The Dismantling of Medicaid

Once considered one of the crowning achievements of The Great Society, Medicaid is now being steadily chipped away—and patients are suffering because of it.

Michael Collins

President Lyndon Johnson signs H.R. 6675, into law in 1965, establishing Medicare and Medicaid. (Truman Library)

When Suzanne Klug took her daugh­ter Tama­ra to an ortho­pe­dic sur­geon in the win­ter of 2012, the first ques­tion the doc­tor asked her was, Why are you here?”

Plagued by a poorly designed medical reimbursement process that rewards health care professionals for providing medically unnecessary care and yet doesn’t pay enough for many specialists or small providers to deal with burdensome administration, the popular program has been a target of reform for decades. With state budgets hollowed out and a budget regime that cuts investments in health to fund tax breaks for corporations, legislators are now looking to cut costs—and if there’s time, improve the quality of care.

My daugh­ter had five oper­a­tions on her back and a sur­gi­cal­ly removed leg bone; she has two brain shunts. And now her foot aches,” Suzanne remem­bers telling the doc­tor. The rolling spasms, bone pain and gen­er­al dis­com­fort her daugh­ter had been expe­ri­enc­ing of late, she says, had final­ly sent the two of them to find an in-net­work ortho­pe­dic sur­geon for treatment.

But accord­ing to Suzanne, Tamara’s pain wasn’t enough to war­rant med­ical atten­tion. He said, I can’t help you, come back when you have a prob­lem.’ He wouldn’t even look at her foot,” Suzanne recalls now.

This wasn’t the first time a med­ical pro­fes­sion­al had turned down Suzanne and her daugh­ter for med­ical care. Tama­ra, a 24-year-old wheel­chair user with advanced cere­bral pal­sy and mul­ti­ple atten­dant dis­abil­i­ties, needs access to pro­fes­sion­als who treat her with dig­ni­ty and who have the skills to suit her needs. Because Suzanne, Tamara’s sole care­tak­er, was cov­ered through Aet­na-man­aged Med­ic­aid, those doc­tors must also be in her net­work. And find­ing them, the Klugs say, is a near-impos­si­ble task.

Med­ic­aid, once con­sid­ered one of the crown­ing achieve­ments of The Great Soci­ety, is now being dis­man­tled by those entrust­ed with its care. Plagued by a poor­ly designed med­ical reim­burse­ment process that rewards health care pro­fes­sion­als for pro­vid­ing med­ical­ly unnec­es­sary care and yet doesn’t pay enough for many spe­cial­ists or small providers to deal with bur­den­some admin­is­tra­tion, the pop­u­lar pro­gram has been a tar­get of reform for decades. With state bud­gets hol­lowed out by the per­fidy of the mort­gage indus­try and a bud­get régime that cuts invest­ments in health to fund tax breaks for cor­po­ra­tions, leg­is­la­tors across the nation are now look­ing to find ways to cut costs — and if there’s time, improve the qual­i­ty of care.

How man­aged care operates

Here enters man­aged care, seen by some elect­ed offi­cials as a panacea to their fis­cal woes. Under this sys­tem, pri­vate insur­ance com­pa­nies, or Man­aged Care Orga­ni­za­tions (MCO), receive a fixed month­ly pay­ment from the state per Med­ic­aid patient. In exchange, they agree to work with hos­pi­tals to strike deals and low­er costs.

The first step in this process for an MCO is to sort patients by health risk by review­ing their med­ical records or, in severe cas­es, send­ing a social work­er to eval­u­ate them at home. As a hypo­thet­i­cal exam­ple, if 100 peo­ple enrolled in Aetna’s MCO were at risk of a heart attack, Aet­na would cal­cu­late how many of them could improve their health through low-cost inter­ven­tions, such as free gym mem­ber­ships and dietary coun­sel­ing. If Aet­na decid­ed that, say, 60 of the new enrollees wouldn’t need access to expen­sive car­di­ol­o­gists if they improved their eat­ing and exer­cise habits, it could then approach region­al hos­pi­tals and doc­tors with a bar­gain: a guar­an­teed refer­ral of 40 new patients to said facil­i­ties in exchange for low­ered med­ical costs. Doc­tors and hos­pi­tals are promised a flow of new patients, and the MCO gets cheap­er care and doesn’t have to pay for the most expen­sive inter­ven­tion possible.

The­o­ret­i­cal­ly, this costs states less than pay­ing for each patient direct­ly. In fact, man­aged care seems like a great idea over­all, until one fac­tors in the often unscrupu­lous busi­ness prac­tices of the health insur­ance industry.

One obvi­ous flaw in the sys­tem is that MCOs can increase their prof­its by erect­ing road­blocks to care. If you’re one of the afore­men­tioned 60 patients put on a diet and exer­cise régime, you may find it more dif­fi­cult to get access to a car­di­ol­o­gist. Worse still, if MCOs make a patient dri­ve three hours to see an in-net­work” spe­cial­ist he or she needs, chances are less­ened that the patient will make it to that pro­fes­sion­al at all — and the MCO can keep the funds it receives from the state with­out pay­ing for that person’s care.

States argue that they have a two-pronged response to avoid these neg­a­tive cir­cum­stances: con­sumer choice” and care­ful mon­i­tor­ing. If insur­ance com­pa­nies cheat by mak­ing it too hard for patients to find the care they need, they say, con­sumers will sim­ply switch to a bet­ter net­work. If the bad behav­ior con­tin­ues, then the state will find anoth­er com­pa­ny will­ing to play by the rules. But the MCO mar­ket is fre­quent­ly monop­o­lized by one or two com­pa­nies in a region — and state reg­u­la­to­ry agen­cies have become so weak that the worst of the worst” are still get­ting con­tracts, mean­ing that opt­ing for one over anoth­er doesn’t guar­an­tee any sort of improvement.

Ken­tucky tax­pay­ers became inti­mate­ly aware of just how quick­ly the prof­it motive can strip away access to care in 2011, when the Ken­tucky leg­is­la­ture out­sourced its exper­i­ment in Man­aged Care to three com­pa­nies: Coven­tryCares, Ken­tucky Spir­it Health Plan and Well­Care. The basic logis­tics of group­ing patients by risks and divid­ing them into hos­pi­tal net­works result­ed in abrupt and poten­tial­ly dan­ger­ous changes in treat­ment. While Med­ic­aid recip­i­ents once had rela­tion­ships with local med­ical pro­fes­sion­als, many were now forced to try and nav­i­gate an often-com­pli­cat­ed bureau­cra­cy to try and find doc­tors that worked for them in their net­work.”

In a let­ter to the edi­tor of the Lex­ing­ton Her­ald Leader, the head of statewide child advo­ca­cy orga­ni­za­tion Ken­tucky Youth Advo­cates lament­ed that the roll­out of man­aged care sev­ered con­ti­nu­ity of care around the state, because many par­ents had to switch their chil­dren to anoth­er plan once they dis­cov­ered the providers in their area weren’t part of their assigned plan.” For most fam­i­lies, this was an incon­ve­nience at best; for those with rare ill­ness­es and few spe­cial­ists near their home, how­ev­er, try­ing to find qual­i­ty care was a haz­ardous bur­den.

And Kentucky’s inaus­pi­cious start to pri­va­tiz­ing man­aged care was quick­ly fol­lowed by a per­ilous end. Ken­tucky Spir­it, one of the three com­pa­nies hired by Ken­tucky to admin­is­ter Med­ic­aid man­aged care, refused to meet its contract’s year-long term and abrupt­ly can­celled its ser­vices. Cit­ing a lack of full dis­clo­sure from Ken­tucky of just how ill Med­ic­aid patients were, share­hold­ers in Ken­tucky Spirit’s par­ent com­pa­ny Cen­tene decid­ed it was time to jump ship. Or, as Ken­tucky Sec­re­tary of Cab­i­net for Health and Fam­i­ly Ser­vices Audry Haynes wrote in a press release, “[a] For­tune 500 com­pa­ny has cho­sen to put prof­its above peo­ple and will not hon­or the terms of its con­tract.” Cen­tene skipped town, result­ing in chaos for its 125,000 enrollees, many of whom didn’t know where to go to get vital pre­scrip­tions. Though Ken­tucky Spir­it patients were re-enrolled in oth­er net­works, the process took time and mon­ey — and the state and its res­i­dents were left to flounder.

Centene’s search for prof­it also dev­as­tat­ed patients in Kansas. A law­suit recent­ly filed against a Cen­tene sub­sidiary in the state alleges that a CEO instruct­ed plan oper­a­tors to ille­gal­ly shift patients to cheap­er doc­tors. Sun­flower State Health Inc, run by CEO Jean Wilms, signed a con­tract with the state of Kansas promis­ing that Sun­flower must ensure that mem­bers are afford­ed the right to select the providers of their choice with­out regard to vari­a­tions in reimbursement.”

But the for­mer Vice Pres­i­dent of Con­tract­ing and Net­work Devel­op­ment for Sun­flower alleges that she was direct­ly instruct­ed to do what­ev­er was nec­es­sary” to pre­vent patients from see­ing the doc­tors of their choice. Instead of dri­ving down costs through inno­va­tion or reduc­ing bureau­cra­cy, Cen­tene decid­ed it would be eas­i­er to sim­ply restrict who patients could visit.

Big shoul­ders, big­ger problems

Suzanne and Tama­ra became all too famil­iar with the low qual­i­ty of care offered by pri­va­tized Man­aged Care Orga­ni­za­tions. After a year and a half, they were tired of search­ing non­stop for doc­tors with­in their Aet­na net­work” who weren’t ableist, had hand­i­cap-acces­si­ble offices and were with­in 50 miles of their home. When Suzanne report­ed that none of the doc­tors in her net­work were will­ing or able to treat her daugh­ter, she says that her Aet­na social work­er told her to try spe­cial­ists in Kanka­kee — 70 miles away.

Even worse than the unavail­abil­i­ty of treat­ment, how­ev­er, were the exces­sive wait times for vital med­ical equip­ment. Suzanne often went weeks with­out know­ing when her next ship­ment of colosto­my bags would arrive for her daugh­ter. At one point, des­per­ate and out of sup­plies, she even had to begin reusing sin­gle-use bags — which can lead to poten­tial­ly life-threat­en­ing infec­tions. She assumes now that the long inter­mis­sions were a result of the bureau­crat­ic labyrinths cre­at­ed by pri­va­tized care.

For some­one like my daugh­ter with mul­ti­ple dis­abil­i­ties, [acces­si­ble med­ical care] is her life­line. She could’ve died, and I felt real­ly trapped,” Suzanne says.

For the Klugs, man­aged care became syn­ony­mous with headaches, dis­re­spect, dan­ger and wast­ed time. So they packed up their things again and began look­ing for a new home that didn’t force Med­ic­aid patients into Man­aged Care Orga­ni­za­tions. In Sep­tem­ber 2012, they moved to the North Side of Chica­go, hop­ing to find more and bet­ter specialists.

Which is why it was such a dis­ap­point­ment when they found out this year that man­aged care was com­ing to the city, and for-prof­it insur­ance com­pa­nies were lead­ing the charge. In April 2014, Chicago’s busi­ness week­ly Crain’s report­ed that Cook Coun­ty had giv­en a no-bid con­tract to Cen­tene, the same par­ent com­pa­ny that had abrupt­ly quit their con­tract in Ken­tucky. With tax­pay­ers foot­ing a $450 mil­lion year­ly bill, Centene’s con­tract promis­es that it will reduce the cost of care per patient by $1,000 a year.

Just as in Ken­tucky, though, Med­ic­aid patients across Illi­nois’ largest coun­ty are suf­fer­ing from dis­rup­tion of ser­vices and a dip in care qual­i­ty. Dur­ing a pilot pro­gram from 2010 to 2013, Centene’s Illi­nois incar­na­tion, Illini­Care, failed to meet 21 out of Cook County’s 42 per­for­mance goals. Ide­al­ly, insur­ance com­pa­nies should work with doc­tors to admin­is­ter pre­ven­ta­tive treat­ment and reduce more expen­sive pro­ce­dures in the long run. But in 2013, Illini­Care actu­al­ly decreased the amount of cho­les­terol test­ing it per­formed in a one-year peri­od; this has the poten­tial to let Coro­nary Artery Dis­ease go unchecked in patients. Like­wise, Illini­Care also per­formed worse in the per­cent­age of patients they fol­lowed up with after receiv­ing ambu­la­to­ry care.

For that mid­dling per­for­mance, how­ev­er, the CEO of Cen­tene received a total com­pen­sa­tion pack­age of $14.5 mil­lion in 2013; the com­pa­ny will pro­vide care to hun­dreds of thou­sands of Illi­nois res­i­dents until 2015.

Fight­ing the trend

Illi­nois is just one of dozens of states attempt­ing to move state-pro­vid­ed health care ser­vices from the rel­a­tive account­abil­i­ty of local gov­ern­ment into pri­vate oper­a­tors noto­ri­ous for their crony­ism. While far from per­fect, local health depart­ments must fol­low pub­lic meet­ing laws and are sub­ject to inter­nal (such as Inspec­tor Gen­er­als) and exter­nal (such as FOIA requests and pub­lic inter­est law­suits) over­sight. That’s not the case when pri­vate com­pa­nies take the reins.

To com­bat this alarm­ing trend of back­door Med­ic­aid pri­va­ti­za­tion, activists across the nation are step­ping up to demand pro­tec­tion and sys­temic change. In Illi­nois, Tom Wil­son of Access Liv­ing, a pol­i­cy and orga­niz­ing group fight­ing for dis­abled peo­ple, is work­ing with three hos­pi­tals and a think tank to beat the insur­ance com­pa­nies at their own game. They formed Com­mu­ni­ty Care Alliance of Illi­nois, a non­prof­it Man­aged Care Orga­ni­za­tion, in 2010.

Wilson’s work, he says, is informed by an explic­it under­stand­ing that Peo­ple with dis­abil­i­ties are nor­mal­ly the most knowl­edge­able peo­ple about their own health.” In recog­ni­tion of this, the Com­mu­ni­ty Care Alliance has cre­at­ed a Stake­hold­ers Forum con­sist­ing of rep­re­sen­ta­tives with dis­abil­i­ties — of which Suzanne is a mem­ber. When the CCAI reduces costs through effec­tive care-man­age­ment, it rein­vests those sav­ings into pur­chas­ing durable med­ical equip­ment for patients rather than squir­rel­ing them into high­er-ups’ pockets.

But Wil­son admits that the com­bi­na­tion of con­stant bud­get cuts, new providers and chang­ing leg­is­la­tion make for a lot of change to stay on top of from an advocate’s point of view.” As a result, CCAI — arguably one of the most eth­i­cal incar­na­tions of the MCO pro­gram — is still far from per­fect. Though there are 1,000 pri­ma­ry care physi­cians and 3,000 spe­cial­ists in its net­work, it still has to grap­ple with bureau­cra­cy and ration care based on health history.

Suzanne says even at CCAI, her wait time for colosto­my bags is still alarm­ing, although her social work­er is much more help­ful. Robert Cur­rie, the pres­i­dent of CCAI, wrote in a com­ment that they are learn­ing to cope with [the] tremen­dous demand for [their] inno­v­a­tive, con­sumer led model-of-care.”

Both Suzanne Klug and Tom Wil­son read­i­ly admit that in a per­fect world, the state would imple­ment a sin­gle-pay­er sys­tem fram­ing med­ical care as a pub­lic good rather than a pri­vate asset. Even if the U.S. were to imple­ment such a thing tomor­row, how­ev­er, the crises of our broad­er econ­o­my would make such a sys­tem unten­able. Pro­vid­ing a high lev­el of health care for the chron­i­cal­ly ill and severe­ly dis­abled will require mas­sive invest­ments and a rad­i­cal shift in val­ues, the likes of which the U.S. hasn’t seen since the first pro­gres­sive movement.

Sharon Post, the Direc­tor of the Cen­ter for Long Term Care Reform at the Health and Med­i­cine Pol­i­cy Research Group, argues that the flaws in our health deliv­ery sys­tem are deep­er than admin­is­tra­tion and privatization.

Just switch­ing to sin­gle pay­er won’t change the range of prac­tices and habits [of care providers],” Post says. It won’t nec­es­sar­i­ly get bet­ter. We have a sep­a­rate insur­ance sys­tem for poor people.”

Post encour­ages activists and health care providers to think of med­ical care and its fund­ing struc­ture as vital to eman­ci­pa­to­ry pol­i­tics.” To lib­er­ate our­selves from a moral­ly bank­rupt med­ical sys­tem, she sug­gests we reframe our think­ing on health care. Is there a long-game to look beyond man­aged care to a bet­ter over­all sys­tem that isn’t so frag­ment­ed and doesn’t seg­re­gate poor peo­ple into one under­fund­ed plan? And what can we learn from the man­aged care exper­i­ments to inform a longer-term plan for a more just and effec­tive health care deliv­ery system?”

While our econ­o­my isn’t struc­tured to invest in the peo­ple and insti­tu­tions that mat­ter most, plen­ty of peo­ple are work­ing hard to change that. In addi­tion to Access Liv­ing, groups like Nation­al People’s Action, the Chica­go Teach­ers Union and the Nation­al Nurs­es Union are call­ing for a rad­i­cal reimag­in­ing of our tax sys­tem that puts peo­ple first. Once we take back our mon­ey from the be-Rolexed hands of Wall Street, they hope, we can final­ly put it towards health care for all people.

Michael is the Exec­u­tive Direc­tor of the Cen­ter for Pro­gres­sive Strat­e­gy and Research where their research inter­ests include race, employ­ment and transna­tion­al labor sol­i­dar­i­ty. They cur­rent­ly sit on the board of The People’s Lob­by Edu­ca­tion Insti­tute and have pre­vi­ous­ly served on the boards of the Cross­roads Fund and In These Times mag­a­zine. They are a proud mem­ber of Chicago’s pro­gres­sive queer community.
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