After my post on how to transform Medicare into more of a free market system I thought about what if the same idea was applied to Medicaid. Medicaid currently provides benefits to 74 million low income and disabled people. Medicaid in 2017 spent $582 billion. This would mean on average Medicaid spent $7,800 per Medicaid beneficiary. Each state administers Medicaid but the actual funding comes from the federal government (i.e. taxpayers). Medicaid spending is used for hospital care, physician services, prescription drugs, and nursing homes. In a previous post years ago I pointed out how to the government makes it extremely difficult and expensive to open a nursing home (there were more nursing homes in 2010 than 1995 despite a dramatic increase in the number of people requiring these services). One major issue with Medicaid is the improper payments for turn out to be about 12% of it's budget or $139 billion (even Wells Fargo with all it's issues doesn't have a improper payment rate close to this). What if individuals were allowed the freedom to spend Medicaid dollars as they see fit?
A solution that would offer Medicaid beneficiaries a health savings account (HSA) that would allow individuals more options, better quality care, and reduce the burden on taxpayers and greatly improve efficiency. The basic idea of an HSA account is that money is contributed and the growth is tax free and if distributions are taken to cover medical expenses the growth in the account is not taxed. These accounts over a variety of investment options that allow individuals to invest the monies as they see fit. The idea is allow contributions to grow over time and then to use the monies inside of the HSA for medical expenses as they come up. It is important to know that each states have their own rules regarding Medicaid (so not only would the states have to approve this plan but the federal government would have to approve it as well).
Current legislation only allows individuals with high deductible insurance plans to have HSA plans. This current legislation would have to be repealed to allow anyone to have a health savings plan (which wouldn't be a bad thing). The state government every year would deposit monies spent on Medicaid into the HSA plan for Medicaid beneficiaries and allow Medicaid beneficiaries to use the funds for health insurance or health expenses (I prefer the money being deposited into the account over vouchers so Medicaid beneficiaries don't have to go through a middle person or agency). If money is taken out from an HSA for non-medical expenses the penalty is to pay both the income tax and a 20% penalty (for Medicaid beneficiaries I would be okay increasing this penalty to 50%-75% ) as an incentive not to withdraw monies. Any penalties would be just be additional government revenue.
As Medicaid is run by each state there are financial requirements in terms of how an individual can qualify. However, if an individual Medicaid beneficiary was able to use $7,800 of benefits every year that would allow them to have power in the market place and make choices in terms of what health care they wanted and allow them choices in deciding what doctors to use, what prescriptions to purchase, and what treatments they would like. Also with 50 different states there could be experimentation which plans and see which plans worked and which ones didn't. The $7,800 could be the maximum amount of benefits allowed with it being phased out based off income. For example someone without any income would get all the benefits however someone that earns $15,000 would get a reduced amount of the $7,800 (this would help in rein in the cost of Medicaid). Now when you run the math if there was a family of 3 is on Medicaid this would be over $23,000 of health benefits annually that could be used (I am not opposed to a family maximum limit either). Not only could the health benefits be used for the current year but could be saved and invested for future years if Medicaid established HSA for beneficiaries. Allowing individuals to invest the monies in their HSA accounts would over time allow the account to grow in value which would allow individuals to save for their future medical costs (and have individuals learn about deferred gratification). In addition to this, if the monies were invested in either the stock market/bond market it would provide a boost in giving corporations capital (possibly hundreds of billions of dollars) which would give the economy a major boost.
In addition to this, if Medicaid beneficiaries could use the funds in the Medicaid HSA account to bid on medical services it would create even more competition. Medibid is an online platform that allows individuals seeking medical services to bid on medical procedures and services online. Recently the platform had over 265,000 paid subscribers (83 employer groups are included in this number too). The online provider features "all in prices" for medical services and you don't have to worry about separate bills from different providers. Patients are able to see the ratings a particular doctor has and the number of those procedures the doctor has performed (Medicaid doesn't even have this type of information). As a result patients are provided transparency in terms of quality and price. Medibid users are saving 70% on MRI scans, 63% on CT scans, 53% on colonoscopies, and 35% on ultrasounds. Now if Medicaid patients were able to use Medibid they would be able to shop around and Medicaid would actually be savings tens of billions of dollars a year. An interesting point is if you the 74 million people on Medicaid shopping online for medical procedures there is no doubt the price would decrease even further and induce more doctors to want to offer their services.
Medicaid doesn't even provide quality care to its beneficiaries. What is fascinating is that patients on Medicaid are 13% more likely to die than patients who didn't even have insurance and 93% more likely to die than patients with private insurance. Shouldn't we allow low income individuals the freedom to make choices so they don't die? The funds in the health savings account could be used by Medicaid patients to enroll a direct primary care program. Direct primary care is not health insurance however allows patients to pay to directly contact their doctor 24/7 if that have any issues. The fee covers clinical and lab services and sometimes doctors can get prescription drugs at a cheaper price. The cost of direct primary care can range start at $50/month. If a Medicaid beneficiary thought $600 was worth it they could use their HSA to purchase direct primary care services.
Medicaid has a low reimbursement rate. It should be noted that Medicaid pays about 61% of what Medicare pays. Of course doctors would be weary to accept Medicaid patients. In addition to getting paid less doctors have to worry about filling out more complicated forms. Not only do doctors receive less for their work but in addition have to fill out more complicated paperwork. Doctors would receive payments direct from these Medicaid HSA accounts and not have to worry about billing or reimbursements from the government. Given that reimbursements from Medicaid can take doctors up to 2 months to get paid doctors wouldn't have to worry about the timing of payment.
The cost of health insurance premiums has exponentially increased. In 2008, the average monthly premium for an individual cost is $159/month and then by 2017 the premium would be $393/month which is a 147% increase. As of 2018 the monthly cost for a family health plan cost was $1,168. Obviously the large increase was due to the passage of Obamacare which mandated coverage and required insurance policies to cover "essential benefits". In in this post I explored 10 ways in which the cost for healthcare costs could dramatically be decreased. If Obamacare was repealed and these reforms were in place health insurance could be a fraction of the cost (and more like the rates from 2008) and allow many more individuals (including those on Medicaid) to afford a decent health insurance policy and allow them to get more bang for their buck out of the $7,800 provided by Medicaid. If there was massive insurance deregulation and the premium per individual was only $159/month (2008 figure however with massive deregulation it be even less) it would say over 1 year an individual would pay close to $2,000 a year in premiums.
The $7,800 amount per person is already being spent by taxpayers on Medicaid beneficiaries. Why not allow Medicaid recipients and families decide how they will spend their healthcare money to allow for greater efficiency, more access, and allow individuals to take control of their health/financial futures.
One state that has attempted to try a Medicaid HSA program is Indiana. In Indiana Medicaid members "HIP POWER account holders" get a $2,500 deductible health plan. The state contributes $1,100 per adult per year to pay medical costs. Participants pay up to 5% of the family gross income (this can be between $0 to $105/month (depending on the family size). Also it is important to note that roughly 1/3 of beneficiaries pay nothing). Employees were less likely to use high-cost emergency rooms and most likely to use generic brand name generics. This resulted 35% lower health-spending and individuals were going in for mammograms, check ups, and other preventive care at the same rate as traditional insurance plans. Members contribute 2% of their income (members own their contributions and if they leave the program are refunded the pro-rata share). What is interesting is that 70% of members make contributions (only 5% of the members left the program due to affordability). The interesting thing is about 80% of members are satisfied.
The example of a Medicaid like plan rolled out nation wide would do wonders to help Medicaid beneficiaries. If roughly $7,800 is spent on each Medicaid beneficiary and you had individuals pay a small portion of their income to get access to Medicaid HSA plan (with a deductible of a few thousand dollars) this would save the government lots of money, allow patients greater access to their healthcare decisions, would allow doctors to get paid quicker and more efficiently and if patients had health savings accounts it would dramatically reduce the current Medicaid fraud (save over $100 billion on this alone). Adding Medibid to Medicaid in the base case would save Medicaid billions of dollars a year. Most importantly Medicaid beneficiaries would have the same power that all other individuals have in the market place to decide who provides them medical care. Often times patients can't go to a doctor because they don't accept Medicaid. Of course too I wouldn't have state/local governments administering the HSA accounts either (you could have companies like ADP, Fidelity, Paychex bid on these projects-which would add additional revenue for the states)
A change like this to Medicaid would be a much needed improvement over the current system and be beneficial to Medicaid beneficiaries, doctors, and taxpayers. Of course politically this would be hard to pass given that politicians like to run other peoples lives.
No comments:
Post a Comment