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S.C. Statehouse
Report
Sunday, Aug. 14, 2005
VIEW: http://www.statehousereport.com/columns/05.0814.risk.htm
COMMENTARY
Medicaid plan looks risky,
costly
By Andy
Brack
SC Statehouse Report
 AUG. 14, 2005 - More than 700,000 South
Carolinians may be used as guinea pigs to see if the
marketplace can lower costs in providing health care.
Gov. Mark Sanford and the folks at the state Department of
Health and Human Services requested a waiver from the federal
government in June - - just five days after lawmakers went
home for the year - - to test a controversial new way of
delivering Medicaid services.
Medicaid, which provides health care services to the poor
children and the elderly, consumes about 20 percent of the
state budget and has been growing at 9 percent a year.
Traditional ways of dealing with escalating costs are cutting
benefits, decreasing rates to doctors for services provided or
cutting people from receiving the health services.
Sanford and his pals want to try something different - - to
hold down costs using the holy grail of the marketplace as
Medicaid's savior.
Advocates and some analysts say the program should be given
a chance because it provides a new paradigm that will
encourage the insurance market to develop innovative new
health plans that will allow the poor and elderly to choose.
According to DHHS, "It is desirable to bring market place
principles to the Medicaid program. It is essential to both
enable and require that the Medicaid beneficiary participate
as a prudent buyer of health care services." Or according to
the waiver application: "We plan to create an environment
where providers and insurers are freed from unnecessary
bureaucratic requirements and can compete for the consumer's
dollar."
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Translation: The Republican way of doing business is to
figure out a clever way to cut government programs and let the
market rule.
Critics say the Sanford salvation is still half-baked. One
of the biggest reasons is, "The proposal rests on untested
assumptions, such as the belief that a system of managed care
plans and provider networks will rapidly emerge in the state
to serve Medicaid beneficiaries," according to the Center on
Budget and Policy Priorities.
In a scathing report, the Center (http://www.cbpp.org/) described the Sanford
plan as a radical way that seeks to privatize Medicaid.
"For beneficiaries - - the vast majority of whom have
incomes below the poverty line - - the result would be much
less health coverage at considerably greater cost. Private
plans would not be required to provide the range of benefits
now offered under Medicaid. All beneficiaries, including
pregnant women and children, would face a significant increase
in out-of-pocket costs for health care."
In other words, the people who can least afford health care
increases may have higher costs, which means they likely will
show up more in emergency rooms, which will raise overall
costs of health care even more.
The Sanford plan essentially calls for Medicaid
privatization in three ways. First, the state would create
personal health accounts for Medicaid users, who would
self-direct their care dollars to the doctor of their choice.
Second, Medicaid users could use the money to purchase private
insurance, which may reduce benefits. Or third, Medicaid
recipients can join use the money to join private networks,
which would run like a health maintenance organization and
could limit benefits.
In addition to hurting the most vulnerable, the Center says
the proposal has a number of obvious weaknesses:
- It's risky. It would rely on a delivery system
that currently doesn't exist, according to the Center.
- It's theoretical. There's no evidence that
relying on the marketplace would really lower costs. In
fact, bringing in the marketplace has the advantage of
encouraging competition, but multiple avenues of service
delivery also encourage inefficiencies and reduce economies
of scale.
- It may be more expensive. If you have 10
companies doing the same thing that one bureaucracy is now
doing, administrative costs are higher. Studies show
Medicaid's administrative costs are about half of private
health plan administrative costs. Furthermore, South
Carolina's administrative costs are only 4.6 percent of
total program costs, more than 2 percent below the national
average.
Some may admire the Sanford administration for trying to do
something about Medicaid, but at this point, the proposal
seems like it has too much of a chance of hurting the poor,
elderly and children. They shouldn't be experimental subjects
to test a Republican political theory.
This proposal doesn't appear to be much different than what
the Bush Administration tried to do nationally to privatize
Social Security, an idea that failed miserably when most
people figured out it wasn't in their best interests.
Go back to the drawing board.
RECENT
COMMENTARY
McLEMORE'S
WORLD
8/14: New
interpretation
Another great cartoon from Bill
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KEEPING
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Ahead on
modernization
This section tracks past forecasts by Statehouse
Report with other media reports:
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In Statehouse Report:
6/19/05: Tax modernization should
be on the front burner: "Beyond the constant
political rhetoric about taxes, it's time for the state
to take a long look at modernizing our tax system. Over
the summer, lawmakers are planning big pow-wows on the
property tax. But instead of a small fix here or a minor
tweak there, lawmakers need to look at equity and
fairness to make sure the whole structure is as balanced
as possible." |
In Spartanburg Herald
Journal:
8/9/05: Lawmakers should be careful about changing
tax system. "Lawmakers should be careful about
how they tinker with the system. To begin with, the
state needs to take a comprehensive look at its tax
system. Lawmakers have passed many measures of piecemeal
tax relief and economic development incentives. They
have created a more complex and less fair system that
has shifted more of the burden from industries to
commercial businesses and homeowners. Another quick fix
for the property tax won't fix the larger
problem." |
SOUTH CAROLINA SCORECARD
Here's a "thumbs up" and "thumbs down" related to various
political events from the past week:
Thumbs up
Budget and Control Board. Hats off to the board for
voting to add medical coverage to the state health plan for
state workers who want to quit smoking.
Thumbs down
Eckstrom. Lawmakers are right to question whether
Comptroller General Richard Eckstrom can shift $105 million of
surpluses to cover accounting glitches. Sounds an awful lot
like appropriating, and whose job is that? More.
Sanford. The governor's arrogant move to privatize
Medicaid smacks of class warfare.
Shedd. Seems like the government could do a little
better and save money for office space for federal Judge
Dennis Shedd than building a $2.5 million palace just a few
miles from the federal courthouse.
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