Watching new Medicaid costs

Dec. 2
The Advocate, Baton Rouge, Louisiana, on watching new Medicaid costs:
According to a new report from the state’s auditors, taxpayers are shelling out more than $900 million in increased costs since a move to private insurers in the Medicaid program.
But as the Legislative Auditor’s report said, that increase is not yet conclusive about whether the privatization initiative of Gov. Bobby Jindal is inflating costs to no good purpose.
There are big numbers in Medicaid spending, borne by the taxpayer either at the federal or state level. And there are big numbers of Louisiana families that are dependent on Medicaid, either for medical care for the poor or for nursing home care for the elderly.
The top line of the auditor’s report, though, calls out for attention: Expenditures re-mained fairly consistent from 2010 through 2012, remaining in the $6.6 billion to $6.8 billion range. But then spending jumped to $7.57 billion by fiscal year 2014 which ended June 30.
Included is a net increase of $600 million related to Bayou Health spending — the private health insurance program handling health care for more than 900,000 of Medicaid’s 1.4 million recipients. In addition, there has been an estimated $350 million increase in payments for care of the uninsured to private operators of LSU hospitals, another controversial Jindal initiative.
“You do see the impact of these programs,” said Ernie Summerville, assistant director of Financial Audit Services.
But, he said, “there are a lot of other factors that go into the overall determination whether this is costing us that much money. I don’t think we have enough information to say that ... This is looking at one aspect.”
We think that caveat is important. Clearly, there was bound to be an increase in utilization of medical services with the privatization initiative.
If nothing else, Bayou Health’s private insurers had incentives to enroll people, and of course those folks went to doctors for needed care.
The theory is that managed care through Bayou Health will reduce duplication of services and allow people to get cheaper care or medicines in a doctor’s office instead of an emergency room. All of those are important data points that need to be assessed.
As Summerville said, the data for a comprehensive judgment is not yet in.
Another complication is that the state has been fine-tuning the requirements for managed care contractors, changing both financial terms for the contracts and the measurements for quality of care. The latter are particularly important, and we think the Department of Health and Hospitals has been making some good moves to see that the health outcomes of Medicaid patients improve.
At the same time, that’s another data point that is moving, and it may have some impact on bottom lines for the program.
We welcome the assessment of the auditor’s office on the big questions of both costs and effectiveness of the privatization initiative.
It sounded good, in the sense that it seemed plausible to help people and to contain rising costs. But privatization must prove itself to be worthwhile. Rising costs are not a good sign, but not yet the final judgment on this program.
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