Manatt on Medicaid

Medicaid at a Crossroads: What's at Stake?

By Deborah Bachrach, Partner | Patricia Boozang, Senior Managing Director | Arielle Traub, Manager

Editor's Note: Since its inception 50 years ago, Medicaid has evolved from a small welfare program into an integral part of the nation's health insurance system, now covering more than one in five low-income children and adults. As Medicaid coverage has expanded and stabilized, states are making strides to improve the cost and quality of the care provided to Medicaid enrollees. And, because Medicaid is the single largest payer in every state, governors are using Medicaid to drive multi-payer reforms, including adoption of value-based payment methodologies and advancement of population health models.

As Congress and the new administration consider proposals to repeal the Affordable Care Act's Medicaid expansion and implement limits on federal Medicaid funding through block grants and per capita caps, Manatt Health, in a new issue brief for the Robert Wood Johnson Foundation's State Health Reform Assistance Network, details how much states have accomplished to drive value in and through their Medicaid programs over the last five decades and most especially the last five years. In addition, the brief covers what states stand to lose in terms of progress and innovation in their Medicaid programs and healthcare delivery systems if federal support for Medicaid is reduced.

Click here to download free the full issue brief.

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Medicaid in Context

Today, Medicaid is the nation's largest health insurer and the single largest payer in every state, covering more than 20 percent of the total U.S. population. Since 2014, more than 14.5 million people have gained coverage in 31 Medicaid expansion states and the District of Columbia, including 11.2 million newly eligible adults.

Medicaid is unique in covering the nation's lowest income and most medically complex children and adults and the services they require. Despite serving a disproportionate number of complex patients, Medicaid provides care more efficiently than private insurers and the national healthcare marketplace overall.

Medicaid as Strategic Purchaser

Medicaid modernization and reform are occurring in every state, but the pace of reform is especially significant in states that have expanded Medicaid. Expansion states are developing innovative programs to address the needs of challenging populations—such as the homeless, the mentally ill and the victims of the opioid epidemic—while at the same time increasing access to primary and preventive care for all Medicaid enrollees. The federal government has been a critical partner to states in funding those efforts through Section 1115 Delivery System Reform Incentive Payment (DSRIP) waivers and the State Innovation Model (SIM) initiative. Beyond these targeted investments, day-to-day transformation activities—again in partnership with the federal government—are driving the evolution of Medicaid as a sophisticated, value-based purchaser. Examples of innovations that states are implementing include:

Advancing Value-Based Payments and Multi-Payer Alignment. As Medicaid has evolved into a strong health insurer, it has become a laboratory for testing a wide range of payment models across states, generating savings, improving patient satisfaction and contributing to improved health outcomes.

Tackling Serious Mental Illness and Substance Use Disorders (SUDs). State Medicaid agencies are driving consolidation, integration and coordination at the agency, health plan and provider levels to identify patients at-risk for SUDs and provide them with comprehensive care management and community-based treatment and recovery services. Notably, state Medicaid agencies have been at the forefront of efforts to address the opioid epidemic.

Investing in Long-Term Services and Supports. Medicaid is the largest payer for long-term services and supports (LTSS), accounting for more than half of the $300-plus billion spent on LTSS annually.

Integrating Interventions That Address the Social Determinants of Health. Research demonstrates that nonmedical factors—such as income, access to food and housing, and employment status—account for as much as 40 percent of health outcomes. States have significant flexibility under Medicaid law and regulations and are taking full advantage to ensure that their Medicaid spending is targeted to the medical and social services that have been shown to influence patient health and outcomes while also achieving cost savings.

Embracing Medicaid Managed Care. Across 38 states and Washington, D.C., approximately three in five Medicaid beneficiaries are enrolled in comprehensive managed care organizations. Nine of the 12 remaining states operate primary care case management systems through which Medicaid beneficiaries receive coordinated primary care.

Medicaid in the Future

Medicaid is now a recognized leader in efforts to reform the nation's healthcare system, improving coverage, access, payment and delivery of care. This progress has taken decades and has been significantly accelerated by federal financial support. If the federal government pulls back its support for Medicaid, states will have no choice but to resort to the same detrimental cost-cutting strategies that were common before the Affordable Care Act. The impacts will ripple throughout the nation's healthcare delivery system.