Is Real Medicaid Reform Possible? Two States–Indiana and Rhode Island–Show That It Is – Forbes

TWO STATES, Rhode Island and Indiana, have been able to make major changes to the traditional Medicaid programs, which allowed them to curb costs and enhance their recipients’ quality of care. Patient satisfaction went up sharply.

In 2009 Rhode Island sought and won an unprecedented waiver from Washington. Gary Alexander, the state’s secretary of health and human services at the time, describes what happened: “We agreed to a fixed amount of funding from [the federal government] for five years; in return, the feds agreed to waive the burdensome restrictions that prevented us from instituting imaginative reforms, such as shared living for seniors, delivery of a specialty to only the small patient cohort that needed and benefited from it and improved reimbursement incentives for home care and prevention.”

A patient has her blood oxygen level checked during a free check up at a low-income apartment complex for seniors in Denver, Colorado. The non-profit Dominican Sisters Home Health Agency performs some 25,000 home visits each year in the Denver area, with the aim of keeping patients in their homes. (John Moore/Getty Images)

Patients loved the idea of being able to stay home instead of being institutionalized. As Alexander noted, “These reforms, in turn, gave patients greater independence and better outcomes, and their satisfaction soared. . . . The imaginative remedies we implemented were so responsive and customized to our patients’ needs that their experiences and health improved even as we spent less.”

Let’s emphasize those last few words: “even as we spent less.”

Indiana instituted even better Medicaid reform. The Hoosier State has long pushed the idea of health savings accounts (HSAs) coupled with high-deductible health insurance that covers catastrophic medical expenses. As the state has observed: “About 96% of [the state's] employees have voluntarily elected to enroll in a consumer-driven health plan option. In its first four years of offering [such options] to state employees, the state saved 10.7% annually, as employees used hospital emergency departments at lower rates, had fewer physician office visits, lower prescription costs and a higher generic-medication dispensing rate.”

When patients own their health care money, they spend it wisely and get better outcomes. What patients in Indiana don’t spend in their so-called Personal Wellness and Responsibility (POWER) accounts they may roll over.

Now the Hoosier State is expanding this state-employees concept and applying it to its Medicaid recipients. Nondisabled Medicaid enrollees will receive $2,500 in their POWER accounts. The high-deductible insurance offered is being expanded to cover more benefits, such as dental and vision expenses. In order to get this expanded insurance, however, enrollees must make small monthly contributions of a few dollars to their accounts.

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