Governors across the country are struggling to balance their budgets that have been squeezed by the recession. Many are looking for savings from the Medicaid program that provides health coverage to some low-income residents. Although the federal government pays more than half of Medicaid's costs, the program still takes a huge chunk of states' spending—on average about 16 percent—and is among the most expensive programs run by states after education.
As part of the stimulus, the federal government pumped extra money into state Medicaid programs, which grew during the economic downturn. But that special assistance is slated to run out at the end of June, and provisions of the new health law have limited states' ability to cut enrollees. The governors, who are assembling in Washington this weekend for the National Governors Association annual winter meeting, are pressing for much more latitude in running Medicaid.
Kaiser Health News reporters Jessica Marcy and Aimee Miles surveyed some governors to ask, "If you were given flexibility from Washington to redesign your state's Medicaid program, what would you do?" (Some answers have been edited for space and clarity.)
Arizona Gov. Jan Brewer, Republican
I believe a sustainable, flexible and manageable Medicaid program is critical to Arizona’s fiscal stability. Arizona is a national leader in Medicaid innovation and continues to pursue every option available to improve the program’s efficiency and effectiveness, without sacrificing core state government functions such as education and public safety.
In addition to efforts to manage the number of people enrolling in the program, it is necessary to implement common sense benefit reforms, such as the elimination of taxi rides for visits to the doctor and the institution of fees for missed appointments. These "reforms" have long been a reality in the commercial market, and Medicaid should take lessons from private sector successes. Finally, payment reforms and a continued focus on integrating and coordinating care will ensure the program is operating as efficiently and effectively as possible. By working with elected officials, health care providers and patients, we can institute reforms that protect taxpayers while safeguarding Medicaid as the safety net originally intended.
Arkansas Gov. Mike Beebe, Democrat
Arkansas wants to use its unique national position to redefine how we pay for Medicaid. The current system of fee-for-service is unsustainable, and the continued rapid growth in Medicaid costs threatens to hit our state budget hard in the near future. However, unlike most of the country, Arkansas is not facing budget shortfalls and is not making rate cuts, eliminating services or trying to reduce the number of citizens eligible for Medicaid assistance.
This puts Arkansas in prime position to step out front and try something new. The present Medicaid structure pays providers for undertaking as many tests and procedures as possible, with no consideration of treatment outcomes. We want to create partnerships across the public and private sectors of the health-care system to craft a new payment-and-reimbursement model that encompasses Medicaid, Medicare and private health insurance. This system will focus more strongly on outcomes and will incentivize providers to help people get better.
Arkansas is the right size and in the right financial position to pursue a statewide program that can start us down the road toward a health-care system that produces better results for patients at lower costs for everyone, while still ensuring reasonable compensation for providers.
Georgia Gov. Nathan Deal, Republican
The current healthcare law has states locked in, with no flexibility to decide what is best for each of their residents. The best avenue to ensure Medicaid is efficient, accountable and sustainable for Georgians is flexibility. However, what changes we would implement if given the flexibility would be largely dependent upon the state budget. There are several options Georgia may explore if this requirement was lifted, though nothing specific has been discussed.
Kansas Gov. Sam Brownback, Republican
I have asked Lt. Gov. Jeff Colyer, a doctor, to head my administration’s efforts to reform Medicaid in the state of Kansas. He is leading a working group that includes the cabinet members and elected officials involved in Medicaid delivery in our state.
We are asking stakeholders and citizens to submit pilot projects and reform ideas based on three criteria -- improving quality of care of Kansans receiving Medicaid; controlling costs of the program; and long-lasting reforms of health care that improve the quality of health and wellness of Kansans.
Everything is on the table. Our efforts are focused on choice, competition, affordability and accountability. These principles will guide us as we try to remake a 45-year-old program comport more efficiently with today’s needs. Key to our success will be having the flexibility to reform the state’s entire system of Medicaid to improve quality at lower cost.
Kentucky Gov. Steve Beshear, Democrat
In Kentucky, we strongly believe that using public-private partnerships to implement innovative cost saving measures and improve health outcomes will transform our state's program. Organizing the health care delivery system to improve care and outcomes in particular holds a great deal of promise for improved savings and service.
We are investigating strategies used by other states to manage health care costs, and we will implement programs based on those results. Among the programs we are looking at are:
• Performance-based managed care programs for all people eligible for Medicaid in the commonwealth.
• Pay-for-performance physician and primary care provider incentive plans.
• Performance-based managed care dental programs for children.
• Performance-based pharmacy capitation programs.
• A long-term care coordination program for institutional and community-based care.
• Increased cooperation and collaboration with the United States Attorneys to bring the full arsenal of enforcement actions to bear on significant instances of fraud and abuse.
These innovations are in addition to steps we have already taken to control costs in Medicaid. These previous steps include reducing unnecessary use of medical services, treatments and ER visits, stopping payments to hospitals for hospital-acquired infections and errors, more aggressively identifying fraud and abuse and increasing efforts to collect payments for Medicaid services from liable third parties. Kentucky is also eliminating the ability of some patients to "doctor shop" to obtain unnecessary drugs.
New Jersey Gov. Chris Christie, Republican
(from a Feb. 22 speech to the legislature suggested by his office)
To make room for (budget) priorities, we must reform Medicaid. ... We propose to move our aged, blind, and disabled recipients into modern managed care, and move their pharmacy benefit to modern managed care as well – saving a total of $41 million while still providing vital services. ... We must do these things, not only to fill the hole created by the loss of over a billion dollars of federal stimulus money since 2010, but because it is the right thing to do. Medicaid’s growth is out of control. We must manage it better. Even with $250 million of Medicaid savings in this budget, and additional projected savings from a $300 million global waiver to reform Medicaid, spending will grow by nearly $1 billion over last year. That is the definition of an out-of-control program. Worse yet, we cannot make meaningful reforms because of the restrictions on New Jersey from Obamacare. States desperately need relief from that unfunded federal mandate.
Oregon Gov. John Kitzhaber, Democrat
The economy has left Oregon -- like many states -- with a serious Medicaid budget shortfall.
But we have made a commitment to ensure that none of the 600,000 people in the Oregon Health Plan (the state's Medicaid program) will be dropped from health care in order to balance the budget.
To meet that commitment, Oregon has embarked on a unique effort to bring coordinated, patient-centered care to our statewide delivery system. We are so serious about it that I have put the estimated second-year savings from the effort -- some $290 million -- into my proposed budget for the legislature. To make it happen, stakeholders from every part of the health-care and long-term-care system are involved in crafting a plan to achieve those savings.
Here are some of the principles the group is following:
• Local coordination of all benefits, including physical health, mental health and addiction services, oral health and long-term care services.
• Coordination of social supports that promote health and keep people out of high cost medical care.
• Include Oregonians who are eligible for both Medicaid and Medicare. Blend funding to create more efficient use of resources, care management and aligned incentives.
• Set budgets at levels that are sustainable, affordable and sufficient for best-practices; establish incentives for prevention efforts, and lower costs.
• Build on best practices in local communities in which health entities partner with each other and consumers, and are accountable for improved health.
Oregon has a reputation for innovation when it comes to health care and I believe that the budget crisis has created an opportunity for our state that we cannot afford to waste.
Texas Gov. Rick Perry, Republican
Whether through a waiver or a block grant, Texas would be better served by a system that is tailored to the unique needs of Texans rather than the one-size-fits-all system currently in place. We need a system that provides for a more market-based health care delivery model that emphasizes individuals sharing in their health care decisions and responsibilities, and eliminates fragmentation and duplication.