Medicaid MCOs and cost savings – What the evidence says

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Go to the full report

Governor Lamont is reportedly considering a plan to have private insurance managed care plans (MCOs) run Connecticut’s Medicaid program.

Do MCOs save states money in state Medicaid programs? We looked into the evidence.

In a word, No.


From the literature:

The evidence does not support Medicaid managed care saving money for states.

According to MACPAC, Medicaid’s federal oversight commission, the National Conference of State Legislators, and KFF, despite many studies,  independent evidence does not support MCOs’ promises to save money for states. Syntheses of independent, peer-reviewed studies also do not find evidence of savings.

MCO inefficiencies include advertising to attract healthy members, federal taxes that states like Connecticut do not pay, overlap of functions between MCO and agency staff, agency staff to manage MCO contracts, and costs to collect  data, sort out the differences between MCOs, reporting, and accountability enforcement.

Without MCOs, Connecticut leads the nation in Medicaid cost control. According to DSS financial reports, Connecticut taxpayers have saved billions of dollars since MCOs left our program in 2012. DSS financial reports also find that Connecticut Medicaid spends just a third of what other states spend on administration, the lowest rate among states.

Last year Connecticut spent only 21.9% of our state budget on Medicaid, well below

the US average of 29.6%. Connecticut’s lower Medicaid spending frees up $3.96 billion in our budget, compared to the average state, for other policymaker priorities.

Go to the full report for all the evidence

Visit NoHuskyMCOs.org for updates, more evidence, the history of MCOs in HUSKY, talking points, a slide deck, sign onto a petition to the Governor, and other ways to get your voice heard. We’ll be adding to it regularly. NoHuskyMCOs is sponsored by the CT Health Policy Project.