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S.C.
Statehouse Report
Sunday, Aug. 14, 2005
VIEW: http://www.statehousereport.com/columns/05.0814.risk.htm
 COMMENTARY
Medicaid plan
looks risky, costly
By
Andy Brack
SC Statehouse Report
 AUG.
14, 2005 - More than 700,000 South Carolinians may be used
as guinea pigs to see if the marketplace can lower costs in
providing health care.
Gov. Mark Sanford and the folks at the state Department of
Health and Human Services requested a waiver from the federal
government in June - - just five days after lawmakers went
home for the year - - to test a controversial new way of delivering
Medicaid services.
Medicaid, which provides health care services to the poor
children and the elderly, consumes about 20 percent of the
state budget and has been growing at 9 percent a year. Traditional
ways of dealing with escalating costs are cutting benefits,
decreasing rates to doctors for services provided or cutting
people from receiving the health services.
Sanford and his pals want to try something different - -
to hold down costs using the holy grail of the marketplace
as Medicaid's savior.
Advocates and some analysts say the program should be given
a chance because it provides a new paradigm that will encourage
the insurance market to develop innovative new health plans
that will allow the poor and elderly to choose.
According to DHHS, "It is desirable to bring market
place principles to the Medicaid program. It is essential
to both enable and require that the Medicaid beneficiary participate
as a prudent buyer of health care services." Or according
to the waiver application: "We plan to create an environment
where providers and insurers are freed from unnecessary bureaucratic
requirements and can compete for the consumer's dollar."
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Translation: The Republican way of doing business is to figure
out a clever way to cut government programs and let the market
rule.
Critics say the Sanford salvation is still half-baked. One
of the biggest reasons is, "The proposal rests on untested
assumptions, such as the belief that a system of managed care
plans and provider networks will rapidly emerge in the state
to serve Medicaid beneficiaries," according to the Center
on Budget and Policy Priorities.
In a scathing report, the Center (http://www.cbpp.org)
described the Sanford plan as a radical way that seeks to
privatize Medicaid.
"For beneficiaries - - the vast majority of whom have
incomes below the poverty line - - the result would be much
less health coverage at considerably greater cost. Private
plans would not be required to provide the range of benefits
now offered under Medicaid. All beneficiaries, including pregnant
women and children, would face a significant increase in out-of-pocket
costs for health care."
In other words, the people who can least afford health care
increases may have higher costs, which means they likely will
show up more in emergency rooms, which will raise overall
costs of health care even more.
The Sanford plan essentially calls for Medicaid privatization
in three ways. First, the state would create personal health
accounts for Medicaid users, who would self-direct their care
dollars to the doctor of their choice. Second, Medicaid users
could use the money to purchase private insurance, which may
reduce benefits. Or third, Medicaid recipients can join use
the money to join private networks, which would run like a
health maintenance organization and could limit benefits.
In addition to hurting the most vulnerable, the Center says
the proposal has a number of obvious weaknesses:
- It's risky. It would rely on a delivery system
that currently doesn't exist, according to the Center.
- It's theoretical. There's no evidence that relying
on the marketplace would really lower costs. In fact, bringing
in the marketplace has the advantage of encouraging competition,
but multiple avenues of service delivery also encourage
inefficiencies and reduce economies of scale.
- It may be more expensive. If you have 10 companies
doing the same thing that one bureaucracy is now doing,
administrative costs are higher. Studies show Medicaid's
administrative costs are about half of private health plan
administrative costs. Furthermore, South Carolina's administrative
costs are only 4.6 percent of total program costs, more
than 2 percent below the national average.
Some may admire the Sanford administration for trying to
do something about Medicaid, but at this point, the proposal
seems like it has too much of a chance of hurting the poor,
elderly and children. They shouldn't be experimental subjects
to test a Republican political theory.
This proposal doesn't appear to be much different than what
the Bush Administration tried to do nationally to privatize
Social Security, an idea that failed miserably when most people
figured out it wasn't in their best interests.
Go back to the drawing board.
RECENT COMMENTARY
McLEMORE'S WORLD
8/14: New interpretation
Another great cartoon from Bill McLemore:
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KEEPING TRACK
Ahead on
modernization
This section tracks past forecasts by Statehouse Report
with other media reports:
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In Statehouse Report:
6/19/05: Tax
modernization should be on the front burner:
"Beyond the constant
political rhetoric about taxes, it's time for the state
to take a long look at modernizing our tax system. Over
the summer, lawmakers are planning big pow-wows on the
property tax. But instead of a small fix here or a minor
tweak there, lawmakers need to look at equity and fairness
to make sure the whole structure is as balanced as possible."
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In Spartanburg Herald Journal:
8/9/05: Lawmakers
should be careful about changing tax system.
"Lawmakers should be careful about how they tinker
with the system. To begin with, the state needs to take
a comprehensive look at its tax system. Lawmakers have
passed many measures of piecemeal tax relief and economic
development incentives. They have created a more complex
and less fair system that has shifted more of the burden
from industries to commercial businesses and homeowners.
Another quick fix for the property tax won't fix the
larger problem."
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SOUTH CAROLINA SCORECARD
Here's a "thumbs up" and "thumbs down" related to various
political events from the past week:
Thumbs
up
Budget and Control Board. Hats off to the board for
voting to add medical coverage to the state health plan for
state workers who want to quit smoking.
Thumbs
down
Eckstrom. Lawmakers are right to question whether
Comptroller General Richard Eckstrom can shift $105 million
of surpluses to cover accounting glitches. Sounds an awful
lot like appropriating, and whose job is that? More.
Sanford. The governor's arrogant move to privatize
Medicaid smacks of class warfare.
Shedd. Seems like the government could do a little
better and save money for office space for federal Judge Dennis
Shedd than building a $2.5 million palace just a few miles
from the federal courthouse.
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