Monday, February 07, 2005
Florida Medicaid overhaul highlighted in Wall Street Journal
[Editorial, "Medicaid Rx," The Wall Street Journal, 2 February 2005.]
The Wall Street Journal showed an interest in changes to Medicaid at the state level with this recent editorial praising Florida:
If it succeeds, the Sunshine State's vision could serve as a template for reforms in other states. And in the best case, it could lead to a remaking of Medicaid in the same way that reforms in the early 1990s in Wisconsin and elsewhere paved the way for an historic and hugely successful national welfare reform.
From the consumer's perspective, Medicaid is a nearly incomprehensible maze -- which explains in part why so many participants head for expensive hospital emergency rooms when they need routine treatment. The defining feature of the Florida proposal is that it would transform the system into one centered on consumer choice, starting with letting participants decide how to spend the money allocated on their behalf.
Each participant would be assigned a premium with which to purchase coverage for basic and catastrophic care. Options would include HMOs, insurers and community-based networks of physicians and hospitals. Premiums would be risk adjusted, which is to say that someone with AIDS, severe mental illness or other serious conditions would receive a higher premium than a generally healthy person. By introducing competition, the aim is to encourage diversification of products and services.
A third feature of the Florida plan is even more innovative. Patients who follow the medical plan laid out for them by their doctors -- take their medication, have their children vaccinated, stop smoking -- will earn extra money that will be deposited for them in flexible-spending accounts.
They will be able to use that money for medical services not covered under their basic plan (say, eyeglasses or dental care) or to purchase more expensive coverage. Participants who eventually earn enough to go off Medicaid get to keep the money that's accrued in their personal accounts to use for health expenses -- a feature that should help ease low earners' transition to the private system.
This emphasis on personal responsibility will encourage healthy outcomes by providing incentives for patients to comply with their doctor's orders. And since a huge share of Medicaid budgets go to managing chronic conditions that often can be ameliorated by personal behavior, the potential to save money is enormous.
Without Medicaid reform, governors across the country will be unable to balance their budgets and coverage for the poor will inevitably get worse. By allowing states like Florida to test new ideas, Republicans in Washington can both honor their federalist principles and do better by the poor.
[Matthew Hisrich, "Kansas Needs Bold Medicaid Reform," The Wichita Eagle, 21 January 2004.]
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