Solving the States’ Medicaid Crisis – Prevention, A Novel Concept Worth Exploring


For the past few years the impact of Medicaid costs on State budgets has become a central focus of Legislators and Governors. Here is some background information from the Kaiser Family Foundation Report:

Hoping for Economic Recovery, Preparing for Health Reform: A Look at Medicaid Spending, Coverage and Policy Trends, Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2010 and 2011

States experienced the sharpest decline in revenues on record, had to close unprecedented budget shortfalls of an estimated $194 billion for FY 2010 and had to handle increased demand for public programs like Medicaid.

And here are some recent news stories:

As these stories and others point out, many States are now looking to lower reimbursement, reduce or eliminate benefits, implement more managed care, opt out of Medicaid and a host of other approaches in an effort to dig out of this hole.

Like any program in which there is an optimal level of service delivery though, there is only so far a state can go in reducing rates and cutting benefits before the lack of care or reductions in access results in greater costs than those experienced prior to implementing the changes. Providers and others in health care already know that Medicaid is one of, if not, the lowest payer around and access to care, due to a myriad of reasons (number of providers, transportation as but a few examples) has always been a problem in Medicaid. Furthermore, the problem with each of these is that they do not address the underlying issue of why costs are rising over and above the expected increase caused by higher enrollment levels due to the poor economy.

The issue facing Medicaid is no different than the issue facing employers, a growing increase in the prevalence of preventable chronic illnesses. Medicaid beneficiaries are becoming more burdened with obesity, cardiac disease and diabetes among other preventable conditions at a rate that may surpass that seen in the insured population. While States continue their focus on the supply side of the equation, they need to begin to put in place programs that focus on the demand side as well.

Therefor the goal should be to create a healthier Medicaid population in order to permanently bend the cost trend. State Medicaid programs would be better served if they looked at their beneficiaries the same way employers do:

reducing the health risks in a population will over time result in lower health care costs.

It’s a sea change from the way Medicaid has been viewed in the past, but that’s because Medicaid was built to work within the health care system frame work as it currently exists; which is really nothing more than a sick care system.  This may be cliche, but as David Nash, the Founding Dean of the Jefferson School of Population Health at Thomas Jefferson University stated at last years Population Health and Care Coordination Colloquium and I am paraphrasing:

In a ranking of Pennsylvania counties by their health status, which county ranked the lowest?  Philadelphia county, home to seven major health systems and prominent medical schools. Why? Because the health of a population is not related to the health care facilities available. They only impact the population after a problem is identified. So the health care system has little to do with the health of a community.

State’s need to look beyond the current system to an idea being embraced by employers and one that was stated so eloquently by Dr. Dee Edington, in his book Zero Trends; if you want to bend trend, “you need to keep the healthy people healthy”, quite a novel concept for Medicaid, but one worth exploring.



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About Fred Goldstein

President and Founder of Accountable Health, LLC. My background includes over 25 years of health care experience in hospital administration, health plan management, disease management and population health.
This entry was posted in Health Reform, Medicaid, Preventive Medicine, The Industry, Wellness and tagged , , , , , , , , , , , , , , , , . Bookmark the permalink.

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