New York under Gov. Andrew Cuomo has been able to tame Medicaid costs by bringing together service providers and health care unions to find ways to save money.
Medicaid, which provides health insurance for 6.4 million New Yorkers, is the single most expensive item in the state budget, costing more than $22 billion in fiscal year 2016. Local governments have to kick in another $8 billion, chiefly from property and sales taxes. The rest is paid by the federal government.
The entire New York Medicaid program will cost taxpayers more than $62 billion this year. Much of that expense is for the care of a disproportionately small group of patients: Nationally, just 1 percent of Medicaid consumers are responsible for 25 percent of the costs. These patients typically have five or more chronic conditions, such as obesity and diabetes.
In other words, the most expensive part of our Medicaid program is the people whose conditions are caused or worsened by lifestyle choices.
Rightly, federal regulations prohibit New York and other states from dropping people from Medicaid — no matter how poorly they follow doctors’ instructions or continue unhealthy behaviors. The only option left to states is to use incentives as a way to encourage Medicaid patients to do the right thing.
The state Health Department has begun offering cash and non-cash incentives to encourage Medicaid patients to lose weight, exercise and address other causes of chronic illness. But less than 1/10th of 1 percent of Medicaid patients are participating in these programs.
It may seem odd to suggest making cash payments to people who are already collecting so much from the taxpayers, but the incentives are a proven means to ultimately lower the price for care, as they pale in comparison to the costs of hospitalizations and other treatments.
New York has hindered its own success by capping the incentives that patients can receive. While the federal government won’t reimburse the state for greater payments in the future, research has shown that larger incentives than those currently offered could produce even greater results for patients dealing with mental illness, drug addiction or other conditions that require especially strict adherence to medical instructions.
Other states have shown promising results with their own incentive programs, such as requiring Medicaid patients to use Health Savings Accounts and waiving their copays if they follow instructions, take their medication and get immunizations.
Others have provided Medicaid patients with opportunities that will help them lose weight and improve their diets.
Albany doesn’t need to limit itself exclusively to carrots in this approach, because the taxpayers also have a few sticks at their disposal.
For example, the state could also request permission from the federal government to penalize the welfare cash benefits of Medicaid patients who fail to follow their doctor’s orders — and ultimately cost taxpayers more when their conditions worsen.
And the state needs to lobby the federal government to come to grips with policies that are actually working against the best interests of patients.
For example, taxpayers are paying, through the Food Stamp Program, for sugary beverages that lead to obesity and diabetes among the same clients enrolled in Medicaid, thus driving up public health care costs.
To be sure, patient behavior is not the only part of the state’s Medicaid program that needs to be modified. Connecting patients with primary care physicians, basing payments to providers based on positive outcomes rather than the number of costly procedures performed and getting patients to stop using emergency rooms for primary care, is imperative, both to control costs and to improve the health of those on Medicaid.
By virtue of its size and mediocre health results, Medicaid’s massive costs warrant all the creative thinking that Albany can muster. New York taxpayers can’t afford anything less.