Gov. McCrory, Sec. Wos surrender on Medicaid reform, privatization

Last week, Governor Pat McCrory’s DHHS Secretary, Aldona Wos, unveiled the administration’s long-awaited reform plan for Medicaid. One of McCrory’s favorite talking points on Medicaid has been how “broken” the system is and how he’s going to “fix” it. Setting aside the past year of missteps in which McCrory and Wos did more than any Governor and Secretary in history to discredit and cause problems for NC’s award-winning Medicaid program, what does the administration’s plan tell us about the future prospects of Medicaid and health care for the poor in NC? Here’s my take:

Surrender: The Governor completely surrendered by backing down from his former big plans to sell off substantial parts of the Medicaid program to private, out-of-state insurance companies. The proposal to use “Accountable Care Organizations” or ACOs is simply, at its core, a new way to pay existing or new networks of doctors, hospitals and other health care providers. Paying health providers as a group for each illness a patient gets rather than piecemeal for every test and procedure is supposed to get providers focused on quality and efficiency, especially when payments go up if patients are healthier. ACOs represent gradual evolution in health care and not “major reform.”

Missing the boat on Medicaid expansion: The Governor also made it clear that he has no intention of solving the coverage gap for the 500,000 poor North Carolina citizens who would be eligible for Medicaid coverage if he led the charge to expand Medicaid using the billions of dollars in federal money available to our state. Conservative governors and legislators around the country – whether in New Hampshire or Utah – are coming up with innovative solutions to cover their citizens with all the new federal money available. By leaving an expansion proposal out of his plans to change Medicaid, our Governor is renouncing any claim to national moderate leadership on this issue, leaving billions of federal tax dollars collected from North Carolinians to go to states that do expand and hurting hundreds of thousands of his own constituents.

Taken to the woodshed by the politics and the policy: Ultimately, some items that McCrory and Wos didn’t count on in their headlong Medicaid privatization rush to join an ideological gravy train ended up being enough to stop them short. First, and most obviously, with the majority of doctors and hospitals participating (and helping run) our current homegrown Medicaid managed care program, NC Community Care, it’s pretty hard to tell all these powerful interests that you are going to dismantle what has been in place for years. This is especially true when huge supporters of NC Community Care include hometown pediatric and family medicine practices and local hospitals, both very politically influential because of their local connections and respect in the community. Second, their privatization ideology blinded McCrory and Wos to a plain fact: Medicaid works, and works well in North Carolina. The General Assembly’s own Fiscal Research staff presented information to the DHHS Medicaid commission showing that North Carolina per capita spending on Medicaid has declined 11% since 2008. This is unprecedented and has to be the best record in the country. Over the same period national per capita spending on Medicaid increased by 6%. Providers and patients are also happy with the program. Eventually, facts matter and they mattered here.

No son, you’ve been a little too reckless for me to give you the car keys: Finally, this important point: After a year in which McCrory has had trouble even paying Medicaid providers under the current system, many observers saw it highly unlikely that the General Assembly would give approval to McCrory and Wos for a big Medicaid overhaul. After all, the General Assembly is the one stuck with the bill if things go wrong. Add to this the experience of lawmakers (like the Medicaid reform commission’s Rep. Nelson Dollar) who have responsibility for actually balancing the Medicaid budget, who have seen firsthand how much North Carolina Medicaid has saved through its Community Care Program and what has happened in other states that have tried selling off Medicaid to private industry, and the result becomes even less surprising. In the end, these adult voices clearly prevailed, at least on this privatization issue.

The bottom line: Overall, last week’s announcement of surrender on the privatization issue is good news for low-income people. Unfortunately, for the hundreds of thousands of North Carolinians left out of health coverage because of McCrory’s continued refusal to come up with innovative expansion ideas, this surrender is bittersweet. McCrory now has a chance to lead with real innovation around health care for the poor that includes expansion and reform but given the track record above, I’m not holding my breath.