August 7, 2009 | WebMemo on Health Care
A big casualty of the congressional health care reform legislation would be the loss of state flexibility in the financing and delivery of affordable health care options for their citizens.
Under the House bill, the federal government would regulate private insurance for the first time and dramatically increase its control over the Medicaid program. Flexibility will be sacrificed for uniformity and federal control.
Congress is ignoring important lessons that states have learned. It should pay particular attention to West Virginia, which has experimented with Medicaid reform and has learned a lot about what those reforms accomplished.
"All or Nothing" v. Individual Needs
West Virginia was one of the first states to redesign its Medicaid program under new benefit flexibility authority provided through the Deficit Reduction Act of 2005 (DRA). The state created Mountain Health Choices (MHC), which began operations in spring 2007.
Prior to the DRA, the Medicaid benefit package consisted of mandatory and optional benefits. Once a state chose to provide an optional benefit, that benefit had to be provided to everyone on Medicaid. This "all or nothing" approach deterred states from expanding benefits and expanding coverage to optional populations.
For those in MHC, the state moved away from the mandatory/optional construction and reorganized Medicaid benefits into a basic plan and an enhanced plan. The enhanced plan provides a greater array of benefits than the basic plan but carries with it an obligation to establish a Health Improvement Plan with one's physician and adhere to a Member Responsibility Agreement.
What the Data Show
West Virginia University recently released its evaluation of these reforms. While the study does not analyze whether MHC has produced savings for the state, it does provide policymakers with helpful insights and information, re-enforcing previous assumptions about certain behaviors and dispelling others.
The WVU Report provides a number of helpful insights, including:
Punishing Personal Responsibility
West Virginia has received criticism from some national organizations for supposedly "punishing" personal responsibility. For example, the Georgetown University Health Policy Institute described the state as using the "stick" approach. The Center on Budget and Policy Priorities predicted, "West Virginia's plan actually could lead to poorer health for some beneficiaries."
The West Virginia Medicaid Member Agreement outlines both responsibilities and rights. The responsibilities are:
If critics think taking your child to the doctor, taking your medications, and avoiding the emergency room for routine care is "punitive," it only shows the absurdity of their attacks.
The study shows that West Virginia is on the right track in terms of involving individuals in their own health care. While the report concedes that there is still much work to be done to fully engage the Medicaid population in participating in their own health care, the critics of reform have been wrong. West Virginia now knows far more about the needs and behavior of its Medicaid population. Congress should pay attention to what West Virginia has learned.
Dennis G. Smith is Senior Fellow in the Center for Health Policy Studies at The Heritage Foundation.
Deficit Reduction Act of 2005, Public Law 109-171, Section 6044, adding Section 1937 to Title XIX of the Social Security Act.
West Virginia requires certain Medicaid recipients to accept a greater role in their own health care. Individuals with a disability are excluded from MHC. The MHC population covers more than 160,000 individuals and represents about 35 percent of the total Medicaid population.
Tami Gurley-Calvez et al., "Mountain Health Choices Beneficiary Report," Bureau of Business and Economic Research, West Virginia University, July 29, 2009.
Ibid., p. 16.
Ibid., p. 19.
Ibid., p. 30 and p.82.
Ibid., p. 59. To be eligible, adults must have income at or below 37 percent of the federal poverty level ($8,159 for a family of four).
Ibid., p. 39.
Ibid., p. 36.
Ibid., p. 86. This phenomenon is often referred to as "adverse selection" from a health plan perspective, but from the perspective of the individual, it is clearly a rational choice based on self-interest.
Ibid., p. 63.
Ibid., p. 41.
Ibid., p. 40.
Ibid., p. 63.
Ibid., p. 17.
Ibid., p. 56.
Ibid., p. 47.
Ibid., p. 46.
Press release, "Three Out of Four of the People Put at Risk Under West Virginia's Medicaid Changes Are Children," Georgetown University Health Policy Institute, May 31, 2006, at http://ccf.georgetown.edu/index
+are+children.pdf (August 7, 2009).
Judith Solomon, "West Virginia's Medicaid Changes Unlikely to Reduce State Costs or Improve Beneficiaries' Health," Center on Budget and Policy Priorities, May 31, 2006, at http://www.cbpp.org/files/5-31-06health.pdf (August 7, 2009).
Gurley-Calvez et al., p. 95.