Another reason to be glad HUSKY fired managed care

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New favorite quote – “If you have a dumb incentive system, you get dumb outcomes.” Charlie Munger, quoted by 46brooklyn

A new analysis by 46brooklyn highlights the extra costs to Medicaid managed care programs of drug industry middlemen. Ohio’s Medicaid program pays $224 extra in markups to Pharmacy Benefit Managers (PBMs) hired by managed care plans and provide no value to taxpayers or members. The report finds wide, unjustified variation in drug price markups by PBMs who can essentially set their own prices. According to 46brooklyn, “It is akin to Visa being granted the ability to set prices of individual products that you are buying at Target, and then charging 4.5 times more for a bottle of Pepsi than a bottle of Coke.” The difference in marked up prices then creates a cascade of warped incentives across the system, impacting members’ access to medications. Drugstores, both independents and chain stores, are moving out of low income neighborhoods. In good news, Connecticut is not affected by this mess. In 2012 we fired the managed care companies, and consequently the PBMs, from our Medicaid program resulting in significant savings to taxpayers and better access to care for members. 46brookly notes that “the fee for service model has largely removed the economic incentive to dispense one drug over another, leaving only the incentive to serve more patients.”

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