Sunday, November 16, 2008

What we're up against

It's been said that "Obstacles are those frightening things you see when you take your eyes off of your goal." I certainly believe that, but at the same time there needs to be a gameplan for the challenges in front of us.

I work in the healthcare industry in NY and my boss remarked to me that 25% of New York State's population is on MedicAID. I captialized the last three letters to emphasize: that's the poor one, not the old people one.
So I went to google the stat and I found this NCPA study from 2006. I couldn't even get past the Executive Summary on the first page it was so disheartening.

Here are some highlights (actually lowlights); I bolded the NY politicians' responsibilities:

New York's Medicaid program is especially costly. New York has less than 7 percent of the U.S. population, but spends about 14 percent of the nation's Medicaid dollars. In 2004, the latest year for which complete data is available:

  • New York spent $10,349 per enrollee, compared to the nationwide average of $6,834. Only New Hampshire spent more.
  • New York Medicaid spent about $2,165 for each state resident (more than any other state) and almost two-and-one-half times the national average.

Why Is New York's Medicaid Program so Costly? Higher living costs do not account for the high Medicaid spending in New York. The state spends more because of policies that encourage higher spending and discourage cost control. Other states share some of these same problems, but none have such a wide array of perverse incentives. Specifically:

  • Unlike most other states, New York offers coverage to virtually all optional populations, and covers almost all optional services.
  • New York pays physicians less than almost any other state, even though physician therapies are often more cost effective than hospital therapies.
  • In contrast to its treatment of physicians, New York pays hospitals generously; whereas in most states Medicaid pays the lowest hospital fees of any payer, in New York Medicaid pays the highest fees of any payer — including private insurers.
  • New York does not use smart buying techniques, such as selective contracting with providers, to reduce costs.
  • New York spends more than any other state on drugs and pays some of the highest drug prices of any state; the state imposes few restrictions on doctors who prescribe the most expensive drugs, when lower-cost alternatives are often just as effective.
  • The political incentives to spend are greater since the New York legislature bears only a fraction of the cost (less than almost any other state); for every dollar the state spends, it can confer $4 of benefits.
  • New York does not aggressively pursue fraud — even failing to spend a substantial portion of the federal funding available for antifraud efforts; in
    2004, only 37 cases of suspected fraud were uncovered.
  • New York's insurance regulations raise the cost of private insurance, and make (free) Medicaid coverage more attractive.
  • If New York Medicaid were as efficient as the average state program, it could spend billions of dollars less to achieve the same health outcomes, and would have billions of dollars each year to fund tax cuts or other spending programs.