FREEPORT — MaineCare advocates are excited about a new expansion proposal by Sens. Roger Katz, R-Augusta, and Tom Saviello, R-Wilton, because it’s the camel’s nose under the tent, and because it’s a Republican camel.

The proposal would expand Medicaid to an estimated 70,000 new enrollees with incomes between 100 and 138 percent of the federal poverty level for three years, at which point it would have to be re-authorized by the Legislature.

This is advertised as a compromise, but for all practical purposes, the extension would be permanent. Once that many new enrollees have free health care in any form, it would be practically impossible to take it away, even if the federal government waffles on its promise to pay 100 percent of expansion costs for three years, declining to 90 percent in 2020.

Democrats in the Legislature understand this perfectly, and Sen. Katz probably does, too, which makes one wonder why he bothers with the three-year sunset charade.

Sen. Katz is right that the current MaineCare program is dysfunctional in many respects, and that its cost trajectory is unsustainable. To fix this, he proposes that the state shift from fee-for-service Medicaid to a managed care system, as a number of other states have done in an effort to control costs. However, the results for access, quality of care and cost savings have varied widely.

First, managed care systems often narrow the choices patients have for doctors and hospitals. Not all providers accept Medicaid patients, and a managed care system could reduce the number of options even further and could result in significant inconvenience for patients, especially in rural areas.


Second, in most Medicaid managed care programs the burden for savings is entirely on providers, who must stay within an expenditure limit for the patients they serve or lose money. The result is that providers have an incentive to stay below the expenditure cap by limiting services to patients. State officials like the idea of placing the burden of controlling costs on providers, but for patients it doesn’t always work so well.

The best idea that Sens. Katz and Saviello have is buried in a single subsection of the legislative proposal and isn’t even mentioned by Sen. Katz in a recent op-ed column for the Press Herald (“Commentary: MaineCare compromise would tackle two big problems, state senator says,” Feb. 27).

It is a proposal to study the possibility for a private option along the lines of proposals for Medicaid expansion in Arkansas, Iowa and Pennsylvania.

These plans use Medicaid dollars to help enrollees buy qualifying private insurance by providing subsidies for premiums and by capping deductibles. In Maine, such a plan would take the state at least partly out of the open-ended health care claims business – which threatens to overwhelm the state’s budget – and would arguably improve the quality of care.

The problem with conventional Medicaid expansion, which a managed care system wouldn’t solve, is that it more deeply embeds the third-party payment system, which takes away any incentive for consumers to seek value in their health care, does nothing to constrain demand and is the primary driving force behind the steady rise in the cost of care. The fundamental guiding principle for cost-efficient health care reform should be to give patients more responsibility for how their health care dollars are spent.

The Katz-Saviello managed care proposal does exactly the opposite.


“Remember,” Sen. Katz says in his op-ed, “that while low-income and elderly people are the beneficiaries of Maine-Care, they don’t actually see any of the money – the checks are cashed by middle-income workers.”

The problem is that a cost-efficient health care system isn’t a jobs program, and beneficiaries need to see and have some control over the money if they are going to have any incentive to make good decisions about their care rather than having someone else make them.

Think about the effects on demand and ultimately on the cost of care if Medicaid beneficiaries had a fixed amount of money sufficient to pay the premiums for good-quality private insurance policies with money left over for deductibles which are already low under the Affordable Care Act.

Then, at the end of the year, money left over could be rolled over into a health-savings account for next year, or could be taken into taxable income. The 30 percent of health care costs for redundant and otherwise unnecessary care would begin to melt away overnight.

The federal government has finalized rules that let states use Medicaid funds for premium assistance. While Maine considers whether to expand Medicaid in any form, why not study what can be done with private options as well as with managed care?

— Special to the Press Herald

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