Save Medicaid from wrong ‘reform’

N.C. Governor Pat McCrory should veto any Medicaid reform plan that includes managed-care companies.
N.C. Governor Pat McCrory should veto any Medicaid reform plan that includes managed-care companies. clowenst@newsobserver.com

Since taking control of the General Assembly following the 2010 election, Republicans have been intent on reducing or at least freezing the cost of Medicaid. The federal-state health insurance program serves mostly children in low-income families, plus pregnant women, the elderly and disabled people. The federal government pays two-thirds of the cost, and the state pays one-third. Last year, the state’s share was about $3.3 billion.

Republican reforms focus on “transferring the risk” of extra medical costs from the state to the providers. Legislative leaders want a system in which the state writes a check for Medicaid and leaves it to providers to meet the medical needs of the 1.8 million people covered by Medicaid. Providers would absorb any cost overruns.

To make that transition, Senate leaders are pushing to have the system taken over by private managed-care companies. A House plan supported by Gov. Pat McCrory calls for the system to be run by hospitals and doctor groups known a “provider-led entities” or PLEs. Now what’s emerging is the possibility of the two approaches being combined, with insurance groups covering some people on Medicaid and providers covering others.

This is a case in which compromise isn’t progress. The House should hold out for a Medicaid system run by providers, a group whose primary interest is preventing illness and helping the sick, not making profits for stockholders. If the House can’t hold the line, the governor should veto any plan that involves managed-care companies.

The performance of managed-care companies in other states has ranged from disappointing to disastrous. When profit is the motive, medical services and access to services are cut. The savings then go to stockholders, not back to the state. And when costs can’t be sufficiently controlled, managed-care companies demand a rate increase or threaten to pull out, with the Medicaid delivery system held hostage.

Beyond the hazards of a switch to managed care, Senate leaders are also considering ending the management role of Community Care of North Carolina. The nonprofit organization oversees the delivery of services to 1.4 million people covered by Medicaid (it does not serve elderly Medicaid patients in nursing homes) and has realized impressive savings by encouraging preventative care and managing chronic illnesses to reduce the frequency of hospital admissions.

Republican lawmakers skeptical of CCNC efficiency claims ordered a review by medical-costs experts overseen by the state auditor’s office. This month the report came back. Between 2003 and 2012, CCNC has saved the state an average of $312 per beneficiary annually, or nearly $400 million a year.

That Medicaid will be changed is inevitable and in some respects desirable. But the delivery of services must be run by providers, and the systems developed by CCNC that promote health and lower costs should be kept in place. Anything less will violate the first principle of medicine – first, do no harm.