Minn. Policymakers Discuss Consumer-Driven Options for Medicaid

Published January 1, 2004

More than 100 people–physicians, health insurers, insurance agents, employee benefits consultants, state officials, union leaders, members of the general public, and representatives of employers, clinics, and hospitals–attended an October 15 conference sponsored by the St. Paul, Minnesota-based Citizen’s Council on Health Care (CCHC).

“Consumer Driven Health Care: Public Sector Opportunities” also attracted two key Minnesota state legislators: Senator Becky Loire (D-Kendrick), chair of the Senate health care policy committee, and Representative Tim Wilkin (R-Eagan), vice chair of the House health care finance committee.

Medicaid Focus

Jim Frogue, director of the American Legislative Exchange Council’s Health and Human Services Task Force, described the history and structure of the Medicaid program, including the fact that, at $275 billion in 2003, it is larger and more expensive than Medicare. Calling the program “widely unpopular with everyone,” he cited a study that found 47 of 50 orthopedic doctors refused to treat a patient with a broken arm who had identified himself as a Medicaid recipient.

By contrast, Frogue reported, Medicaid’s new Cash and Counseling pilot program for disabled individuals has a 99 percent patient satisfaction rate and virtually no fraud. Patients are given a cash account, financial counseling, and the freedom to buy services and hire and fire health care providers. Frogue said President George W. Bush’s Medicaid proposal, which gives states more money and increased flexibility, would allow states to bring more consumer-driven health care options to Medicaid.

Also making a case for patient incentives in health care was Commissioner Penny Steele, a member of the Hennepin County Board of Commissioners. Minneapolis, Minnesota’s largest city, is located in Hennepin County, where 25 percent of Minnesotans, including many Medicaid recipients, reside. She opened her remarks by reminding the audience about an unavoidable fact in government programs: “If we give something away for free, we will have to ration it.”

Implementing Consumer-Driven Care

Steele stressed how a focus on “systems” slows the movement to consumer-driven health care. “I would venture to say we get caught up in systems,” she noted, “and somehow, how the systems want to be is how we wed to that system. Sometimes the most brilliant people on the planet can’t break out of systems anymore and think for themselves.”

Steele provided several examples of putting consumer-driven ideas into action. In June 2003, the Hennepin County Board of Commissioners passed a resolution asking Congress to give public employees access to Medical Savings Accounts. In addition, one Minneapolis charter school has successfully offered MSAs to its employees.

Greg Scandlen, director of the Galen Institute’s Center for Consumer Driven Health Care, was the event’s closing speaker. After applauding the audience for the way Minnesota-based companies are “changing the way America thinks about health care,” Scandlen focused on how America’s health care financing system has limited access to health care.

“The essential problem in health care is growing and excessive reliance on third- party payment for everything.” That leads to excess consumption of health care services, he said. “Excess consumption leads to runaway prices, and runaway costs lead to the third party rationing health care services.”

As antidotes to excessive third-party payment, Scandlen discussed medical savings accounts, health savings accounts in the Medicare bill, and health reimbursement arrangements recently approved by the Internal Revenue Service. He emphasized that customization is the future of health care, not standardized, so-called “evidence-based,” cookie-cutter medicine.

Questions and Answers

The audience posed many questions about health care coverage options during the panel discussion that followed. A particularly spirited discussion arose over whether individuals should be penalized with higher insurance premiums for lifestyle choices.

Although some audience members supported lifestyle underwriting, Steele expressed caution, saying she didn’t want “the fat police” monitoring the public. And Frogue said that while lifestyle is an issue, the public’s assumptions are not always accurate. One study found wealthy white men in Texas to be less healthy than poor Hispanics living on the Mexican border.

CCHC received many positive comments from attendees during a telephone survey conducted the next day. One of the health care providers said, “What I liked most was the painting of a picture with encouragement in it.” Showing how ideas can lead to action, a government official said, “It turned my perception on its head. I came away with several possible alternatives for our group.” And looking to the future, one clinic administrator enthused, “Very good. Do more!”