As 2014 looms and the requirements of the Patient Protection and Affordable Care Act threaten to become permanent, virtually every state is seeking a solution to an impending Medicaid-induced budget crisis. In Utah, Medicaid consumes 21.5 percent of our budget, nearly double what it was a decade ago, encroaching on critical education funding and elbowing out social service, transportation and corrections needs. For Medicaid to survive and state budgets to balance, states must both modernize Medicaid and bend the health care cost curve.
Utah set out to do just that, and our solution garnered the bipartisan, unanimous support of the 104-member Utah State Legislature, as well as stakeholders across the spectrum. But such broad-based support was inadequate for federal observers. Following a prolonged approval process, the proposal was squarely undercut last month by Washington, D.C., bureaucrats who prefer the failed federal status quo to a state-initiated solution.
The framework of Utah's solution was principle-based and outcome-driven. The principles included caring for our most vulnerable populations, protecting long-term program viability, promoting responsibility and preserving individual choice.
The desired outcome was simple: improve the way we deliver health care to the most vulnerable populations while protecting Medicaid's long-term viability. To achieve the outcome, Utah's proposal includes five innovative components:
1) Change financial incentives for doctors, rewarding quality instead of quantity.
2) Align Medicaid's growth rate with that of state general funds.
3) Offer a premium subsidy option to provide Medicaid clients access to a health plan offered through their employer or the Utah Health Exchange.
4) Modestly increase co-payments to curb over-utilization and encourage appropriate care.
5) Reward those who actively maintain or improve their health.
These are seemingly sound requests. But D.C. didn't get it. Staff at the U.S. Department of Health and Human Services (HHS) — the agency from whom we need approval to enact our proposals — denied many key provisions, effectively gutting Utah's solution. What was baffling was the rationale, or lack thereof.
First, bureaucrats rejected our cost containment strategy, even though Oregon has used precisely the same approach since the 1990s, an approach reauthorized by both the Bush and Obama administrations. If one state has used a strategy that works for almost 20 years, why can't other states follow suit?
HHS also initially rejected our idea of incenting patients to get healthy or stay healthy. Once we pushed back, a higher level officer reviewed the situation and reversed course. While we appreciate their acknowledgement of their own flawed reasoning, it also illustrates the inconsistent and capricious nature of their review process.
Of course, this is not the first time Washington has demonstrated a stubborn and biased unwillingness to allow Utah to manage our Medicaid program. Last fall, after three full years of inaction, HHS rejected a separate proposal to allow Medicaid clients to choose a private individual policy that better meets their needs. In their denial letter, staff suggested they simply didn't believe Utah Medicaid recipients could make the right choice for their families.
In order to resolve this arbitrary denial of state solutions, I have scheduled a face-to-face meeting with Health and Human Services Secretary Kathleen Sebelius on my next trip to Washington. On behalf of the people of Utah, my message will be clear: re-examine your agency's arbitrary and unsupportable position on our Medicaid proposals, and restore the role of states as true partners in what used to be a state-federal partnership.
The role of the federal government should not be to stifle and suppress state innovation and solutions to our Medicaid morass.
To the contrary, the federal government should look to the states — the true incubators of innovation and ideas — for solutions to the challenges besetting both Medicaid and state budgets. Who knows? We might have more than four or five good ideas to avert this crisis. (Please see above, Washington.)
Gary Herbert is the governor of Utah.
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