Insight, analysis & opinion from Joe Paduda


Whither (or wither?) Medicaid?

Mathew Holt has his usual way with the present administration in his latest post on The Health Care Blog. He also has two rather interesting quotes from the outging Secretary of HHS, which may provide insights into the future of Medicaid.
“In response to a question after his resignation speech, Secretary of Health and Human Services Tommy G. Thompson said, “I would have liked to negotiate” or bargain with pharmaceutical companies over the price of prescription drugs.
Thompson also said this:
“Out here, in this department, you get an idea and you have to vet it with all the division heads and the 67,000 employees. … then it goes over to the supergod in our society, and the supergod is.


CA move to universal coverage?

A California legislator has announced plans to introduce legislation authorizing implementation of a universal health insurance system run by the State. California HealthLine reports that Sen Sheila Kuehl (D-LA) and an unnamed number of co-sponsors are working on plans to establish a state government run health system, funded by taxes, that would provide coverage to all residents.
Hopes are not high for eventual passage, as political stars do not appear aligned in favor of this sweeping change from today’s combined private and government-funded health care system.
According to California HealthLine, funds would come from a variety of sources;
“The system would not have participants contribute deductibles or copayments but rather would be funded through “a patchwork of taxes,” the Times reports. The taxes would include:
An employer payroll tax equal to 8.2% of salaries;
An employee payroll tax of 3.8% of salary;
A 3.5% tax on unearned income;
A 12% tax on the net business income of self-employed residents; and
An additional 1% tax on all income of more than $200,000 a year.”
The bill will likely be similar to one introduced by Keuhl in 2003. That bill did not get far; it may have been overshadowed by SB2, CA’s initiative to require employers to provide health insurance to all employees.
I wouldn’t make too much of this, nor would I dismiss it as a flakey CA thing.
Desparate times call for desparate (or is it disparate?) measures.


HMO enrollment drops in 2003

Managed Healthcare Executive magazine published their annual survey of HMO enrollment in December.
The numbers show that most states actually experienced a decline in HMO enrollment, and nationally there was a decline of some 3 million members. Part of this may well be definitional issues, as HMOs have morphed into “open-access” HMOs, “closed network” PPOs, and the like. Regardless, this is an interesting development; early (albeit anecdotal) indications are that enrollment in more tightly managed plans may actually be increasing, as employers battle significant trend rates.


Impact of CA WC reforms

The impact of California’s workers comp reforms is already being felt in insurance rates, as premiums are dropping by between 13.9% and 16.6%.
The reforms, which have included drastic reductions in reimbursement for prescription drugs, a tougher definition of disability, a requirement to utilize clinical guidelines, and the authorization of employer-directed care to certified networks, have been at least in part, responsible for the rate reductions.
Interestingly, perhaps the most significant component of reform, the Medical Provider Networks (MPNs) have only just come on the scene. The first batch was recently approved by the State, and rumor has it that the next batch is due out next week, with Liberty Mutual among those to receive notice.
Sources indicate that the State has over 300 applications pending, and is being quite the stickler on some of the applications, rejecting one because part of the documentation was on the wrong form.
If other states’ experience is any guide, once the State and the payers get comfortable with the process, things will flow more smoothly and quickly. For now, patience is the watchword if you’re waiting for your notice.


A use for Cox-2s?

A very funny post on Mathew Holt’s “Health Beat” blog re the silver lining of the grey cloud of Cox-2s
Highly recommended!


NY’s Medicaid troubles

the recent publicity about the Bush administration’s plans to change the way the federal government pays for Medicad got me wondering what the states think of the program.
We know that Florida is struggling with a $1 billion increase in Medicaid costs this year.
Another big state has problems that make FL’s situation look positively sunny be comparison. (free subscription required) Medicaid in NY is now consuming 44% of the state budget. That’s $44 billion, and has resulted in calls for significant cuts in the program, accompanied by increased taxes on health care providers including hospitals.
The New York Times reports:
“The cuts, if they go through, will cause a ripple effect. Since the state’s contribution to Medicaid generates matching contributions from the federal government and New York localities, a $1 billion cut in state financing could mean a decrease of at least $3 billion in overall Medicaid spending across the state, according to health care analysts. Hospital trade groups predicted that cuts on that scale would stun the health care industry, a major sector in the state’s economy, and perhaps lead to cuts in service or even hospital closings.”
NY is somewhat unique in that it requires local governments to partially fund their portion of Medicaid. This complicates Gov. Pataki’s (R) mission, as he has also promised to cap Medicaid funding increases for local government at the general rate of inflation.
Couple that promise with the Bush Administration’s pending changes and the political power of health care employee unions and you have the makings of a very unpleasant budget battle.
We’ll look at other states in future posts – here’s hoping there’s some good news amongst the bad.


thanks to

On MLK day
“Of all the forms of inequality, injustice in healthcare is the most shocking and inhumane.”
Rev. Dr. Martin Luther King, Jr.


Privatization of Medicaid – FL trial balloon

Gov. Jeb Bush (R) of FL announced a proposal to enroll FL’s 2.1 million Medicaid recipients in private health plans, a sweeping change from the present program wherein the government acts as the sole administrator.
The program is designed to address FL’s rapidly growing Medicaid cost, which at $14 billion accounts for a quarter of the state budget. At present growth rates, the program will double in size, and consumption of the state’s budget, within eleven years.
Bush’s proposal, Mike Leavitt’s nomination to Sec HHS, and other recent pronouncements from the administration noted here and elsewhere are adding clarity to the picture of governmental health programs of the future. Here’s the essence –
–government as funder, not administrator
–funds based on defined contribution not defined benefit
–beginning to push responsibility for lifestyle-related diseases onto insureds
Not exactly Hillary II, but perhaps even more far-reaching.
Thanks to Andrea Lewis of Choice Medical Management in FL for pointing me to this…


Medicare reimbursement to MDs to increase

Medicare will increase payments to physicians by 2.6% in 2006.
While this will likely not lead to a line out the door at the Bentley dealerships, it will impact other health care payers whose reimbursement is tied to Medicare – including most states that use Medicare as a basis for their Workers’ Comp fee schedules.
Note that 2.6% is well under the general rate of inflation. Again, providers will undoubtedly seek to recover the lost income from other payers…

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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