By Dan Calabrese ——Bio and Archives--July 27, 2018
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Two-thirds of states have cashed in on this “free” government lunch. Between 2008 and 2016, Medicaid enrollment nationwide rose 24 million to a total of 71 million, according to the Centers for Medicare and Medicaid Services. By comparison, only five million more Americans signed up for plans on the private individual market. Struggling to manage this Medicaid surge, states have increasingly come to rely on private health insurers. About 270 “managed-care organizations” administer half of federal Medicaid dollars. Under these arrangements, insurers are paid a capitated rate—that is, a flat monthly payment per enrollee, set to reflect what actuaries estimate will be the average cost to provide covered services. Unlike on the ObamaCare exchanges, insurers are paid higher “premiums” for covering sicker patients.
The theory is that this system makes costs more predictable for states while giving insurers an incentive to coordinate care and reduce “waste and fraud,” since they can pocket any savings. A win-win, right? Not quite. Instead insurers appear to be gaming the Medicaid rules to the detriment of taxpayers and sometimes patients. One problem is that future capitated payments are determined based on costs and claims reported by the managed-care organizations. If MCOs report inflated spending, their rates increase. This undermines insurers’ incentive to reduce wasteful spending, as the Government Accountability Office noted in a May report. Officials in 13 of the 16 states the GAO contacted “were unable to define the magnitude of overpayments in their managed care programs.” In 11 of the states, “officials responded that they did not directly monitor MCO payments to providers.”No one should be surprised by this. It’s what inevitably happens when politicians try to make something cheap or free to the masses, and then try to set rules about how it will be paid for so that costs are supposedly controlled and quality isn’t compromised. Those who have inside information and influence game the system and everyone gets stuck dealing with the fallout from the game. Most of the people who got herded to Medicaid could have purchased reasonably priced private insurance if that was not disallowed by ObamaCare, which insisted on gold-plated mandatory benefits that many people would never use and could have paid for out of their own pockets if they did need them. But that was never what Obama or the Democrats wanted. They wanted as many people as possible dependent on federal entitlement programs, because that would incentivize them to vote forever for the party of government – the party that would never keep the federal benefit train rolling forever. ObamaCare did only two things. The first was to mangle the private insurance market so insurers couldn’t make a profit and couldn’t price benefits to match a covered party’s likely level of risk. The second was to herd 24 million more people onto government-subsidized health care. ObamaCare is a complete failure, unless you hate the private sector and love everyone depending on taxpayers for everything they need. The fact that Democrats defend it to this day tells you everything you need to know about which of the two viewpoints they embrace.
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