RALEIGH – This year, North Carolina’s Division of Medical Assistance got its first director with an M.D., but it is not yet clear that he has the right prescription for what ails the troubled and expensive Medicaid program.
According to an informative account in the Raleigh News & Observer of Dr. Allen Dobson’s first few months on the job, he is seeking to reduce the growth rate of the Medicaid budget through state interventions. For example, as a physician in Cabarrus and Stanly counties, Dobson worked with Medicaid administrators in the late 1990s to set up the Community Care initiative, which linked together local health providers and case managers to help ensure that women and children on Medicaid receive primary care so they didn’t develop more serious conditions later that would cost more to treat.
Community Care is said to have saved the state $120 million in 2004 alone, though I wonder how those savings were calculated and on the basis of what assumptions. What I do know is that while ensuring access to primary care unquestionably heads off some costly illnesses, it also increases the per-enrollee cost for many Medicaid patients who were not going to develop costly illnesses. Preventive care is not infinitely valuable, and will certainly be over-consumed if consumers bear little or none of the cost of receiving it.
Apparently, Dobson is working to expand Community Care to encompass more of Medicaid’s elderly caseload, which is where a disproportionate share of the cost is found. The General Assembly hoped this effort might save $22 million this year, though Dobson doesn’t think so.
I don’t want to be misunderstood here: given the current scope of North Carolina’s Medicaid program, state policymakers ought to do as much as possible to find economies, urge recipients to get necessary primary care, and avoid costly hospital stays. Community Care isn’t a problem. But it also isn’t likely to be a major solution to the Medicaid dilemma. As long as recipients are spending someone else’s money, and the state is precluded either by law or custom from requiring patients to shoulder even a modest share of the cost of their care, the costs will continue to rise faster than the taxpayers’ willingness to finance them.
I am more hopeful that nascent experiments in South Carolina and Florida will bear fruit, showing the way for North Carolina and other states to follow. Their governors have proposed new models for medical assistance that give recipients a set amount of funds with which they can purchase coverage or care, as well as a financial incentive not to purchase some care. In South Carolina, the latter will include health savings accounts, a reform that is finally catching on in the private health-plan market and offers the promise of returning insurance to its proper role of covering catastrophic, rather than routine, expenses.
We should all wish Dr. Dobson well. He has a difficult and probably thankless job. Moreover, if he succeeds only modestly, that would still represent a welcome budget savings to the state. We will have to go much further than has yet been considered in Raleigh, however, to reach the roots of the problem – and to become a national leader in Medicaid reform.
Hood is president of the John Locke Foundation.