Do Democrats Want to Make Medicaid Work for People, or Make People Work for Medicaid?

By Libby Watson | December 19, 2017 | 6:17pm

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This past weekend, Ralph Northam, the Democratic governor-elect of Virginia, gave an interview to the Washington Post in which he suggested instituting restrictions on Medicaid even as he promised to expand coverage. The key passage:

“So I look forward to . . . seeing how we can provide better service and at the same time cut costs” through “managed-care Medicaid,” he said.

A managed system would involve rewarding “healthy choices,” he said. “I want people to have skin in the game. I want to incentivize people to really have good health.”

And although some people who need Medicaid cannot work — children, some pregnant women, people with certain disabilities — others can, he said. “I want to help them get back on the workforce [through] training,” he said.

This led to predictable progressive outrage. Northam kind of walked it back on Twitter, but not really:

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Most of the outrage focused, quite understandably and correctly, on Northam’s seeming suggestion to introduce work requirements to access Medicaid coverage. That horrible prospect jumps right off the page as a fundamentally conservative, deeply evil, and very stupid idea.

“Managed care,” though, is a wonky term that many people have never heard. “Rewarding healthy choices” sound great, if it means the government will give me $10 for eating an apple for once. But it doesn’t! Using managed care to “incentivize” good health is actually much more sinister than it sounds, and has the potential to be almost as vile as work requirements.

Managed care is essentially a type of insurance where patients are required to only see providers in their network; many types of private insurance are managed care plans, including HMOs and PPOs. It sucks, and makes finding a doctor and getting care harder; burdens like that are increased on the poor, who are less likely to have the time and resources necessary to chase down care. Most states have some type of managed care system for Medicaid patients, and about half of Medicaid patients are in managed care. The advantage for governments is that it saves money, by paying providers a set amount per patient rather than reimbursing them for each visit or procedure. It’s also supposed to help patients by allowing better coordination of care, but it limits the doctors they can see. It can also provide the government an excuse to institute requirements that kick people off Medicaid.

In Illinois, for example, the introduction of managed care Medicaid saw a rocky start, with some patients accidentally kicked off coverage. The governor announced a total overhaul of the program earlier this year, but the program is now estimated to cost far more than they originally intended—$63 billion instead of $30-$40 billion. The Democratic chair of the state’s House Human Services Appropriations Committee criticized the ballooning cost and lack of oversight on the bidding process, saying: “None of this was done with independent oversight. Nobody knows how the contracts were awarded.”

Iowa, too, switched its Medicaid patients to managed care in 2016, with disastrous consequences. In November, one of the three insurance participants in the program left because the state’s projections of how much it would cost to reimburse them were vastly too low. That leaves hundreds of thousands of Medicaid patients in the state with only one choice of insurer, meaning only one set of in-network providers. Six disabled Iowans are now suing the state, claiming that the managed care program is depriving them of the care they need.

California managed care insurers, on the other hand, are making bank off Medicaid patients: Anthem made half-a-billion dollars off Medicaid patients in California between 2014 and 2016. Meanwhile, a California managed care administration company is being investigated for improperly denying care to thousands of Medicaid patients.

But what Northam wants to do could be far more radical than these. His references to “skin in the game,” incentivizing good health, and rewarding “healthy choices” indicate that he might be open to a more ideologically conservative form of Medicaid provision, based on the idea of encouraging ‘personal responsibility’ in healthcare.

I spoke to Adam Gaffney, an instructor in Medicine at Harvard Medical School and a board member of Physicians for a National Health Program, about what fresh hell Northam’s ideas might be. He said it’s not entirely clear what Northam means from the Post interview, but that it sounds like Northam is “basically following the footsteps of Mike Pence,” who expanded Medicaid in Indiana but also brought in a punitive and vicious system to kick recipients off insurance entirely.

The Indiana plan requires recipients to pay a small percentage of their income into what are essentially health savings accounts. If people fail to make those payments, and make between $12,000 and $16,000, they’re locked out of coverage entirely for six months; if they make less than $12,000, they’re bumped into the Basic plan that requires copays and doesn’t cover dental or vision care. More than half of recipients don’t even know they have these accounts. (Meanwhile, hospitals and doctors got “substantial raises from Medicaid” as a result of the plan.) According to the Center for Budget and Policy Priorities, an independent report commissioned by the Centers for Medicare and Medicaid Services (CMS) found that “Basic members also were less likely to adhere to their prescription drug regimens for certain chronic conditions such as asthma, arthritis, and heart disease. This isn’t surprising, because Basic members must refill their prescriptions every month and make a co-payment, while Plus members can obtain a 90-day supply of maintenance medications with no co-pay.” How is that helping them make healthy choices, again?

Even if you accept Northam’s premise that identifying cost-saving measures has to happen before the state can expand Medicaid, the question remains: Does managed care actually save Medicaid programs any money? And if it does, where does the cost-saving come from? Gaffney said it’s essentially from disincentivizing people to access care, as with the co-pays in Indiana. If you “create copayments that make it hard for people to access health care, maybe they’ll use less healthcare,” and therefore will cost less money, “but that’s not actually a good thing.”

Gaffney said Northam’s approach is “grossly paternalistic,” implying that low-income people “need a sort of petty system of carrots and sticks in order to get them to care about their health.” It’s also basically a toned-down version of what Republicans say. Mitch Daniels, the former governor of Indiana, told the New York Times last year that when “things aren’t completely free, people begin to make more careful decisions about how and how much to consume.” Northam’s phrase “skin in the game” was used by Pence and by Seema Verma to sell the Indiana plan; Verma helped design it and is now Trump’s head of CMS. It was also used by a Republican legislator who supported Pence’s plan in 2013, who said: “Those who have some skin in the game have more of an appreciation for services than if it’s given to them for free, and abuse it less.” Does Ralph Northam also believe there’s a widespread problem with poor people abusing Medicaid for too much healthcare?

In reality, it’s already quite hard to access Medicaid. A 2014 report by the Department of Health and Human Services’ Office of Inspector General found that 51 percent of providers in managed care Medicaid plans weren’t taking patients. The harder it is to access healthcare, the longer people will put off getting the care they need, making them sicker. It’s cheaper to treat someone with one painful tooth and hand them a good toothbrush than it is to fix a whole mouth full of rotten teeth, but that can only happen if they can access the care as soon as they need it.

As I said, we don’t have much detail on what Northam means or wants, and a representative for his office did not respond to my email. Maybe Northam’s vision of rewarding “healthy choices” and incentives isn’t as pernicious as Indiana’s plan, or won’t be as poorly implemented as Iowa’s. But the bigger problem is: Why is a Democrat adopting conservative rhetoric on healthcare at all? Why is a Democrat talking about “skin in the game” and “incentivizing good health,” let alone god damn work requirements? Moreover, why is he conceding ground to Republicans before he has to, and not starting from, say, a more progressive version than he expects to get?

If Democrats want to start winning, in government as well as the ballot box, they have to stop talking like Republicans. Underneath all the technocratic jargon, Northam’s assumptions are conservative: that healthcare isn’t a human right, that poor people need to be forced or coerced into doing sensible things, that balanced budgets are more important than human dignity. Instead of sounding like Mike Pence on downers, Northam should articulate, if not support for single-payer itself, the principles behind it: that everyone has a right to access good-quality, comprehensive healthcare, and that poor people and the disabled currently face a massive and unjust uphill battle in getting that care. If you think poor and working people just aren’t trying hard enough to get their health sorted, why are you even a Democrat?