JFS Perspectives

Friday, July 07, 2017

Denver Business Journal: Viewpoint: The business case for continuing Medicaid

Denver Business Journal: Viewpoint: The business case for continuing Medicaid

Shepard Nevel, the head of Jewish Family Service, makes the case against gutting the federal Medicaid program in this article in The Denver Business Journal, July 7, 2017.

The article is for Denver Business Journal subscribers only, but the full article is below:

The political contest over federal health care policy is in full swing.

The battleground is rooted in a fundamental difference over our nation’s approach to health care and goes beyond the parameters of the Affordable Care Act (Obamacare) enacted in 2010. It also reflects an intensifying of the half-century debate over the legislation creating Medicaid signed by President Johnson in 1965. Medicaid’s opponents see it as an unsustainable entitlement while its supporters see it defined by the value of access to health coverage and care for the most vulnerable.

On those terms, the philosophical differences are too deep to be resolved and could lead to federal policy veering disruptively between these competing philosophies based on which party is in power.

But there is another way.

Throughout U.S. history, consensus (or at least super-majority support) has often emerged not when one side “prevails over the other side” but when the debate is re-framed.

The Marshall Plan, a U.S.-led effort to rebuild Europe after World War II, initially embroiled in controversy, eventually earned broad support. Partisan debates over welfare evolved into bipartisan support for the poverty-reducing Earned Income Tax Credit. The debate over public education, once divided along stark partisan lines, has been re-framed by the public charter school movement.

Now is the time to take a similarly fresh look at Medicaid, from a business perspective.

What are the primary challenges of our health care system for the vast majority of American families and businesses?

Health care is too expensive, too uneven (one the most unequal health care systems among developed nations), too complicated (a particular burden for small businesses) and under-performing.

With each of these challenges, a strong business case can be made for Medicaid.

Let’s take cost.

Last year, health care spending in the U.S. hit the $3.35 trillion mark, exceeding $10,000 per person for the first time. No other country comes close among the 43 industrialized nations tracked by the Organization for Economic Cooperation and Development (OECD). But more spending does not equate to better outcomes, as we see in the U.S.’s relative poor public health outcomes compared to other industrialized nations, with high rates of infant mortality, chronic diseases and deaths attributed to lack of timely and preventative care.

The increasing cost of Medicaid as a component of total health care spending has garnered considerable attention. But here’s where there is a need and opportunity to reframe.

While Medicaid costs are rising, spending per enrollee is lower for Medicaid in comparison to private insurance for individuals with common health characteristics. It is estimated that total health care spending per person would increase nearly 26 percent for adults and 37 percent for Medicaid - or CHIP - enrolled children if they were to be moved to a private health plan. So the question is not only what Medicaid costs, but what Medicaid costs compared to comparable health coverage and care through other means.

Medicaid programs across the nation, including Colorado, continue to drive toward even more efficiencies and system reforms, moving to value over volume of services and greater transparency and accountability. This national trend in Medicaid reform compares favorably to other large “drivers” of our health care costs that regrettably receive far less attention. The pharmaceutical and medical device industries, for instance, both enjoy profit margins unmatched by any other health care system in the world. Here again, Medicaid offers a positive contrast, with private plans and Medicare paying substantially more than Medicaid pays for brand-name drugs.

Simply stated, an informed business analysis of our health care system leads to the conclusion that Medicaid is among the most cost-effective elements of the $3.35 trillion we spend on health care in total; and Medicaid funding and expansion should be protected not dramatically slashed.

Despite misperceptions to the contrary, Medicaid is far more than “an insurance card,” as critics argue. It is a lifeline for tens of millions of low-income and disabled Americans and evidence indicates has long-term positive effects on health outcomes and increased education and economic opportunity. And for consumers it is less complicated to navigate than other parts of our health care ecosystem.

Critics of Medicaid have focused on doctor participation rates, driven in part by lower reimbursement rates and delays in billing. While Medicaid like any program has room for improvement, the evidence demonstrates that Medicaid and private insurance enrollees have the same likelihood of using primary care doctors, prescription drugs and inpatient care and most other health care services. The two exceptions are lower emergency department use and fewer specialist visits, neither of which is an entirely negative result considering the occasionally excessive (and costly) utilization of both.

Finally, let’s discuss the issue of political viability. Here is where there may be the biggest disconnect, and greatest opportunity, for a paradigm shift in our nation’s approach to Medicaid. Public opinion polls show overwhelming support for Medicaid and its key program elements. But this high level of public support for Medicaid only can be activated by strong leadership to overcome narrower, special interests. Some governors from both parties are making the case for Medicaid, and leadership is important at the federal level where levers of system change exist.

A national approach to health care reform and cost containment should not force deep cuts to the relatively cost-effective Medicaid program while neglecting other bloated sectors of our health care system, where equal or greater savings can be accomplished with far less negative impact. The debate over how quickly to slash Medicaid misses the point entirely. This approach is not only inhumane for the most vulnerable of our fellow citizens, but is deeply misguided from a business perspective.

Shepard Nevel is CEO of Jewish Family Service of Colorado. Reach him at 303-597-5000 or email, snevel@jewishfamilyservice.org.

Photo by Andrew Harrer, Bloomberg