A Better Approach to Medicaid for Governor McCrory

A couple of weeks ago, I shared some of my impressions at the Greensboro Guardian regarding Governor McCrory's Medicaid reform initiative.  My thoughts were shaped in part by a meeting I attended in Winston-Salem hosted by HHS Secretary Aldona Wos and Carol Steckler, the director of the Division of Medical Assistance.

What is the bottom line?  McCrory and his staff unfortunately appear to be headed toward a statist, big government approach to Medicaid reform.  They are creating "entities" that will function much like the Accountable Care Organizations (ACO's) established under Obamacare.  They seemed poised to jump on a number of trendy bandwagons that are largely untested and unproven. 

They are concerned about rising Medicaid costs; but they seem to be convinced that one of the keys to fixing this problem is to change the behavior of physicians and other health care providers.  It is therefore necessary to influence and/or control their decisions through the use of proxy organizations or "entities".

They don't say a word about the true drivers of Medicaid inflation-- the program's incorporation of both third party insurance coverage and first dollar coverage.  They don't even try to address another key driver-- the epidemic of single parent families in the state of North Carolina.

They don't really talk about incorporating true free market principles.  And they don't even pretend to adopt a "limited government" approach. 

We don't see any effort to change the behavior of Medicaid recipients and their families.  Instead, the McCrory administration is apparently seeking to put pressure on providers to behave in certain ways through the use of quasi-ACO's.

We don't see a concerted effort to identify and achieve cost economies.  Nor do we see a comprehensive approach to reduce dependency.

A couple of things must be understood.  First, North Carolina Medicaid already employs several managed care approaches.  For instance, it employs a drug formulary; requires precertification of expensive diagnostic tests; and usually requires that any referrals be provided by the patient's primary care physician.  Perhaps these tasks could be managed better.  But we ought not presume that the current Medicaid program in North Carolina does not incorporate managed care techniques.

Second, Medicaid is supposed to be a health insurance program for the impoverished.  However, in North Carolina, the program covers many children from working class and lower middle class families.  It gives these families a huge incentive to forego the purchase of private group health insurance; and teaches them that providing health care for their kids is not their own primary responsibility. 

Third, Medicaid covers many optional services that have virtually nothing to do with the direct provision of medical care.  Many of us are familiar, for instance, with the huge fraud that systematically takes place when families structure their estate planning to protect assets while simultaneously enabling Medicaid coverage of future nursing home stays.

What can be done to tame Medicaid costs?  Here are some ideas:

1. Institute higher required copayments, and limit the number of visits covered per year.   These approaches were actually included in at least one version of the North Carolina Senate's proposed budget.  These changes would give recipients a greater financial stake when they seek medical care; and would motivate them to access care in a responsible manner.

2.  Set a high deductible to be coupled with a medical savings account funded by the state.  If Medicaid recipients perceive they are using their own money when accessing care, they will do so more responsibly.

3. Set a time limit on benefits.  For instance, two years.

4. Decrease or eliminate the optional services covered.  Civitas listed numerous optional services funded by Medicaid.   There is no requirement for the state to fund all of these; and we ought to be having conversations about which to cut back or eliminate.

5. Reduce eligibility, especially for minors.

6. Change the process of applying for charity benefits by orienting it toward work.  Institute work requirements for parents and recipients, as appropriate; and provide coordinated, automatic job placement referral.  Make the process of applying for Medicaid akin to entering a "Work Center".

7. Make adjustments so the single parent family is not incentivized, and the two-parent family is not penalized.  Don't make it much more likely that a minor will be excluded from coverage if there is an intact two-parent family.  Also, set an arbitrary future date-- for instance, two or three years hence.  And inform the public that new applications for children from single parent families will no longer be accepted after that arbitrary date.

Yes, I know that the federal government likely will not allow some of these approaches.  And I know that some Republicans will feel that some of these are politically unwise. 

But let's remember that the Republican Party holds itself up to be the party of limited government, low regulation and minimal interference in private markets.  And we often see the party represent itself as pro-family.  And yet, the reality is sometimes that Republicans embrace solutions that represent big government; high amounts of regulation; and the perpetuation of incentivizing single parent families.  The McCrory administration's Medicaid reform initiative is but one example.

I think that Governor McCrory can do much better with his well-intended efforts to control and manage Medicaid costs.  He can genuinely adopt free markets and low regulation-- instead of high-regulation approaches.  He can embrace limited government instead of big government.  He can try to change the behavior of Medicaid recipients and their families in a manner that reduces costs.  He can earnestly promote the formation and maintenance of two-parent families, and thereby reduce the huge swell of potential applicants to the Medicaid program.  He can seek to reduce dependency.  He can cut costs by reducing  both eligibility for coverage and also services covered.

There is a better way to handle this challenge.  Let's hope the McCrory administration finds it.

Comments

[bubba]

These are all valid reforms. Of course, the "progressives" who like to assume the non-existent moral high ground on issues like this will never agree.

The solution is to maintain common good sense approach to programs like this, and for the Republicans in power to remeber they're not Democrats buying votes from a victims' group.

[Triad Conservative]

I agree entirely, Bubba. But here is the problem. Some Republicans will have no problem going with the Obamacare ACO model, which is what McCrory is envisioning-- whether he knows it or not.

A great example of the establishment Republican sell-out is Bill Frist, who used to be Republican Majority Leader in the US Senate. A commission he chairs is going head over heels for ACO's. Some Republicans will support and enable the ACO model even though there is no evidence it will be effective-- and even though the model promises nearly total control over treatment decisions, to be achieved in part by reliance upon electronic medical records:

http://healthblog.ncpa.org/bill-frist-wants-to-ban-ffs/

[Polifrog]

Bubba:

The solution is to maintain common good sense approach to programs like this, and for the Republicans in power to remeber they're not Democrats buying votes from a victims' group.

I don't know, Bubba.

When I cast a look back over the last 100 years I see no slowing of progressivism. While it has stumbled on occasion, even earning multiple black eyes from eugenics to prohibition to failed policies regarding poverty and economics none of these failures are commonly associated with progressivism, liberals or Democrats.

Progressivism is immune to failure. Obama.

Again and again the argument is made that the fault is in too much liberty, too little regulation, too little government, or this or that bureaucracy does not exist.

And again and again those arguments are accepted.

There is a reason for this.

I believe it is that the spark of liberty can only be found at the birth of a government and in the hands of individuals, a moment during which the influence of amorphous governance is not corrosive to liberty as it is a moment when governance is not yet in existence.

It is when government comes into existence that the corrosion of liberty begins. Perhaps this corrosion propels progressive success or perhaps progressivism is the corrosion of liberty in name.

Regardless it is axiomatic that liberty wanes in the company of waxing governance.

And furthermore, while the spark of liberty is found in the hands of individuals creating government, the spark of liberty, despite conservative, TeaParty, or Libertarian desire, can not be found in governance itself. That is the root of our disappointment in McCrory. We expect liberty to flow from those we empower but find ourselves far more frequently disappointed than pleased with our representatives. That is because they are not individuals creating government but rather individuals working within existing liberty stifling governance.

And more personally it also explains why I am increasingly giving up on conservative candidates and more generally giving up on a fight that in the face of 100 years of failure has proven to be no more than effort wasted. Perhaps I am giving up on America, leaving it to its destiny.

I have come to believe that the only way to keep liberty alive is through periodic reignition as there is no rekindling of liberty on the coals of previous success.

As a result I am increasingly on the lookout for a new start to liberty.

It might be in a state that chooses secession, it might be in a movement in which those who desire liberty go "Mormon" on a state and through relocation overwhelm that state's politics such that it represents the views of liberty and possibly even chooses to secede. It might be found in the unforeseen.

Do you see the spark of liberty ... anywhere, Bubba?

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BTW after Google pulled the rug out from under my reader, I created a WordPress based reader for myself that focused on local politics and econ; I later realized I had put together an aggregator with a very effective filter.

[Triad Conservative]

Poli, thanks for the thoughtful comments. I agree with you that the prospects for liberty are quite dim, and waning seemingly with each passing moment. We have plenty of libertinism; but true liberty-- both economic and religious-- are in grave jeopardy. And the Republican Party, I am afraid, has proved to be an ineffective vessel to reverse this trend.

[Bob Grenier]

"Do you see the spark of liberty ... anywhere, Bubba?"

Yes.

You need to dig a little deeper.

[Polifrog]

Our government has failed liberty, our political parties are failing liberty, and with the atrophy of the TeaParty, the disinterest toward libertarianism, and the support for feckless Republicans, the individual too is failing liberty.

When liberty is not even demanded by the citizens to the degree necessary to overcome the intransigence of governance I do not know where you are digging.

"Vessel" -- Triad Conservative

I like that term. It connotes a certain transience.

Individuals, political parties and governments are each poorer vessels for liberty than the prior. Regardless, each is no more than a vessel for liberty, each a home for liberty for only a time.

Just as liberty was passed from the founders to their descendants, and liberty in varying degrees passed from the Whigs to Republicans, liberty passes from nations. Unfortunately as far as nations are concerned I see no evidence that liberty has ever passed into a nation.

Is it America to which you have fealty or is it liberty? They are increasingly not one in the same.

Patriotism can be blind, hope for a political party disappointing, and trust in a delusional citizenry unforgiving.

[Triad Conservative]

These are very perceptive comments. I have been thinking about an upcoming post on the topic of liberty. Anthony Kennedy's horrendous DOMA decision is yet another straw on the camel's back. I am afraid that the country's best days are long since past.

Can this be turned around? Not when Republicans acquiesce and even strategize with those who would steal away our economic and religious liberty. But there is a more fundamental meaning of liberty that I will be discussing here later.

[Polifrog]

I look forward to it.