The Detroit News is highlighting ideas from various groups to promote discussion on reform, restructuring government and the economy.
Reform Medicaid with incentives
Idea 3: Reform Medicaid
Why: Medicaid, the state-federal program that provides health care to low-income families, consumes about a fifth of the state's budget and contributes to the rising cost of health care. Medicaid does not pay the cost of the services it "covers." This increases the cost of private insurance. In 2007, more than $1.2 billion was shifted to the private sector by Medicaid. Medicaid reimbursement rates not only shift costs, but they also decrease access to care for Medicaid recipients, especially preventative care. Physicians are undercompensated for the care they provide Medicaid recipients, and some providers cannot afford to accept new Medicaid patients, forcing them to use the most expensive health care option -- the emergency room.
Benefits: Reduces cost-shifting to the private sector, improves access for Medicaid recipients, covers more individuals and saves the state an estimated $900 million annually.
How: Pass legislation that reforms Medicaid by creating incentives for government-covered patients to pursue healthy lifestyles and rewards for providers who meet or exceed specified benchmarks. Most pay-for-performance methods adjust payments to providers based on performance on different measures. Medicaid services and eligibility need to be redesigned to control costs for this ballooning state program and prevent further reimbursement rate cuts. In addition, apply for a waiver from some federal rules.
Obstacles: The federal government, state Legislature and governor. Too often, the easy answer has been to cut Medicaid reimbursement rates to balance the budget. This should no longer be an option. Further cuts only exacerbate the problem. However, Michigan's hands are tied by federal requirements. The state should apply for a federal waiver to pursue necessary reforms.
Source: Grand Rapids Area Chamber of Commerce
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