Connecticut’s health system has been described as a “burning platform.” After six years of moderate growth, health care costs are once again on the rise. Average single premiums are up 25 percent for next year and more costs are being pushed off onto consumers.
Despite all this spending, the quality of care in Connecticut is mediocre and there are still 211,000 uninsured state residents. Health systems are growing and merging at a rapid pace, lowering competition and raising prices even more. But the Healthcare Cabinet’s plans to put out the fire are misguided, misinformed and will make matters worse rather than better.
The good news is that not everything in Connecticut is burning. In fact, there are important rays of hope in our state and we need to learn from them. Medicaid is one of those triumphs with declining costs, saving the state at least $1 billion to date, far more than other “leading state” Medicaid programs. Four years ago, Connecticut Medicaid was a mess. It was run by overpaid, unaccountable insurance companies. Providers wouldn’t participate in the program so members were forced into emergency rooms for simple, avoidable conditions. Since we moved away from the insurance-driven model to a system that supports prevention and care coordination, costs are down, quality is up and providers have come back to the program.
Connecticut’s Healthcare Cabinet was created in 2011 to advise the state on Connecticut’s health system and directed by legislation from last year to develop recommendations for reform. There are plenty of bad and costly ideas being proposed by the Cabinet but the worst is to move almost a million Medicaid (and state employee plan) members out of the successful current plan that is saving money into downside risk, a new and untested payment model. The Cabinet’s proposal is to encourage more providers to consolidate into large health systems, and pay them based on whether they save money on their members’ care. If their patients end up costing less, they get a share of the savings. But if their patients end up costing more than expected, the state will clawback a share of the losses from the providers. Nationally, providers are fleeing this model and we can’t afford to lose providers from our Medicaid program
Since Medicaid pays providers far less than other plans, generating savings will be very difficult. There are two ways to save money in downside risk. The right way is to reduce waste, avoid useless care and eliminate duplication. But as we know from managed care in the 1990s, there is also a wrong way – by denying people the care they need. The Cabinet’s proposal does nothing to distinguish between the two.
Downside risk is a new experiment based on economic theory that doesn’t make sense for health care. It goes even farther than the managed care model that failed spectacularly in the 1990s. The worst part is that it forces a wedge between doctors and patients. In the current system, your doctor recommends the best treatments for your condition and together you make the decision. Insurers use tools to lower costs, but your doctor has no reason to deny you the care you need. But under downside risk, if you need a costly treatment, your doctor will have a financial incentive not to provide it and not to even tell you about it. Doctors went to school to heal people, not to deny care. They shouldn’t lose money for doing their job.
Medicaid is finally working by rewarding quality, coordinating care, and using data for smarter policymaking. We are saving money, but there is room for even more improvement. The Cabinet’s proposal would turn back the clock and unravel all our hard-won progress.
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