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Governor Rick Scott’s decision to take federal Obamacare money to expand his state’s Medicaid program was unsurprising. Amidst declining political fortunes, he was under intense pressure by local health care firms to accept the new cash.
Florida health care businesses, perhaps more than any other state, feed off of the Medicaid program. Many health care plans refuse to do business in the state precisely because it’s so rife with corruption. The breadth of government financing in Florida, and the state’s poor supervision, enables a lot of fraud.
This new expansion should help those businesses’ concepts expand.
How much? JP Morgan is out with a research note this morning that estimates the largesse paid to the legitimate side of the state’s health care market.
On the plan side, assuming $500 in incremental revenue at a 2% margin, JP Morgan calculated that earnings per share would grow by $0.12 for MolinaHealth (NYSE:MOH); $0.11 for Centene Corp (NYSE:CNC); and $0.02 for Aetna (NYSE:AET).
What’s more surprising, though, is how little the Republican governors are asking in exchange for signing on to President Obama’s plan.
At least Rick Scott got his “1115 waiver” – which will let the state shuffle more of its Medicaid recipients into managed care plans. That’s not a highly original vision of reform. The waiver makes it the burden of the health plans to sand down the benefits that these patients receive to match the Medicaid program’s declining fortunes. Other Republican governors have asked for little or nothing in the way of increased flexibility from Washington to better administer their programs. Such flexibility could have freed them from all of the federal rules that prevent governors from better tailoring Medicaid benefits based on individual need.
For these governors their decisions on the Obamacare Medicaid money was the moment when the states had maximal leverage with Washington. Few governors have used that influence to push for ways to pursue more fundamental reforms. Maybe they are just out of ideas.
Liberal commentators have hailed Governor Scott’s “reversal” on Obamacare and the Medicaid expansion. But it’s not clear what they are cheering. Medicaid is lionized on the left with an almost religious fervor, but the program is hard to be really proud of. That it’s better than being uninsured (for most patients) seems to be the rallying cry on the left. But that’s hardly a high standard to measure success.
The reality on the ground? Most Medicaid patients cannot access timely, specialized care (especially on the outpatient side) when they need it because reimbursement has been set so low, and the doctors partaking in the program are often so poor.
Obamacare increased reimbursement, but mostly for primary care providers. It won’t do much to change the networks that these patients have access to, which are frequently narrow, and filled with low-performing providers. This translates into poor outcomes for many complicated conditions. True, Medicaid pays first-dollar coverage for a lot of routine medical care. This means patients with simple problems have fewer out-of-pocket costs. But it’s increasingly becoming a hollow benefit that leaves patients with more complex issues with limited access to outpatient care.
Honest liberals seem to recognize these woes. Their belief? Once Medicaid expands, and turns into a middle class benefit, there will be a base of political pressure to correct these problems. That seems to be a terrible gamble to take with peoples’ health. But with Republican Governors fighting for few ideas that will actually reform Medicaid’s structure, there don’t seem to be many political leaders who care.
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