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 Gov. Sam 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 under way for several years will only get exponentially worse without substantive Medicaid reform.
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Governments have typically “reformed” Medicaid by cutting provider payments and reducing enrollments or services, but such actions have not stopped the cost increases. This does nothing but negatively affect patients because the changes were government-focused, not patient-focused.
Real Medicaid reform comes from seeking better service for patients at a better price for taxpayers. That is exactly what states such as Florida and Louisiana have done and is now the model for KanCare. They have empowered Medicaid patients 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 from among 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 who 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 experience demonstrates that when Medicaid patients are presented with a choice, they rush to choose a private insurance plan instead of staying with “old” Medicaid. In fact, 99.8 percent 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 this month, is expected to save a little more than $1 billion over five years, while 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.