Thursday, October 20, 2005

Give It Away Now

The New York Times story on the new Medicaid plan in Florida is a mite bit confusing. At first it seems to describe a rather good plan:
Under the waiver, Florida will establish "a maximum per year benefit limit" for each recipient and fundamentally change its role. The state will largely be a buyer rather than a manager of health care.

In an interview, Alan M. Levine, secretary of the Florida Agency for Health Care Administration, estimated that no more than 5 percent of Medicaid recipients would hit their annual limits. At that point, Mr. Levine said, "the health plan will still be responsible for providing services to the consumer, but the state's reimbursement would be limited to that amount."
If this is accurate, the State of Florida is forcing health insurance companies that enroll people to bear the downside of major medical expenses. This means that the insurance companies will only sign up if they are actually more efficient than the State of Florida thinks they are, because they are bearing large amounts of risk for probably not so good premiums. And so you might well get ultra-efficient health plans emerging, or else business would revolt and the plan would be repealed, or Florida would put more money into Medicaid.

But on the other hand there is this:
Asked whether the beneficiary would be responsible for paying costs beyond the limit, he said: "That can happen today. There are arbitrary limits and caps embedded in the state Medicaid program, limits on home health services, doctors' visits, prescription drugs."

For each beneficiary, Florida will pay a monthly premium to a private plan. Insurance plans will be allowed to limit "the amount, duration and scope" of services in ways that current law does not permit.
This contradicts (or nearly contradicts) what Alan M. Levine says because the insurance companies may not be responsible for providing care beyond the premium. They can introduce more limits on service by cutting coverage at some arbitrary point (or not covering certain procedures). This makes the plan a corporate give-away. Health insurance companies now get their hands on lots of premiums (the state will enroll you in one if you don't do so on your own), but without any downside: sure they have to provide health care, but once you get really sick and needs lots of (expensive) health care, your demand exceeds the amount, duration and scope of health care the company provides and the company no longer has anything to do with you. Those instances where you get incredibly sick are why you have health insurance, and the main business risk that health insurance companies bear. Eliminate that, and they profit.

This is really a subtle way of both cutting the scope of Medicaid coverage, and doing it in such a way that the immediate actor isn't the State of Florida, which would bear political blame, but the insurance companies which have no political responsibility because they are the actor telling you "sorry ma'am."

Certainly there is other stuff going on in the plan ("The state will deposit money into individual accounts for recipients who enroll in programs to help lose weight, stop smoking and lead healthier lives"), but that is just window dressing for a terrible idea.

Though I may have entirely mis-interpreted the article.


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