The Patient Role in Medicaid

NCPA December 17, 2012

New York is taking steps to reform its Medicaid program to target complex, high-cost populations. This includes nearly 1 million people in Medicaid that have chronic health problems or long-term disabilities, says Russell Sykes, a senior fellow at the Empire Center for New York State Policy, a project of the Manhattan Institute.

• New York's Medicaid program is the largest in the country, providing care to 5.1 million people.
• It costs $54 billion annually.
• This comes out to about $8,960 per patient per year.

Many of the Medicaid recipients are enrolled in managed care where their conditions are monitored and treatments are cost controlled. However, the majority are covered on a fee-for-service basis. New York's reform would coordinate and manage health care for this group of people and place more emphasis on health education and prevention.

However, these reforms miss the role of patients themselves. Indeed, many of the costlier treatments for chronic disease like obesity, diabetes and heart disease stem from poor habits and lifestyle.

• About 12 percent of all adults in the program are estimated to have diabetes.
• More than 31 percent smoke.
• Substance abuse affects more than 250,000 beneficiaries and constitutes about $1.7 billion in total expenditures per year.

Because of this, it is important that any reform ensures that there are appropriate incentives to induce healthy behaviors by individuals. The case of welfare reform provides an example of how offering the right mix of incentives can make the program more efficient.

Before the federal welfare reform of 1996, the programs had few expectations of what it could achieve. After the reform, people had the incentive and responsibility to work. The same can be true of the Medicaid program in New York. Some specific recommendation that New York can pursue are:

• Experiment with cash or cash-like incentives to encourage people to adopt healthy behaviors in the form conditional cash transfers.
• Remove barriers that limit private managed care plans from providing higher rewards for healthier behaviors to their Medicaid clients.
• Incorporate proven approaches from other states that have designed incentive programs and mechanisms to increase patient responsibility.
• Test multiple, small-scale approaches and study them to see which incentives and programs work.

Source: Russell Sykes, "Taking Ownership: The Patient Role in Medicaid," Empire Center, December 5, 2012.