Medicaid Safety Net Needs Mending

Commentary — By on March 6, 2012 at 8:42 AM

Dr. Poonam Alaigh
Board of Directors

More than 1.2 million lives in New Jersey rely on the safety net provided by Medicaid. However, the viability of that safety net will be put at risk if we do not understand and prepare for the potential repercussions of the Patient Protection and Affordable Care Act (PPACA). The federal health care reform law can add more than $36 billion to the state budget when thousands of residents enroll in the system for the first time. Legislators must begin the work now to reduce costs, and save a system without jeopardizing the already delicate balance inherent within a budget during these difficult economic times.

Medicaid provides health care to our neediest residents, and is funded jointly by the state and federal governments. Under the PPACA, income limits for eligibility were increased, and the federal government will fully fund newly-eligible enrollees through 2016, and a minimum of 93% of their cost through 2019. For this population, taxpayers should take some comfort in knowing these added costs will be paid for by their federal tax dollars instead of state tax dollars, the federal funding does lessen the effect on a state that is constitutionally-required to balance its budget each year. However, many New Jerseyans are eligible for Medicaid under the pre-PPACA income standards, but have not enrolled for one reason or another. The coming requirement that all Americans demonstrate they have some form of insurance will encourage many of these residents to sign up for Medicaid, and they will do so without the federal government paying more than its standard reimbursement rate of 50%. This combination will leave New Jersey and its residents in a precarious position in terms of access to care, and the cost of the program.

Medicaid spends about $8,000 per New Jersey patient, with about $4,000 of that paid for via the state’s general fund. The effect of the PPACA on the fund is frightening. A model developed by the Cato Institute for a Common Sense Institute of New Jersey health care forum detailed growth of New Jersey’s Medicaid budget both with and without the PPACA. In 2014, The Affordable Care Act can add $1.6 billion to New Jersey’s Medicaid costs; the number continues to increase eventually costing New Jersey taxpayers an additional $36 billion between 2014 and 2023.

This will result in some unacceptable choices for policy makers and legislators. As Medicaid crowds out other budget priorities, we face difficult decisions. These choices can include steeply higher taxes, deep cuts in Medicaid and other safety net programs, and further neglecting the need to rebuild infrastructure and pay down debt. Worst of all, we would be doing this to pay for a program where access to physicians is inadequate, and the health care outcomes are poor. All of which contributes to the increasing cost of health insurance and health care.

New Jersey needs a vision for its Medicaid system that results in providing care for the neediest residents cost effectively. States as politically diverse as Florida, Texas, Rhode Island, and Washington are demonstrating that a bipartisan consensus exists to address the problem and those solutions to improve medical outcomes and save money are not mutually exclusive.

Some of these programs include competition amongst the insurance companies in a marketplace for Medicaid patients, tailoring plans to specific markets and financial rewards for healthy behaviors. In addition, care coordination programs especially for comorbid mental and medical conditions, accountable care organizations, integrating health information technology, rebalancing long-term care, and payment reform initiatives should be explored and implemented. There are other examples from across the country that New Jersey can look to adopt, but we must build on the progress already made here more quickly if we are to protect Medicaid patients, and our state.

As a physician, health insurance executive and the former Commissioner of Health and Senior Services, I know first-hand the difficulties faced by Medicaid patients seeking care, and doctors who lose money with every patient who walks through the door. We must do better, and we can if we collectively pursue organic grass roots and market-based reforms in advance of the coming changes.

This commentary was published by The Asbury Park Press, and the Times of Trenton


Related posts:

  1. Averting a Medicaid Crisis in New Jersey
  2. In Need of Healing: Medicaid and the New Jersey Budget
  3. Federal Healthcare Law Only Adds Urgency to Need for Medicaid Reform
  4. Medicaid Program Fails Fraud Test
  5. Substitution Effect: When Security Guards are enough for Public Safety


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