Medicaid reform follies

by Chris Fitzsimon, NC Policy Watch and NC SPIN panelist, December 6, 2013.

The McCrory Administration continues its ill-advised efforts to privatize the state Medicaid system in the name of “reform.” This week a special Medicaid advisory committee heard from a consultant hired by the Department of Health and Human Services to develop a privatization plan that would divide the state into as many seven regions that for-profit companies could bid to control.

As usual, the presentation seems to have raised more questions than it answered. And it’s important to remember the driving force behind McCrory’s flailing reform efforts in the first place, his insistence that Medicaid in North Carolina is broken, with high administrative expenses and cost overruns that are breaking the budget and making it impossible to adequately fund education and other state services.

But in recent weeks, McCrory’s wild and exaggerated claims about the problems with the Medicaid have been challenged and refuted by people inside and outside of state government.

Legislative staff recently pointed out that the program’s administrative costs are not out of line with neighboring states, as McCrory and a state audit claimed earlier this year. In fact, they are lower.

That hasn’t stopped McCrory from complaining about the administrative costs, but it has made it easier for people to recognize his ideological-based hyperbole about them.

Even officials at McCrory’s own DHHS are now presenting information which challenges the broken characterization. The CFO for Medicaid told the advisory committee Thursday that the cost of state Medicaid claims in the state in the last two years increased significantly less than the national average.

Given all the absurd claims about Medicaid from McCrory and the think tanks on the right in recent months, that fact alone deserves a headline, but was buried in some news stories about the meeting and not mentioned at all in others.

And as the News & Observer reported, the same official pointed out that the sheer size of the Medicaid program means that even a one percent forecasting error can mean a swing of more than $100 million.

That’s part of the explanation for the wild “cost overruns” that McCrory and some Republican lawmakers like to complain about. Senator Dan Soucek told a town hall meeting in Boone this week that “massive overspending” on Medicaid made it impossible for the General Assembly to give teachers a raise this year.

But other legislators, including some Republicans, point out that part of the cost overruns came from a state budget based on savings in the program that were unrealistic and one-time repayments that the state owed the federal government. Those points were also made at Thursday’s hearing.

All the exaggerated claims about problems with Medicaid were also used by McCrory and legislative leaders as a justification for their decision not to expand Medicaid as under the Affordable Care Act and provide health care coverage to 500,000 low-income adults who are currently uninsured.

The outlines of the new regional privatization proposal come after McCrory and DHHS Secretary Aldona Wos touted a statewide privatization proposal earlier this year that would have turned over the Medicaid program to out of state for profit managed care companies.

That approach, which has caused serious problems in other states that have tried it, was widely panned by Democrats and Republicans alike, including Rep. Nelson Dollar, a member of the current advisory committee.

Now the Administration is back with what appears to be piecemeal privatization approach and Dollar still seems skeptical, frequently pointing to success of Community Care of North Carolina, a homegrown managed care nonprofit that has won national awards and saved the state millions of dollars.

It’s not clear if any of this is sinking in with McCrory or his top lieutenants but maybe that is the good that will come out of this advisory committee’s work, that the public will understand more clearly that what is going with Medicaid in North Carolina bears little resemblance to the picture painted by McCrory and his political supporters.

State officials and policymakers should continue to work to improve Medicaid. But that should mean making adjustments to the current system to make it easier and more efficient for people to access the services they need, not dismantling a generally well-run system to increase profits for a few well-connected corporations.