This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Utah lawmakers are worried that spending for Medicaid health insurance for the poor is growing so fast that it will devour the lion's share of the state budget. In 2010, Medicaid accounted for about 18 percent of state spending, and it is growing much faster than the rest of the state budget and the economy.
To try to put a brake on costs, the Legislature passed a law this year to reform the way Medicaid pays doctors and hospitals. The idea is to pay managed care organizations a set fee per patient rather than paying providers set fees per service. This approach looks promising, and the Legislature was right to give it a try. However, there need to be some changes made to the plan that the Utah Department of Health released earlier this month.
Fee-for-service medicine is one reason why health care in the United States is so costly compared to other industrialized countries, even though the outcomes often are no better. Paying per service gives doctors and hospitals an incentive to perform as many services as possible, even when those procedures are medically unnecessary. Instead, the system should give providers incentives to offer the best medical outcomes at the lowest possible cost.
Medicaid is a federal program in which the state government shares costs. So, to pursue its proposed reforms, the state must seek a waiver from federal administrators.
The proposed waiver sets up Accountable Care Organizations. These outfits would be paid a set fee for a set period of time to care for a patient, based on actuarial studies of costs for a given patient population. The idea is similar to the Health Maintenance Organizations that surfaced in the 1990s. The challenge with this reform is to make sure that the new ACOs are affordable to patients and don't cut corners on care.
Medicaid provides health insurance to about a quarter of the nation's children, and critics worry that the Utah experiment will cut medical services if the anticipated savings from a more efficient payment system don't materialize. To prevent that, the quality of care standards in the proposed waiver must be strengthened. There also is a risk that higher co-pays and deductibles could be a barrier.
The reform also fails to go after the biggest category of Medicaid spending: nursing home and chronic care. It would be wrong to sacrifice children and young families, which place a far smaller burden on the system, without tackling the larger problems.
If these challenges are addressed, however, this reform could provide better health at lower cost to everyone.