By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen
Over the past week, both houses of the Florida legislature have rejected the Medicaid expansion program endorsed by Governor Rick Scott. You may recall the huzzahs from the progressive world when Scott, a self-possessed anti-Obamacare warrior, decided to accept the Medicaid expansion. What didn’t get reported as much is that Scott’s announcement coincided with the go-ahead from the Administration for Florida to fully privatize their Medicaid system. The move into managed care represents an enormous cash cow for private corporate interests, including Scott’s former colleagues – he ran a health care company (notable for his racking up the largest Medicare fraud fine in history). A pilot project was seen as disastrous for almost everyone involved, save perhaps the insurers. Providers and patients alike are uneasy about full privatization.
So what was up with the Legislature’s rejection? Tea Party politics? Some unlikely show of principle against crony capitalism and corporate welfare?
No. They just want a different kind of privatization.
Arkansas’ privatization, in particular – which would just completely liquidate the public Medicaid program and have the state, in the immediate term, pay for premiums for everyone up to 138% of the poverty line to purchase private health insurance. There would be no more public disposition of Medicaid for the poor. It folds Medicaid into the as-yet-untested insurance exchanges.
Arkansas Governor Mike Beebe, a Democrat, said he got “everything he wanted” from the Department of Health and Human Services, who appear so desperate to expand coverage under Medicaid that they’re willing the privatize the entire thing. This actually jacks up costs over time, perhaps as much as 50%, as Medicaid is cheaper to administer, and always will be, considering that it involves the direct provision of services rather than running them through a middleman. It will only lead to more of the kind of price gouging chronicled by Steven Brill in that monster Time piece, not less. It makes the system more fragmented and unsustainable. It may not even be legal; it’s based on a fairly dubious reading of a 25 year-old clause in the Social Security Act.
But since the Supreme Court ruling that made Medicaid expansion under Obamacare more of an opt-in for states (which, granted, was unanticipated by most of the political class), the canniest of Governors have cajoled HHS into giving them whatever they wish. For some states, that may end up being a positive – Oregon springs to mind. But in the main, HHS is saying, “Just go ahead and provide the coverage and you can make Medicaid bear as little resemblance to a public insurance program as you want.” Among the goodies they’ve been handing out: allowances to states to cut payments further to doctors and providers (which often does restrict access in our fragmented system), blessings for throwing the entire patient base into managed care (which carries a myriad of challenges), and now this folding of Medicaid into the exchanges, with its promise of an even bigger market for the private insurance industry.
Needless to say, states are falling all over one another to get a piece of this action, this leverage opportunity, in the words of one Bush-era official. One of the remaining Republican holdouts, Pennsylvania Governor Tom Corbett, has a meeting set with HHS head Kathleen Sebelius. Indiana and Virginia have their own privatization plans. The Florida Legislature, while rejecting Governor Scott’s deal, put up an alternative that looks exactly like the Arkansas privatization proposal. As George Washington University’s Sara Rosenbaum said in an interview, “Every state will be eyeing this.”
If Arkansas is allowed to do this, I expect it to spread like wildfire. I have three calls with Texas reporters who want to know more about what Arkansas is doing. New York is another state that is looking at something similar… I think that every state is now going to be eying this thing. My own suspicion is it’s going to be very popular. I think CMS sees this as a way to lure in states that might not otherwise do the expansion.
So off we go into the ultimate privatization of the entire health care system… oh but “tightly regulated,” you see. Because this country has such a rich history of stringent regulation on powerful, deep-pocketed interests. The exchanges moved private individual insurance coverage into a private insurance pool with a few subsidies. But privatizing the public Medicaid program is another kettle of fish.