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JAMA Forum: Reforming Medicaid

BY  and Andy Slavitt, MBA |  July 11, 2017

Gail Wilensky, PhD

We are 2 former Administrators of the Medicare and Medicaid programs, under Presidents Barack Obama and George H. W. Bush. Although we represent different political parties, we take pride in the accomplishments of these 2 programs, which collectively help millions of US residents get the health care they need.

Medicaid has become a major focus in the debate over repealing the Affordable Care Act (ACA), because the proposed replacement bills go beyond the ACA into the underlying Medicaid program that was originally passed by Congress in 1965. As we have overseen the Medicaid program at various stages, we are familiar with its successes, its areas for improvement, its effect on state budgets, and its importance to millions of ordinary people who count on the program and will need it in the future.

That is why we are calling for Congress to separate reforms to the Medicaid program from the most pressing task at hand—stabilizing and improving the nongroup market. Given the divergent views on appropriate Medicaid changes, we recommend initiating a 12-month bipartisan review process that focuses on long-term reforms to improve care and reduce costs. Such a process would benefit from broad stakeholder involvement and expert feedback, gathered outside of the heat of the current political environment. Changes to the individual market alone have a greater chance of receiving bipartisan support while substantive work on Medicaid is under way.

Medicaid Opportunities

Many in the United States benefit from Medicaid without knowing it. One reason is that Medicaid often goes by many different names in different states, such as Tenncare in Tennessee, and beneficiaries often receive insurance cards and localized services from managed care plans just like people with other forms of insurance. The program serves more than 70 million people in 4 categories: children and mothers, seniors in nursing homes and community-based settings, people living with disabilities, and low-income people of all ages. As much as 70% of the program’s resources are devoted to people who have disabilities or live in nursing homes. However, most Medicaid beneficiaries are children and mothers and, after passage of the ACA, low-income adults and families. A state-federal partnership, Medicaid policies are driven at the state level through waivers and State Plan Amendments submitted to the federal government.

Cost neutrality requirements and the growth of capitated managed care have been effective in controlling per capita Medicaid’s costs, with medical cost growth rates per capita lower than per capita spending by Medicare and private payers between 2007 and 2014. Despite manageable per capita growth, Medicaid does consume a growing share of a state’s budget as the number of  Medicaid enrollees has grown from both traditional and newly covered populations.

The potential opportunities to improve care coordination, substance use, and mental health services and to serve individuals and their families at home and in the community are significant, particularly with low-income, chronically ill, and frail elderly populations. Such efforts are beginning to gain traction. Conservative innovations such as health savings accounts in Indiana and Arkansas’ use of adequately funded (affordable for low-income people) private plans to deliver care, as well as delivery system reforms across states, represent new approaches for Medicaid to deliver results. There is an important opportunity to measure the effects of many state experiments, to build on what works and to improve what doesn’t.

Policy Recommendations

There is a growing recognition that the entire health care system needs to become more outcome-based, accountable, and patient-centered. Medicaid, along with Medicare, is participating in this shift, and public policy should accelerate these opportunities. Addressing the patchwork of laws and rules that currently regulate the Medicaid program can help develop a higher-quality, more accountable, modern, and accessible system.

We’d like to suggest 6 categories of policy that can be improved.

Medicaid is a successful program. Even though it focuses on the most challenging problems in health care, support for the program is more than 70%, beneficiary satisfaction is high, and most US adults don’t want to see the program cut.

Congress can and should commit to improving and modernizing Medicaid, but the process will take time to develop bipartisan support for the changes that are needed and should not be rushed. We believe the reforms laid out herein could receive bipartisan support. The Medicaid review we have proposed should focus on how to modernize Medicaid in substantive ways that get at the cost drivers, capitalize on innovations in the private sector, and allow states the flexibility to innovate within safeguards that protect beneficiaries and taxpayers.

We believe these changes will allow Medicaid to continue to meet new challenges and act as a potential vehicle to expand coverage if states choose to go that direction. Cost savings to Medicaid can best be achieved through substantive reform, rather than cuts that do not focus on changes to the underlying program.

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About the authors:

Andy Slavitt, MBA, serves as a Senior Advisor to the Bipartisan Policy Center, where he cochairs an initiative on the future of health care. From 2015 to 2017, he served as the Acting Administrator for the Centers for Medicare & Medicaid Services under President Obama, where he focused on advances in health care coverage and accelerating health care delivery system transformation. He has 2 decades of private–sector health care leadership, both as a senior executive at Optum, a health services and innovation company, and as an entrepreneur. He tweets at @aslavitt. (Image: US Department of Health and Human Services)

 

Gail Wilensky, PhD, is an economist and Senior Fellow at Project HOPE, an international health foundation. She also cochairs the Bipartisan Policy Center’s initiative on the future of health care. She directed the Medicare and Medicaid programs, served as a senior adviser on health and welfare issues to President George H. W. Bush, and was the first chair of the Medicare Payment Advisory Commission.  She is an elected member of the Institute of Medicine. (Image: Ted Grudzinski/AMA)

 

About the JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

About The JAMA Forum:  JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.