Federal Healthcare Law Only Adds Urgency to Need for Medicaid Reform

Paul V. Tyahla
Executive Director

New Jersey has an unfortunate tradition of failing to address long-term public policy issues before they become full blown crises. Our public employee pension and benefit obligations and property taxes are prime examples. Federal health care reform will provide another challenge to our state, but it is one we can predict, and provides the opportunity to improve the quality of life for Medicaid recipients and protect the state’s budget.

One of the most underreported provisions of the Patient Protection and Affordable Care Act (PPACA) is its vast expansion of Medicaid eligibility. Whether or not you agree with the law, it is unarguable that when full implementation occurs in 2014, our state’s resources will be stretched even further when up to 500,000 additional New Jerseyans become eligible for Medicaid.

This expansion will cause budgetary problems and stress our healthcare system. Medicaid patients in the nation already face restricted access to care. Forty percent of doctors in America have restricted access to Medicaid due to low reimbursement rates and only half accept new Medicaid patients. This has helped lead to overutilization of emergency rooms, as Medicaid patients are five times more likely to frequently use the ER than individuals who are privately-insured. When a Medicaid patient does see a physician, their health outcomes are comparatively poor. For example, Medicaid patients are 50% more likely to die after bypass surgery, largely because of poor follow-up care, and nearly twice as likely to die after any surgery as individuals with private insurance.

Not all of the grim outcomes are due exclusively to Medicaid, as other factors associated with poverty surely play a role. Still, we as a state and nation can do far better.

Other states are already leading the way. In 2009, the federal government allowed Rhode Island to have more freedom in setting benefit types and levels. The Ocean State responded by taking several innovative steps, including enrolling beneficiaries in a patient-centered medical home and setting up a system of care that takes place in a patient’s home or community center instead of a nursing home.

The early results are promising. Emergency room utilization is down 30%, more than 1,000 lives are now out of institutional care and the state saved $156 million in two years.

In 2006, Georgia established a managed care program for healthy adults on Medicaid, kids on SCHIP and individuals with certain diseases. The state not only benefited from $4.7 billion in savings over four years, but health outcomes improved. Individuals in the managed care system have fewer low weight babies, greater access to preventative care and more screenings for cervical cancer.

Here in New Jersey, needed reform is in its infancy. The state has sought greater flexibility in its Medicaid program from the federal government, which would be necessary for broad reforms. The legislature is also considering a bill creating a pilot program for Accountable Care Organizations (ACOs). In the demonstration project, a non-profit organization could form in an area of high need with the purpose of improving care at lower costs. When properly designed, ACOs utilize quality innovations such as coordinated care and electronic medical records with a focus on outcomes instead of a greater volume of procedures and tests. If and only if the ACOs are successful, they would keep some of the savings generated.

A waiver from the federal government and a demonstration project for ACOs are important first steps, but they will not be sufficient. There are other bold steps that New Jersey can take, but the state will not have the opportunity to properly plan them without accelerating its work. Decisions made within the context of a budget battle or with a clock ticking loudly are seldom well-planned and almost never give significant consideration to long-term needs.

The time to address this foreseeable crisis is now, for a healthier budget and society.

This op-ed was published in the Daily Record, Asbury Park Press and Record (Bergen). It first appeared on CSINJ.org