Courtesy of HP
Medicaid enrollment will exceed 90 million by 2020. Another recession would increase Medicaid enrollment to over 100 million, meaning nearly one-third of all Americans will be insured through Medicaid. Per capita benefit costs are expected to increase by an average annual rate of 9%—far outpacing state revenue growth even in good economic times and doubling Medicaid budgets every eight years.
National Medicaid past and projected spending
Together, we must come to grips with Medicaid's fiscal challenges and transform the program to ensure Medicaid coverage:
The root causes of Medicaid's long-term fiscal unsustainability are numerous and well understood by state leaders. Many of these are unique to Medicaid, including the sheer complexity of Medicaid policy and administration, a long legacy of federal mandates, and Medicaid's role in providing more types of services to more types of patients than Medicare or any private insurer. However, state Medicaid programs also face the same problems confronting other public and private healthcare purchasers. Medicaid is not immune from the effects of poor quality of care, preventable events, poor coordination and care management, inadequate prevention, lack of transparency, and reimbursement that rewards volume and discourages value.
To transform Medicaid into a fiscally sustainable program, we recommend states consider this five-step strategic framework, with specific reform opportunities in Medicaid policy and management:
1. Value-driven Medicaid benefits, payment, and care delivery.
A fiscally sustainable Medicaid is a value-driven Medicaid. States should consider adoption of value-based models for Medicaid benefits, payment, and care delivery. Specifically, state policymakers should seriously consider:
2. Data-driven Medicaid enterprise
Ultimately, Medicaid fiscal sustainability will require a modern, data-driven Medicaid enterprise. Recommended features include:
3. Streamlined business processes
There are many opportunities to replace outdated federally required business processes with new, highly streamlined, outcomes-based processes and procedures. For example, current processes for section 1115 Waivers could be greatly improved by:
4. Aligned leadership as a major purchaser
As large purchasers of healthcare, states should consider ways to leverage their buying power and market influence. This may include:
5. Bias for reform and innovation
Throughout Medicaid—at the federal and state levels and across all dimensions of the program—policymakers and administrators should adopt a renewed "bias" for reform and innovation. Despite formidable obstacles, state Medicaid programs have long been innovators. Many reforms now championed throughout healthcare—such as performance reporting, prevention, and care management—first found a home in Medicaid. To ensure Medicaid's fiscal sustainability, a strong, relentless bias for reform and innovation is essential. We must renew a national commitment to states as America's laboratories of reform in healthcare. This requires the creation of a legislative, regulatory, fiscal, management, and technical environment that explicitly supports bold reforms, rapid prototyping, scaling of successful innovations, and sharing of best practices.
Courtesy of HP
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