Massachusetts is leading the way in showing the looming state budget disaster from the Medicaid expansion. A report issued by a working group set up to address problems with Massachusetts Health, the state’s Medicaid program, recommends bandaids for a machete wound. (Mass. Report) The Medicaid program in the state covers one in four residents, or 1.8 million people, at a cost of $15 billion in 2015. That percentage of enrollment tells you all you need to know about the unsustainability of the program. Like most states, Massachusetts has come to rely heavily on managed care to provide coverage for Medicaid recipients. 48% are in a health plan, another 18% are in a primary care clinician option and the bulk of the remainder are in traditional fee-for-service. In 2014, the managed care organizations lost $137 million and the other parts of the program didn’t do so well either. In addition, the system that was supposed to handle enrollment, information exchange and other administrative tasks was a total failure, leading to tens of millions of dollars in spending to fix the program and care for people who may not have been entitled to coverage. So far so good. And the losses by the health plans aren’t surprising, given some of the absurd design features, like why don’t we let people switch plans on a daily basis, no lock-in at all. That will really reward plans for coordinating and managing care carefully. And why don’t we initially auto-assign all enrollees, no point in letting them pick a plan that they feel fits them best. The state is also pushing “alternative payments” on providers, an effort which it euphemistically calls “stagnant”. In other words, providers aren’t interested in having the losses transferred to them.
Just another example of the hubris of big government advocates. Oh, they say, don’t worry, we know best and we can design and operate a wonderful system that will cost less and deliver better quality. Reality, almost every time (actually, is there any exception), is that they build complex administrative systems that cost way more than projected, are significantly delayed, and impossible to use. And they are shocked when giving people free, rich benefits results in costs much greater than projected with little or no improvement in outcomes. And they just can’t understand why providers get upset when they are asked to take reimbursement cuts to make up for the excessive costs. A very, very predictable disaster, but not to the ideologues and academic wizards who run states like Massachusetts. They built it; let them live with the consequences.