Florida Hands Over Medicaid Program To Private Insurers

On Friday, the Florida legislature passed two bills that would shift hundreds of thousands of poor and elderly beneficiaries in Medicaid onto private HMOs and “other types of managed-care plans.” Under the proposal — which Gov. Rick Scott (R) is expected to sign — seniors with long-term care needs would be required to enroll in private health coverage by October 2013 and women and children would have to begin participating in October 2014. Beneficiaries with developmental disabilities would be excluded from the requirement.

Proponents claim that the change would “hold down spiraling costs in the $20 billion program, while also improving a fragmented system of care.” But the date is far less conclusive. In fact, a five-county Medicaid pilot program that tested the idea of whether “privatization would save the state money while improving services” found widespread complaints and little evidence of savings. From an analysis by Georgetown University:

This study concluded that the pilots were saving money, but did not account for the cost of the enhanced benefits program and increased administrative costs associated with the pilot.

The study also concluded that it was not possible to assess whether these savings were a result of reduced access to care or more efficient provision of services. … Much critical information is still lacking about the impact of Florida’s Medicaid pilots, including whether or not the pilots have saved money – and if they have whether the savings came at the expense of needed care. [...]

Market instability and plan turnover have resulted in significant changes in beneficiary plan assignments over the past three years, which is likely to have caused disruptions in care for children, people with disabilities and other vulnerable populations.

Other cash strapped states are strongly considering partnering with private insurers, but the evidence on the degree to which managed care actually accomplishes these goals varies. Medicaid patients in some states seem to have better access to doctors, while other surveys have found that overall improvements in access associated with managed care are minimal.

States view managed care as way to reduce their Medicaid expenditures, but they have to ensure that private payers aren’t looking out for short term profits by denying treatments or reducing reimbursement rates. Florida’s expansion of managed care — which still has to be approved by the federal government — will serve as a test of that criticism, even if the results of its pilot program are already less than promising.