Medicaid expansion coming soon.
Medicaid managed care plans may prove their worth in containing costs in 2012 since states will seek out alternative policies and payment/delivery models to cope with a looming Medicaid expansion under the health reform law, or the Affordable Care Act.
There are plan sponsors that are focused on expanding into the Medicaid market, including larger plans like United Health Group and Coventry Health Care, Inc. This business opportunity is fueled not only by federal healthcare reform, but also by state interest in outsourcing care of both the ABD (aged, blind and disabled) populations as well as the relatively healthy mothers and children traditionally in Medicaid managed care.
The bottom line is that states will continue to need managed care plans to help both limit costs as well as make costs more predictable and consistent.
Many states are facing massive Medicaid program cuts as they head into 2012. These budget problems in part are the reason why some won’t be able to shoulder the program expansions slated for 2014. The expansion is expected to cover some 16 million to 18 million more Americans whose annual income is over 130% of the federal poverty level.
There are a few factors impacting whether states are ready for the expansion. To name a couple: states are in a budget crunch now and employment in public-sector is declining and affecting state Medicaid agencies.
Even though the federal government is initially paying for the costs of the Medicaid expansion, there will be existing state staff that have to deal with the expanding population and pretty significant changes in rules. So, states have to implement something additionally with fewer resources.
The budget situation in most of these states is both a risk and an opportunity for these Medicaid managed care organizations. Premiums may not keep up with health care costs, and plans, consequently, could face potentially lower margins. If regulators want a viable private Medicaid business, they’re going to have to allow these companies a 1% to 2% net margin or operating margin.
Budget concerns also may create a long-term opportunity for Medicaid plans. More and more states that are dealing with budget issues will turn to private companies to help them manage their Medicaid costs and to make sure their Medicaid dollars are spent efficiently. While only 20% of Medicaid spending is now in managed care, that will certainly go up over time.
The emergence of ‘accountable care organization’ models in the Medicaid space as a way to address the forthcoming expansion is a trend to watch in 2012 and beyond, insiders say.
With at least 16 million more people coming into the Medicaid system under healthcare reform