In the year and years ahead for Medicaid, change will be driven as much by states as Washington, and managed care companies may have as many opportunities as challenges.
In 2014, as the Medicaid program grew to cover more than 72 million Americans, midterm elections brought huge Republican gains in both Congress and in state legislatures.
Those elections, however, may not have quite the same impact as the next Presidential election, or the many state experiments in the works now, notes Matt Salo, executive director of the National Association of Medicaid Directors.
"The number of states embracing the Medicaid expansion will continue to grow at a rate dependent on how flexible the administration is willing to be," Salo writes in the American Journal of Managed Care. "Congress will continue to debate entitlement reform, but it is unlikely that significant changes to Medicaid will be enacted in the next 2 years. Regardless of either of these, states will continue to take the lead in reforming the program in their own ways."
New state Medicaid policies are expanding managed care contracting and blending MCO financing with patient-centered medical home models, accountable care organizations, exchange health plans, wellness rewards and HSAs. All these policies, some of them experimental, are emerging as more than 20 states still decline to expand Medicaid under the means envisioned in the Affordable Care Act.
After the Supreme Court decision making eligibility expansion optional for states, a conservative army of governors have stood their political ground, when the Obama administration thought it cout sit tight and win a game of "Medicaid chicken." As Salo writes:
As it turned out, the administration had fundamentally misread how the politics of the country had shifted in just a few years. While there was certainly a fair amount of purely political opposition to the expansion (as well as to any and all aspects of "Obamacare"), there was also a growing concern about the federal deficit and debt that outweighed the concept of "free federal dollars." Another issue that the administration underestimated was the growing sense that the traditional Medicaid program might not be the best avenue for a major coverage expansion. For many states, it was not simply a question of should you provide health coverage to low income Americans, but a question of what types of private market approaches, or personal responsibility provisions, could be applied to a nearly 50-year-old Medicaid program to accomplish this, or in fact, were there other vehicles to accomplish that goal.
As a result of this ongoing debate, by the eve of the 2014 midterms, only slightly more than half of the states had accepted some version of the expansion. The major question that remains going forward is whether the remaining states are firmly entrenched in the "no" or "never" categories, or simply in the "not yet," or "make me a better offer" categories.
The mid-term elections will help continue the trend that began a year ago with approval for Arkansas' "Private Option" Medicaid expansion using exchange plans to ensure 90 percent of the Medicaid expansion population.
That approval was significant, Salo writes, because it showed that Medicaid expansion "did not have to be a binary decision, that the administration was willing to negotiate in order to get states to yes, but it also showed that you could sell a Medicaid expansion to a heavily conservative legislature and overcome their 75 percent supermajority requirement to expand coverage."
After Arkansas, HHS approved similar policies in Iowa, Michigan and Pennsylvania, introducing new market-based coverage programs and some beneficiary cost-sharing. Those Medicaid waivers with the feds showed, to states, that "you don't know what can be approved until you ask," Salo writes.
Indiana will also be a watershed for the Obama administration's Medicaid policy, depending on how it receives Republican Governor Mike Pence's proposal to use HSAs more broadly for beneficiaries. "The administration has long been skeptical about taking a health savings account-type of approach for the traditional Medicaid population," Salo notes.
Medicaid faces an uncertain future in those and other states, in part because it may bring losses for insurers (like in Iowa) and state legislatures like Arkansas have considered rolling back the programs. Pennsylvania, with a new Democratic governor, may opt for traditional Medicaid expansion.
There are also Democratic-leaning states with new GOP governors, like Maryland and Massachusetts. Leaders in those and other states may, Salo writes, "want to push the Obama administration to bend more to their way of thinking."