Managed Care - August 2012 - (Page 5)
l E G i s l At i o N & R E G u l At i o N
trouble for Hospitals & Health Plans in states that Nix Medicaid Expansion
in nonconforming states, health plans will miss out on a bonanza of new members and hospitals might be on the hook for uncompensated care
By John Carroll
hile the Supreme Court’s majority opinion left the Affordable Care Act largely intact, it stripped away one provision that some of the most potent forces in the health care industry had struggled to maintain. The federal government, the court said, could not make good its threat to withhold all Medicaid funding unless a state agreed to accept a plan that would add about 17 million members coast to coast. States that choose not to participate would have lost the incentive for expansion. In an instant, some of the most prominent governors in the country declared that they would take advantage of this Get-Out-ofMedicaid-Free card. “Florida will opt out of spending approximately $1.9 billion more taxpayer dollars required to implement a massive entitlement expansion of the Medicaid program,” declared Rick Scott, the Republican governor of Florida. Rick Perry in Texas and four other governors echoed Scott, all in states where the ACA is unpopular. Officials in at least 25 states say they are biding their time. In general the red (Republican) states opposed the expansion and the blue (Democrat) states support it. A stretch of states in the Deep South is offering the most vocal opposition.
WellCare Health Plans ( a big player in the battle state of Florida), Molina Healthcare, and Centene — took off as investors eagerly placed their bets on more such buyouts in the Medicaid field. The analysts — and the companies involved — are betting that come what may, the business and political current will leave the top managed care plans with swelling business. And the backlash against the Medicaid expansion might not be all it’s cracked up to be.
Billions at stake But the political broadsides never rattled investors on Wall Street. Just days after the decision, WellPoint announced it would buy Amerigroup, one of the biggest managed care players to operate in Medicaid, in a deal that valued the target company at close to $4.5 billion and leaves the merged company with 4.5 million Medicaid members. In a swift follow-up, shares of
A done deal “There are going to be billions of dollars of federal money flowing into the states, and we think the states are going to have to take it,” Amerigroup CEO Jim Carlson told reporters on the conference call set up to explain the rationale for the merger. “We think once everybody settles down and really understands this from a budgetary standpoint and really from a human standpoint,” the expansion will be a done deal. Some industry leaders, meanwhile, are also betting that once the 2014 start date arrives, most states will leave their concerns aside and give a green light to the expansion. “The vast majority of states will pick it up, because it’s the right thing to do. It makes fiscal sense,” says Meg Murray, the CEO of the Association for Community Affiliated Plans, a group of not-for-profits that cover more than half of the Medicaid members in health plans today. Supporters of the expansion all point to a simple formula: For the first three years, 2014, 2015, and 2016, the federal government will pay all of the expansion cost. And that is not a moveable feast. Lose even one year signing up and they lose the entire incentive. After that three-year introduction rate, a state’s share of the burden rises to a seemingly modest 10 percent.
AUGUST 2012 / MANAGED CARE
Table of Contents for the Digital Edition of Managed Care - August 2012
Managed Care - August 2012
Legislation & Regulation
News & Commentary
Private Exchanges: Practice Makes Perfect
Hospitals and Providers Ganging Up on Plans?
Q&A: Kaiser Permanente’s Sharon Levine, MD
God Save the Health Care System!
Future Points to Greater PBM/Plan Cooperation
Managed Care - August 2012