars on the eve of the Obamacare windfall?
Either way, we must seize this opportunity to restructure Medicaid—not to crudely “save money” by taking a meat cleaver to the budget. Instead, at long last, we should transform it into the genuine managed care program it has never been.
Ever since the mid '90s, when Gov. Gary Johnson in began calling Medicaid “Salud!” and contracted with private companies to operate it, we have labeled it “managed care” and those companies “managed care organizations.” It isn’t, and they aren’t.
If Secretary Squier is serious about truly overhauling Medicaid, this may be the opportunity to at last deal with the most troubling aspect of its design: failure to incentivize keeping people healthy. That’s what genuine managed care is supposed to do.
Salud! is simply prepaid insurance, an administratively convenient way to handle the bills. It doesn’t offer motivation to promote wellness or reduce the amount of care we pay for. The more tests, procedures and days in the hospital, the more money docs and hospitals make. If a patient is cured in one office visit, the physician makes less than if it takes five visits. That’s why costs are always rising.
If health care focused on quality care, not quantity, we may at last realize the promise of Salud! That would be a very different Medicaid program from the one we have. It would offer hope of controlling costs and meeting the most basic needs of our people.