Rest of US catching up with CT – Medicaid managed care doesn’t work

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Closeup of assorted coins.

Two Health Affairs blog posts highlight the disappointments states are having with their capitated Medicaid managed care programs. Managed care across the US is growing fast, making big profits for private insurance companies, promising improved health outcomes and lowering costs. But CT found exactly the opposite effect when we shifted away from capitated managed care to care coordination. Since 2012 when private insurers left the program, CT has saved hundreds of millions of tax dollars, consumers have better access to care, and quality rivals private insurance plans.

Part One of the blog posts highlights Medicaid insurers’ large profits. The authors note a five-fold variation in insurers’ administrative overhead and 37 percentage point variation in medical loss ratios between states, raising concerns of underservice. In addition, state program costs on top of insurers’ administrative costs reach as high as 10.8%. Medicaid managed care plans are not required to meet MLR requirements under the ACA. Part Two asks the question many CT policymakers came to before 2012 – How Much Risk is Actually Transferred to the Plans? The authors note that the rate-setting process ensures that rates are high enough to cover reasonable costs. It is up to states to negotiate savings. To the question of whether Medicaid managed care really saves any money, the authors note that “the evidence for savings is surprisingly thin.” The authors also find no peer-reviewed evidence of improved health among Medicaid managed care members. But CT knew this all along.