News Story

Health Policy Expert: GOP Medicaid Reforms 'Out Of The Stone Age'

Republican backers of the Michigan Senate work group's version of House Bill 4714, the Medicaid expansion measure, are trying to sell it as Medicaid reform.

In reality, as even the regular news media has focused on, the legislation is about expanding Medicaid and cooperating with the implementation of Obamacare.

It now appears that even the so-called reforms in the bill, are of questionable value.

"My goodness, these are out of the Stone Age,” Linda Gorman, senior fellow and director of health policy with the Independence Institute in Denver, said regarding the list of reforms. "Couldn't they at least have brought them up to date?"

The following are the 12 highlights of the legislation, according to the news release that announced the Senate work group's version of the House Bill 4714. Gorman broke down each of the supposed highlights:

No. 1: If a recipient is no longer eligible for the expanded Medicaid because he or she makes too much money, they can receive any unused balance on their account in the form of a voucher to buy private insurance.

Gorman: "Really? The feds are going to hand over their share, too? In addition, it seems like this would potentially encourage recipients who might want to game the account by moving in and out of Medicaid."

No. 2: Require the DCH (Michigan Department of Community Health) to develop ways to improve the effectiveness and performance of the Medicaid program and lower overall health care costs in the state.

Gorman: "Research on improving Medicaid effectiveness has, with the exception of 'Cash and Counseling' programs, been singularly unfruitful. Given that decent performance measures are hard to come by for health care performance in general, this is unlikely to do much.

"At worst, it may end up being the NHS (England's National Health Service) case, where patient care has been hugely degraded to meet arbitrary system metrics. For example, having to have a person in a hospital bed within four hours of admission ...  and they could just take the wheels off a gurney in the hall, then — presto, a bed.

"Medicaid reforms certainly may exist, but as was the case with welfare reform, we aren't likely to find them unless Medicaid funds are block granted and states are given the freedom to experiment."

No. 3: Require the DCH to come up with financial incentives for enrollees to improve and maintain healthy behaviors. That could mean making cheaper the co-pays of encouraged practices, like insulin purchases for diabetics, than discouraged practices, like emergency room visits.

Gorman: "Look, all of this has already been explored by private insurance. Why would one want to reward insulin purchases? Why not A1C levels (which measures long-term blood sugar levels)? There's no guarantee that an insulin purchase goes into the bloodstream of the person purchasing it. Maybe it is sold on the gray market."

No. 4: Hospitals that accept Medicaid cannot charge uninsured individuals whose income is between 500 percent and 115 percent of the federal poverty line more than what Medicaid would pay.

Gorman: "Great, make access for the uninsured as bad as access for people on Medicaid. The government should not be in the business of telling hospitals what to charge. And it should not be using income to do it as income is a flexible construct that no one can measure in real time.

"As stated, this means that a little old lady living in a multi-million dollar home on a small pension and a lot of money in a safe deposit box would get reduced price health care. And, suppose I'm uninsured by choice so that I can get services faster than someone on Medicaid because Medicaid pays so little.

"For the last time, uninsured does not equal lack of access. It just means that one doesn't have a third-party payer."

No. 5: The DCH, not the Department of Human Services, would be specifically designated as determining Medicaid eligibility.

Gorman: "Isn't that the case now?"

No. 6: The waiver application must be done in a way that it doesn't jeopardize federal match dollars and gives the state the opportunity to opt-in and opt-out without hurting the current Medicaid program.

Gorman: "So, the feds are going to be bound by state law in awarding waivers? Ask Connecticut how well that worked for them." (The federal government denied Connecticut's request to provide a waiver that would have allowed the state to move some people off Medicaid.)

No. 7: It moves fee-for-service patients into a managed care setting, which has been a priority of the Michigan Association of Health Plans.

Gorman: "Medicaid managed care does not save money. Even the Robert Wood Johnson Foundation has concluded that."

No. 8: An advisory committee will look at ways to demand doctors and hospitals provide clearer information on the costs of services, like a hip replacement.

Gorman: "These costs are already well known. This is a waste of time, like asking the post office to detail the cost of mailing a letter."

No. 9: Caps the administrative expenditures of Medicaid at 1 percent. Currently, the state is spending slightly under 1 percent to run the program.

Gorman: "What if administration becomes more expensive in the future but detects more fraud?"

No. 10: Allows the state to recover co-pays from individuals who win more than $1,000 from the lottery or have a state tax refund. The idea is to get recipients to "put more skin in the game" and prevent co-pays from being "no-pays." Additional requirements are made of the HMOs that will offer the coverage to keep recipients of the co-pays they owe.

Gorman: "I'd like to see the Medicaid system that actually tracks this. With Medicaid copays of $3 or $5 capped by federal law, one wonders if it is worth the effort."

No. 11: Require HMOs to have policies in place to ensure patient privacy.

Gorman: "Already done. It's called HIPAA."

No. 12: Advanced directives need to be more available so care workers know how to respond in case of sudden trauma.

Gorman: "Given the ethical problems associated with advanced directives, I think that it is unethical to require them as a condition of receiving public aid."

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.