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The Affordable Care Act turned Medicaid into America’s largest public health care coverage program. While the volume associated with this growing program created increasing opportunities for providers, health systems, health plans, and vendors, these same stakeholders shouldn’t write off opportunities in Medicaid now simply because of the change in direction at the federal level. Instead, stakeholders should work with states to develop solutions that address their specific problems, meet their goals, and maximize efficiency and innovation.
Given the difficulties of aligning bipartisan House and Senate interests to assure passage of the American Health Care Act (AHCA) it appears that at least some components of the Affordable Care Act are here to stay for the “foreseeable future.” That said, whether the AHCA changes components of the ACA or not, many Medicaid provisions of the ACA will remain in effect, and many will be changed through additional legislative action or through executive branch action, such as Medicaid waivers.
The House version of the AHCA provides key policy signals regarding the administration’s and Congress’ priorities when it comes to the Medicaid program—and these signals are likely to materialize in future legislative or executive branch reform efforts. As Medicaid agencies, managed care organizations, hospitals, providers, and other stakeholders make plans in an uncertain environment, it will be important to pay attention to these key signals and their potential impacts.
Key Policy Signals
What does this mean for Medicaid programs and stakeholders?
The House version of the AHCA sends a clear message is that Medicaid reforms will likely increase states’ financial exposure, which will in turn have a trickledown effect on providers, health systems, health plans, and other vendors and stakeholders that operate in the Medicaid space. These stakeholders should understand that these targeted reductions may disproportionately hit different stakeholder groups in different states and result in unintended consequences. It will also change the program dynamics and relationships when economic conditions deteriorate.
While this could translate to increased budget disputes—pitting different stakeholder groups against each other to fight for a limited amount of funds—it could also mean increased opportunity for those who are willing to engage in value-based payments, provide innovative solutions to care coordination, think more broadly to address the underlying social determinants of health, and operate in a lower-cost setting while providing greater efficiency.
Capped Medicaid funding could accelerate states’ drive to innovation
Leavitt Partners has always viewed states as laboratories of innovation, and historically states have looked to create Medicaid programs that maximize cost efficiencies and improve care. An increasing focus on care coordination, value-based payments, and consumer engagement are just a few examples of the initiatives many states are engaged in to capture these efficiencies. Many states are continuing with plans that were in place before change in the federal administration and several states are now looking at submitting new waivers to take advantage of the promise of “increased flexibility.”
While the uncertainty of Medicaid reform at the federal level may slow some innovative initiatives in the short term, it is expected that states’ need for innovative approaches to Medicaid will continue, if not accelerate in the long-term.