Lots Of Movement In Medicaid Nationally This Morning

I’m in DC this morning and a bit ahead of the Seattle news cycle.  I had breakfast this morning with some DC think tank types and congressional staff.  It was an informal conversation – we’ve been friends since I worked in DC in the late 90’s.  On health care, they were buzzing with two stories this morning that I thought would be of interest to State of Reform readers.

1.  Wellpoint is buying Amerigroup.  In sum, they will have about 4.5 million beneficiaries.  There is a lot of news here, but the interesting DC buzz:  “we knew Medicaid expansion meant a lot of money to these plans, but a 50% increase in their balance sheet?”  This comment referenced today’s sale price of $90 per share, up from a recent low of $56 in mid-June.  In other words, the Medicaid managed care sector may think there’s more money in Medicaid than Medicaid does.

2.  These same plans are entrenching.  Even in conservative states like Kansas, where Gov. Brownback intends to cut $1b out of the $3b Medicaid plan over the next 5 years, Medicaid is extending deeper, broader contracts with managed care plans.  While some states have left managed care altogether, the general trend nationwide is towards state reliance on companies with managed care experience.  The buzz from the breakfast:  “It’s easy to point the finger at plans as the bad guy, but here’s the deal:  states never would have gotten to this place if 1) they’d have had the courage to push back on providers themselves in terms of outcomes and cost, and 2) if providers themselves had been more willing to improve the system on their own any of the seemingly countless times this came up before.  On this last point, the tone was similar to that expressed by Rick Cooper, CEO of the Everett Clinic, last week:  ‘this is our last chance to get this right.