Medicaid spending consumes nearly a quarter of Washington’s state budget. Its growing share of state spending, along with the aging of the baby boomer generation, puts the future of healthcare coverage for our elderly, disabled, and vulnerable families at risk.It is against this challenging backdrop that Congress passed a healthcare reform law that expanded Medicaid eligibility to potentially another 500,000 Washingtonians, some of whom already have private insurance. President Obama argued three years ago that "in the absence of cost controls and reform . . . we can’t simply put more people into a broken system that doesn’t work." Unfortunately, that's now where the federal government is headed.
Within Olympia, we've had little meaningful discussion about whether massively expanding Medicaid makes sense for our state since the Supreme Court gave us that option last month. Chief Justice John Roberts’ opinion on Medicaid was direct, though, faulting Congress for putting a “gun to the head” of states to coerce their participation in its expansion.
An optional Medicaid expansion may offer a path to greater coverage for some of Washington’s uninsured, but we cannot simply open the floodgates for another 500,000 enrollees. They would face real barriers to access and the potential for substandard care in this broken program.
Our state can use its new leverage to demand greater flexibility over its program. As Democratic Governor Brian Schweitzer of Montana said last week, “Unlike the federal government, Montana can’t just print money,” — and neither can we. We should not commit to any expansion until we have a willing federal partner, offering us flexibility to manage the program more effectively.
We must understand the short and long-term budget ramifications, as well as contingency options, that preserve the maximum amount of state flexibility, especially after the federal government stops paying for the entire program in 2016.
Real reform is necessary to avoid a looming fiscal cliff. Here are some ideas to consider:
- Curb waste, fraud and abuse – With its effective Medicaid Fraud Control Unit, Washington should further expand state efforts to investigate and prosecute fraud perpetrated against taxpayers.
- Consumer Engagement – Washington is one of just a few states without meaningful cost sharing for many Medicaid enrollees. Small co-pays and other affordable costs for current and newly eligible participants are proven ways to reduce unnecessary utilization and reward healthy choices.
- Payment Reform – The state’s increasing use of coordinated care in Medicaid is a promising trend. The next frontier must include a systemic shift from volume-based, fee-for-service payments to providers toward paying for health outcomes with shared risk and realigned incentives. We need public-private partnerships which span the health care delivery system (hospitals, doctors, payers and patients) to achieve this goal.
- Delivery System Reform – Washington Medicaid pays for services in a system that is organized around bureaucracies instead of people, resulting in duplication of effort, administrative inefficiencies and poor health outcomes. Significant savings can be achieved through an integrated delivery system designed around the consumer’s interest and needs.
- Federal flexibility – The federal-state funding relationship for Medicaid is a relic of the 1960s. Our state generally receives one federal dollar for every dollar we spend, and only 50 cents on every dollar we save. A per-capita, block grant model that puts Medicaid on a sustainable budget is one way to realign incentives, provide a stable funding source and provide states a legitimate path forward on real innovation, free of unnecessary federal constraints.