N.C.’s nascent Medicaid reform plan-II-Who is covered by Medicaid?

This is the second post in a series on North Carolina’s nascent Medicaid reform, Partnership for a Healthy North Carolina. The first post is here which you should read first. I am skeptical of the plan, but am granting the benefit of the doubt and trying to work through some key issues and asking questions about it in the hopes of helping to move Medicaid reform ahead.

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The most important thing to understand about Medicaid is that it is not one monolithic program. Instead, it is an insurance program for persons across the life course, with very different needs, but who share the common circumstance of finding their income to be below a given line and/or having health circumstances that make them eligible. The table below illustrates the primary “types” of persons covered by Medicaid in North Carolina (all data comes from the Kaiser Family Foundation web pages on Medicaid; an incredible resource).

• 27% of the beneficiaries are aged (65 or older, and also covered by Medicare; so-called dual eligibles) or disabled persons. Together they account for 63% of the Medicaid expenditures in North Carolina, while children and adults represent nearly 3 in 4 beneficiaries, but account for 37% of the program expenditures.
• The per capita costs differ a great deal: the 309,000 Disabled beneficiaries shown above had per capita costs ($16,050),  5 times greater than did the 960,000 children ($2,796).
• Bottom line: children and adults are numerous in Medicaid; the dual eligibles and disabled are expensive.

Why are the per capita costs so much higher for the elderly dual eligible and disabled Medicaid beneficiaries? The vast majority of the care received by children and adults is acute care services (physician, prescriptions, labs & xray, hospital, etc) while for the dual eligibles and disabled, the costs include long term care services in addition to acute care services. The table below provides a broad overview of the distribution of long term care spending in North Carolina’s Medicaid program in FY 2010.

Long term care includes home and community based services as well as institutional care. Nursing facilities above are nursing homes, ICF-ID is institutional/facility care for the intellectually disabled, many of whom will be Medicaid beneficiaries for decades, and home health and personal care covers a broad range of services including traditional home health for things like wound care, targeted case management to address complex problems, hospice care for those near the end of life, and custodial home health for the disabled elderly (visits to help address of Activities of Daily Living, designed to keep them out of nursing  homes).

Children and adult Medicaid beneficiaries are often eligible for a period of time and then move out of coverage, perhaps if they get a job that provides insurance, for example. On the other hand, dual eligible and disabled beneficiaries are much more likely to be persistently eligible for Medicaid, until death.

A reminder that the goal of the Partnership for a Healthy North Carolina is to have 3 or 4 private entities compete to provide this full Medicaid benefit package in all 100 North Carolina counties. To make a significant dent in the cost profile of our Medicaid program, that means you have to address costs of the dual eligibles and the disabled, which further means taking on long term care which includes a vast array of services for people with persistent and profound health and social problems that are not likely to improve. Further, many of these beneficiaries are unable to make decisions for themselves for reasons of intellectual disability or having dementia, for example. This makes the notion of consumer choice driving the system indirect at best for some of the most expensive beneficiaries.

I believe that finding private entities who are willing to bid to guarantee this full benefit package on an at risk basis in a manner that will reduce the rate of Medicaid spending growth, or actually reduce expenditures will be very hard. There is a very strong likelihood, in my opinion, that North Carolina may throw an insurance competition party in Medicaid, and no one will come. Convince me otherwise!

More details in the next post.

The logic behind N.C.’s nascent Medicaid reform plan-I

I am skeptical about the nascent Partnership for a Healthy North Carolina being feasible, but am going to grant the benefit of the doubt and write a series of posts laying out how it could work, along with questions/doubts that I have that supporters could answer to convince me. To be clear, I don’t doubt we need reform, I doubt this can work. I just provide questions and some general logic in this post; later posts will add numbers.

First, here is what I understand to be the big picture goals/parameters of the plan:

• Provide the current Medicaid benefit package in a manner such that care can be accessed in any of North Carolina’s 100 counties. Reduction of benefits is explicitly not the key goal, while the ability to access the benefit package anywhere in the state is key. The Medicaid benefit package spans pre natal care to dementia care in a Skilled Nursing Facility.
• Have the benefits delivered by a private entity that will bid for the right to offer this benefit package throughout North Carolina. I think this could be done by a not-for-profit or a for-profit entity. There has been lots of discussion of this point and clarity is needed. Regardless, these entities will be “at risk’ meaning that if there are cost overruns they will lose money; taxpayers will not be on the hook for overruns.
• The key aspect of the plan is that the private entities will compete for the business of Medicaid beneficiaries, presumably via developing superior networks of services (benefits are uniform). The notion is that price will do down, while quality will go up, due to the private entities competing for the business of Medicaid beneficiaries.
• I have heard it said there will be 3-4 choices of entities offered, each meeting the stipulations above.
• A key goal is the integration of benefits, with special mention of problems with the mental health/substance abuse parts of the system. A key aspiration is to treat “the whole person” in the reform.

I will work through several more bulleted thoughts and points. Again, if I am wrong somewhere about what is intended, let me know. I am doing the best I can to integrate this overview with public statements that have been made.

• What will the capitalization requirements be for these entities? It will require substantial capitalization (money in the bank) for an entity to be responsible for delivering the full Medicaid benefit package statewide. Presumably the Department of Insurance will have to ensure compliance?
• Will this be an insurance-only model? For example, Blue Cross Blue Shield N.C. is by far the largest insurer in North Carolina and would be an obvious entity. This model would be they as insurance company that has created a virtual organization (insurance plus delivery system) via a system of contracts stipulating how much they would pay providers (doctors, hospitals, nursing homes, etc.).
• Could the The State Employees Health Plan be an entity? They probably have the closest thing to the geographical and clinical span being discussed in North Carolina? (but they don’t have the long stay Nursing Home part; more on that below)
• Or would something akin to a Social HMO whereby the insurance and provision function would be joined? In my understanding of this option, providers would be sole-source, meaning they would only deliver services for one entity and not others. I think this precludes this option in the sense that there is no way to provide sole source provision of the full Medicaid benefit statewide. Perhaps a hybrid is imaginable: lets say UNC becomes an ‘entity’ and does a sole source provision arrangement for beneficiaries in some counties, but then has a series of contracts for those in other counties. Is this ok? Can UNC then provide hospital services to another entity under contract?
• Could CCNC be an entity? I say this mainly because one of the reflexive push backs has been ‘what about Community Care North Carolina (CCNC)?’ I will provide what I think to be the answer. Of course CCNC could be an entity if they (1) obtain the required capitalization; (2) can deliver the full benefit package in all 100 counties. This demonstrates how grand this vision actually is. CCNC is basically an integrated primary care delivery organization for Medicaid and Medicare beneficiaries (and the uninsured). I think of it as managed care for the primary care portion of Medicaid. So, managed care is old news in North Carolina, but the span of what is being discussed in terms of benefits and geography is was is new. CCNC does not now have, but would have to develop to become an entity: (1) hospital contracts; (2) contracts specialized mental health and disability services that they would now refer out to, but which they have not had to arrange payment details or disperse the money; (3) nursing home contracts. etc.
• For the risk stratification aspect of the plan (goal is to not allow cherry picking of the healthiest beneficiaries), will the goal be to equalize up front, meaning tie more money (per member per month) to a given patients enrollment that will follow them? Or will the approach be to ‘balance out’ adverse selection after the fact? I am not sure what is envisioned.
• For Nursing Home care, do you envision NHs to become sole source providers to a given entity? Or could all entities involved potentially have a contract in the same NH?  In some areas there may be enough NH supply to imagine a NH becoming a provider for entity 1 only. In others, doing so might ensure empty beds. Will entities seek to negotiate prices in each county in the state? Will they be spot prices, based on supply and demand on a given day, or locked in? I was in a series of NHs last week in an Eastern North Carolina county, and visited 3. 2 had not empty beds, while 1 did have an empty bed. Guess which one you would pick if you needed a transfer that day? If you are a World War II movie buff, trying to bid out skilled nursing care for the long term disabled and/or the dual eligibles seems ‘A Bridge Too Far’. I am open to being convinced.

I will follow up with posts that look closely at who is covered by Medicaid and what that means for reform, as well as the incentives for some of the big players in North Carolina as they decide whether to participate in this nascent Medicaid reform.

Medicaid Meeting in Durham

North Carolina HHS Secretary Wos and Medicaid Director Steckel have been giving interviews and traveling around the state talking about the nascent Medicaid reform plan that Gov McCrory calls the Partnership for a Healthy North Carolina (this 11 slide presentation is the only written overview I have). The details of the plan are somewhat unclear, but the goals are fairly grand: they want private ‘entities’ to compete to deliver the full Medicaid benefit package in every county in the State. In doing so, they want to ensure the ‘whole person’ is treated, with special emphasis on integrating mental with physical health.

There is a good bit of political momentum behind the nascent plan, as Speaker of the House Tillis and President of the Senate Berger joined the Governor in pledging to move ahead with this direction. However, there is more political agreement that something called the Partnership for a Healthy North Carolina will be done, than there are details of exactly what shape the plan will take.

I think any fair observer would have to note than than sales pitch has been rocky so far. On May 10 in Reidsville, Sec. Wos said that the State Health Insurance Commissioner was the one who decided that N.C. would not expand Medicaid; this of course is not true. The N.C. House and Senate passed a bill declining that the Governor signed, and he stated clearly from the beginning of his term in January that he was not ready to move ahead with expansion because Medicaid was ‘broken.’

Did Secretary Wos just say this to survive a tough moment in the public hearing (she was being pressed about N.C. not expanding Medicaid; here is the audio of the snippet)?  Or did she not really understand what had happened with N.C. rejecting the Medicaid expansion? Neither explanation is particularly reassuring.

I attended the public meeting May 15, in Durham (~200 people)  and there were two sentiments that got rapturous applause:

• That North Carolina should undertake the expansion available under the ACA while improving the system
• That North Carolina should not privatize Medicaid via 3-4 ‘entities’ and instead should build from the success of Community Care of North Carolina (which is really an integrated primary care network that cares for Medicaid beneficiaries)

To say there was and is broad skepticism about the direction to which the Governor and now the leadership of the House and Senate have committed is a polite understatement. And to a person, the skeptics know that health reform in Medicaid and otherwise is ongoing and will likely never be done.

I will blog through some specific thoughts and concerns I have about this nascent plan over the next few weeks.

How Should North Carolina think about the Oregon Medicaid study?

Aaron Carroll and AustinFrakt (this tag will get you to all their posts, along with one by Harold Pollack) have been doing great working blogging on the recent Medicaid expansion study that folks are talking about. Many of the posts are fairly technical, because interpreting research is technical. Kevin Drum has a nice, clear overview as well. Here is what I wrote quickly the night the study came out, including an error I made in interpreting the study, preserved for posterity.

A couple of points, especially for people in North Carolina and other states trying to use this research (a good thing!) to inform policy.

Internal validity is the degree to which a study design can allow you to judge whether X causes Y (in this case, comparing Medicaid coverage to being uninsured, on a variety of measures). Random assignment is about as strong as internal validity gets, though it should be noted that random assignment of a pill v. a placebo is less complicated in a causal sense that assigning an insurance plan. So, when people say things like “if Medicaid were a pill…” Medicaid is not a pill. Insurance gets you access, which leads to treatments, and so on….

This leads to the concept of external validity, which is the degree to which the findings of a given study are relevant and insightful for another population. In a RCT of a pill, you sometimes worry about this (has it been tested in children? Is there a reason to think persons of a different race will respond differently?) but the causal mechanism of swallowing a pill and seeing how it will impact a disease is causally fairly direct (the chemistry of the pill). The causal mechanism of assigning someone to an insurance program v. leaving them uninsured is more diffuse, or farther up the causal chain, say from addressing your high blood pressure. So, in a policy RCT the external validity is very important. The Oregon study actually only studied Portland Oregon, so people in North Carolina (and rural Oregon), for example, should be asking how similar are low income persons and the available health care system to which Medicaid is buying access in Portland to the situation in North Carolina? I will work on providing some data driven answers over the next few days.

The question of whether there was enough power to detect a meaningful change in the health measures used is a question of construct validity, in my opinion (though I could imagine it being characterized as a different type of validity, problem or error; or indeed just left as a problem that needs no further categorization):

Construct validity is the approximate truth of the conclusion that your operationalization accurately reflects its construct.

Restated, does how you measured health properly do so, and can a meaningful change in health in this area show up in the measure(s) you used given the size of the study? If you pick a measure designed to measure “health” that has little to no chance of rejecting the null hypothesis of no difference in the treatment (Medicaid) v. control (uninsured) group, then it is not a particularly insightful test because you will inevitably be unable to reject the null hypothesis of no difference. I think of this as closely related to external validity, because in geographic areas with worse controlled diabetics, for example, the same sample size might be able to detect a difference on the same measure used as being statistically significant.

To best understand the meaning of this study for North Carolina will require some data driven work to compare the populations of Portland, Oregon and North Carolina. More on that later.

Why both Liberals and Conservatives need a health reform deal

On December 16, 2010 I wrote a post that began:

While the rhetoric around health reform has been incendiary from day one, in policy terms, a compromise between Democrats and Republicans using the outline of the Affordable Care Act (ACA) has always been available. The two primary problems with the health care system are costs and lack of coverage. The ACA does pretty well on the second, and is a start on the first, but much more is needed. It will be very hard to get a handle on health care costs, and we will likely only succeed in doing this if both parties are on board.

I then proposed the outlines of a deal:

• Federally guaranteed catastrophic coverage implemented via Medicare
• Private insurance sold in state-based exchanges for gap amounts if individuals desired more coverage, with income based subsidies
• Federalizing the dual eligible Medicaid costs, and moving over time to buy low income persons into subsidized private gap insurance, thus transitioning the low income portion of Medicaid over time
• ending the tax preference of employer paid health insurance; make all subsidies explicit

I refined these ideas in an e-book called Balancing the Budget is a Progressive Priority in August, 2011, and revised it after the failure of the Super Committee to replace the sequester in a version published by Springer in April, 2012. The book claimed that we didn’t need short term cuts in discretionary spending for a sustainable long run budget, but instead needed the next (and the next and so on) steps on health reform, and an increase in taxes collected as a percent of GDP to at least 21% given the movement of the Baby boomers into Medicare, Medicaid and Social Security.

There are many ‘yeah buts’ about the above-outlined deal. I am unsure what the ideal health system would be, because what I think what we most need is a political deal so that we can move ahead with the policy, focusing on the goals of expanding coverage and addressing costs. We will never do the hardest work asking whether health spending is ‘worth it?’ without both sides bearing responsibility for it.

So why do both sides need a deal?

• For Liberals and Progressives, universal coverage is the holy grail, not just of health policy, but of all public policy. Conservatives don’t have a similarly focused top health policy interest, and that makes finding a deal more difficult (lengthy debate between myself and Jim Capretta touching on this). We need a deal because the continued Republican opposition to the ACA, which is made more effective by the Supreme Court’s decision making the Medicaid expansion voluntary, thwarts achievement of our goal of universal coverage (that I also believe to be a precursor to having a hope of addressing costs/wasteful spending).
• Conservatives need a deal because they have no politically viable health reform plan embraced by elected Republicans, and without one they have no hope of what they claim to be their pre-eminent policy objective of smaller government, because the biggest long run spending side issue is health care costs. Keep in mind that Gov Romney ran on a platform of doing nothing to Medicare for 10 years (rescind House Budget cuts that mirrored the ACA; premium support starting in a decade). Further, the Republicans have controlled the House of Representatives for 28 months now, and have voted to repeal Obamacare numerous times, but never seem to get around to the replace part.  Last month they couldn’t even muster the votes for a modest risk pool plan.

I obviously thought we needed a deal a long time ago, and my proposal to move away from Medicaid’s current structure has been the part of the ‘deal’ that has gotten me the most heat from my friends (here is a less grand deal). However, the discussion of the recent Medicaid study has reinforced my belief that the political warring over health reform crowds out our ability to make policy based on evidence. Every study is now just another salvo in a never ending political war around Obamacare, without the offer of a credible alternative. I am a strong supporter of the ACA which expands Medicaid, and would be happy to implement and revisit it when we know more. The passage of the ACA has put the entire health care system into play, and whatever final result we land on, its passage will have been the first step.

However, it is clear to me that both sides would benefit from a political deal to allow us to take the next steps with at least some of the heat removed from the conversation.

A Meeting Yesterday

I was recently elected to the Executive Committee of the Academic Council at Duke (subset of the overarching Faculty governance group at Duke) for a term to start in the Fall Semester, 2013. As best I can tell, this group gets blamed when things go wrong and no credit if they go well, so I plan to use my membership to beg off all other committees for the next two years (but that is another story; Hi new Dean of Public Policy!). Anyway, yesterday the new members met (from 11am to 1pm, before the release of the new Medicaid study) with the current group for both an introduction to the group as well as an outline of the big issues facing the University and thus the Executive Committee next year/in the long run. One of the big issues is “Compensation/Employee Benefits” and of course that includes health insurance (I am already imagining being blamed). As we talked a bit about the health insurance of Duke University’s employees, I doodled this.

The doodle is of a hypothetical RCT of Duke’s employees to 3 arms: Duke’s typical health insurance options, a catastrophic insurance plan (that doesn’t now exist as an option), and cash payment in lieu of health insurance. Outcome measures would be health, financial impact of illness, and employee satisfaction with the benefit package. Of course this will never be done (and there are many reasons it could not be done). However, in theory, this sort of thing could answer the question what impact does health insurance have on health and other outcomes.

The (Portland) Oregon Medicaid Study

A new study today on the Oregon Medicaid experiment (they randomly selected some who applied for coverage while denying others; the difference in the groups is the estimated impact of having Medicaid v. being uninsured in Portland, Oregon; they data reported are only from Portland, and not statewide). Such a study design is as good as it gets on internal validity (does x cause y; in this case does Medicaid make people healthier, measured in a variety of ways, as compared to being uninsured). The external validity of such a study–are these findings applicable to other places depends upon how similar other states are to this study population (Portland).

Based on reading the many tweets this afternoon about the study, I was surprised when I actually read the study. Basically, they find that Medicaid coverage:

• reduced depression, improved or maintained self reported quality of life, increased the likelihood of having a usual source of primary care, increased the uptake of several preventive measures such as cholesterol screening, pap smear and mammography, and increased perceptions that patients received quality care. Again, this is the estimated impact of Medicaid as compared to being uninsured.
• Medicaid also greatly reduced the financial burden of health care and nearly eradicated catastrophic health expenditures that they defined as being greater than 30% of family income (or ~$4,500 for family of two at the federal poverty level in Oregon).

There was bad news too. They found, for example, that Medicaid did not:

• decrease blood pressure, reduce cholesterol, or decrease the proportion of diabetics with A1C levels above 6.5%, or reduce the Framingham risk score significantly (a global measure of 10 year heart disease mortality risk). There was also no significant difference in persons reporting no, or mild pain. There were also some prevention screening procedures that those with Medicaid were not more likely to receive (Table 5), for example: fecal-occult blood test, colonoscopy for those age 50+, flu shot. Again, this is the estimated impact of Medicaid as compared to being uninsured.

In terms of health care use/spending, those with Medicaid:

• had more doctor visits, but there were no differences in hospitalizations, ED visits, or outpatient surgery. Persons with Medicaid had an estimated health care expenditure on their behalf of $4,428, or $1,171 more than someone who was uninsured. Keep in mind other parts of Medicaid that were not a part of this study, or the proposed expansions, cost lots more.

Several things of note:

• This study is focused on Portland, and not even all of Oregon (see 1st para of second column on page 1714). The internal validity of the study (does x cause y) is as good as it gets. The external validity (do these results generalize) depends upon how similar Portland, Oregon is to another state thinking of expanding Medicaid.
• There are a few things about the study subjects that leap out. First, these are some seriously well controlled diabetics in Portland, with 5.1% of the control group (uninsured) having A1C of 6.5%+; those with Medicaid were not statistically better. I honestly think this must be a typo (Table 2) and instead of 5.1% of diabetics in control group with A1C of 6.5% or greater they meant 5.1% with 6.5% A1C or less (though it is repeated in the text). This is a presentation to the results of an incredibly successful diabetes disease management company in Mississippi that is absolutely thrilled to have 64% of patients with A1C less than 7% after one year (see slide 25); the Oregon study says that 95% have levels of 6.5% or less.* Nationally, between 15-30% of diabetics have A1C of greater than 9. I just don’t see how what is written can be true, or if it is, the country should be studying diabetes care in Portland. Update 11:50pm on 5/1; further updated 5/2 at 7:05am: This is a A1C of everyone on the study and not only diabetics. I was thinking in terms of diabetics, so that is my error. This link says prevalence of diabetes over age 20 is 11.3%….but what is needed for comparison to see the similarity of the study population is prevalence between 18-64….going to bed will get after that tomorrow. and this one also has 11.3% prevalence for age 20+, but 26.9% for age 65+. I don’t think the A1C prevalence of 6.5% or greater is that different from the national average, but I can’t find a precise age comparison for the study population (ages 18-64).
• This sample of patients went to the doctor a lot. The uninsured reported an average of 5.5 office visits annually, with those covered by Medicaid having 2.7 more per year, on average. Using this CDC report (Table 10, No. 252, page 115), I found that nationally 69% of persons age 18-44 in the US in 2010 had between 0 and 3 office visits and only 19% had 4-9 visits; for the age group 45-64, it was 57.7% with 0-3 and 25% with 4-9. Yet the mean of the uninsured group in this study is 5.5 visits annually, with those covered by Medicaid having an average of 2.7 more.

The bottom line is that this is a well done study with high internal validity, and it finds some positive health impacts of Medicaid on health as compared to being uninsured. It also finds some areas in which health is no better (or worse) for those covered by Medicaid. The study unambiguously shows that Medicaid reduces the financial burden of health care for beneficiaries. There are some aspects of the study findings that may reduce the applicability of the findings to other parts of the country, but that doesn’t mean it isn’t an important study. It is just another piece of the puzzle.

However, for all the tweeters saying this study showed Medicaid is utterly flawed and there is no way anyone should expand Medicaid coverage I can only think they didn’t actually read the study. More tomorrow on the political and policy ramifications of this study and how people talked about it within 5 minutes of its release.

*Disclosure: I am a consultant for Diabetes Care Group, Inc. and have done cost estimations for them based on their clinical A1C results; some of them are excerpted in that publicly available slide deck.

Cherry Picking in NY Medicaid; Lessons for North Carolina?

Manged care companies are cherry picking the healthiest disabled senior dual eligible beneficiaries in New York state using a variety of methods, and excluding those needing the most care. The program provides a monthly per capita payment amount ($3,800/month) regardless of how much care is provided. The general theory is that the insurer has an incentive to keep people well, reducing needed care, and therefore their profit. However, there is also an obvious financial incentive to simply sign up those who need less care in the first place. Several points here.

• North Carolina has announced what I would call aspirational plans to put all Medicaid beneficiaries into private plans, of their choice. The notion is that via competition for patients, quality will rise and costs will drop. However, the New York experience shows the downside. I call the N.C. plan aspirational because there are scant details, but they do say they will ‘risk adjust’ to prevent cherry picking, but this will be hard. (this links to many posts I have written about N.C. Medicaid reform)
• The key is to remember that Medicaid is not one program, but has a variety of types of patients unified by having low income. It is not hard to imagine children and pregnant women and low income adults being placed in managed care; many states have already done so, with better and worse effects. Doing so is no panacea, nor is it the worst thing ever. However, the idea that disabled and elderly Medicaid beneficiaries are going to be put into private plans, and more to the point for N.C., that persons in Nursing Homes who suffer from dementia, etc. are going to be picking plans so as to improve quality and reduce costs is a pretty long walk in the woods as my grandaddy would have said (aka not likely to work). This table shows the per capita spending differences by category of beneficiary in N.C.
• 
• To belabor the point, it is not that the theory of competition cannot work in health care, it is that the groups of Medicaid beneficiaries who comprise the dual eligibles and the long term disabled have so many complicated and expensive acute and long term care health needs that I think private companies will mostly be trying to avoid the most expensive and difficult patients. Put another way, tell me the private, for profit “entity” (to use Gov. McCrory’s language) that will be bidding to care for the dual eligibles on a straight capitated basis so that I can make sure that I don’t own their stock.
• This doesn’t mean we cannot have Medicaid reform in N.C. However, caring for “the least of these” will always be hard and expensive. I still think federalizing the cost of the dual eligibles at least, and allowing states more flexibility in especially the children and low income adult categories is the best policy approach with any hope of a political consensus of any sort. You could also move toward pushing dual eligibles into Special Needs Plans to get the ‘one payer’ coordination impact, but then see the N.Y. experience. Here is a proposal for SPN with opt-out the dual eligibles, but then you just make cherry picking officially ok. [I remain unsure about the care of the long term disabled; such a heterogeneous group of people with vast array of needs, sometimes for decades; will always be hard and expensive]
• Bottom line, we need Medicaid reform in North Carolina. I don’t see how the outline suggested by Gov. McCrory can work if it is to include all Medicaid beneficiaries. Either no one will want to bid if they really must take all comers, or it will simply be cherry picking if there is an opt out.

updated: revised for typos/clarity.

N.C. Medicaid Reform: Dual Eligibles and what is broken

One of the most difficult aspects of reforming Medicaid in any state is answering the question, “what about the dual eligibles?” These are people who are eligible for Medicare due to their age (65+) and Medicaid due to being low income. The dual eligibles constitute about 1 in 10 Medicaid beneficiaries in North Carolina, but consume about one-fourth of the program costs.

Following are three interviews I conducted (in October 2011) with Marsha Gold, a researcher at Mathematica Policy Research, and one of the nation’s foremost experts on the dual eligibles:

• Interview part 1, 10/28/11
• Interview part 2, 10/28/11
• Interview part 3, 10/28/11

The most important thing to remember when discussing Medicaid, is that it is not one, homogenous program in terms of who is covered. For example, the per capita Medicaid expenditures by Medicaid on dual eligible beneficiaries was around $10,600 in 2009; for the far more numerous children covered by the program, it was $2,800, in large part owing the cost of nursing home and other long term care services for the duals. And the number of dual eligibles will inevitably grow due to the movement of baby boomers into eligibility for Medicare. Keep in mind that most of the persons who would be covered by a Medicaid expansion under the ACA in North Carolina are childless and low income adults, not the more complicated (medically) groups of dual eligibles and the long term disabled.

Further, regarding the language used by the Governor to describe Medicaid as broken–and then using administrative costs as the prime example–the figures on administrative costs described in the in the N.C. Audit have been called into question. As noted in the post, some of the administrative costs in other Medicaid programs are contained in the amounts of dollars spent by managed care companies. So, the much discussed N.C. audit did not provide a complete picture of what proportion of other states Medicaid program was spent on administration. This is important only because this administrative “brokenness” was the logic provided by the Governor for not expanding Medicaid. Not only was this not the case, but the expansion would add people who are on average, much better health risks than the anecdotal examples of problems that have been provided in the debate–mostly of problems with dual eligible beneficiaries and the long term disabled (and there are many problems and difficulties, first and foremost about the health of these individuals).

What is broken in Medicaid are many of the beneficiaries, particularly the dual eligibles described above. These are elderly individuals, many living in Nursing Homes, often because they are widows or widowers, and who have many complicated acute and long term care needs. Medicaid provides care for “the least of these” and that will always be very hard and expensive.

Interview with Sec Wos and Director Steckel

Rose Hoban interviews N.C. Health and Human Services Secretary Wos and State Medicaid Director Steckely. There is a very revealing, 15 page transcript of the entire interview embedded in the story. More later on this, but quick thoughts:

• The Governor clearly said we could not expand Medicaid because it was broken. Administrative overruns were cited as the main way the system was broken.
• The degree to which NC Medicaid has unusual administrative costs is in some doubt; especially states using more managed care don’t call some of the admin costs admin (more on that next week)
• Medicaid is a counter cyclical program whose beneficiaries rise when the economy is bad; it is impossible to precisely estimate the number of beneficiaries. Medicaid is surely a difficult item for all states to budget for due to this, but at least some of the budget overruns in N.C. the past few years have been related to fighting between a Democratic Governor and a Republican General Assembly. We don’t have that issue now.
• I agree that coordination of care for complicated patients, especially those with mental health and long term care needs leads a lot to be desired. I am ready to cheer on efforts to improve these issues in N.C. Medicaid…but the Medicaid expansion would mostly not add such folks to the eligibility roles, but instead add mostly childless adults, who do not now qualify based on disability.