N.C. Medicaid Administrative Costs
November 25, 2013 2 Comments
The line “Medicaid is broken so we can’t expand it” has been repeated ad nauseum in North Carolina during the past year, with a key claim being that North Carolina spent more than several comparator states on administrative costs. Adam Searing recounts the events of the past year, including factual push back that unfortunately had little political impact.
A recent North Carolina General Assembly Fiscal Staff study shows that not only are the North Carolina Medicaid Program’s administrative costs not higher than those State’s to which they were compared, but are actually lower:
Slide 20 above shows where North Carolina ranks in terms of percentage of program costs going to administration as compared to the states used for comparison in the Spring. The source of the earlier error was that amounts being paid to managed care companies were being to assumed to go 100% toward patient care, when in fact managed care companies used some of that for administrative costs (as they reasonably could be expected to do), and a portion of the money would go to profit (as is reasonable to expect; why else would they being doing it).
Above is an apples-to-apples comparison. The earlier mistake was not one of getting the numbers wrong (from the CMS-64 form). It was a case of the numbers not being very meaningful in the manner they were presented given the rise in managed care across many of the comparator states. As the N.C. Fiscal Staff Study from last week noted:
North Carolina doesn’t have higher than expected administrative costs; they are actually lower than those used for comparison last January. This is not a reason to not expand Medicaid in North Carolina.