Deloitte report shows tough road for states and medicaid

Deliotte has issued a new report – “Medicaid Long-term Care: The Ticking Time Bomb,” which examines the long term impact that unchecked Medicaid spending will have on state budgets. According to the report, without serious action from state governments’ cost obligations to Medicaid enrollees could take over 35% of discretionary budget spending over time. CivSource spoke with Robert N. Campbell Vice Chairman and Principal at Deloitte about the report’s findings.

Medicaid is the nation’s primary source of long-term care services, as well as one of the principal health care safety nets for numerous Americans and the passage of health care reform ensures that the program will only expand.  According to the report, if current trends continue, by the year 2030 state budgets will see Medicaid taking anywhere from 20-40% discretionary spending, much of this going to long-term care patients.  Campbell said that without urgency on this issue states could face some dire choices, “failure to innovate with medical and administrative best practices is likely to result in runaway costs, poor quality care and challenging fiscal budget holes for states.”

Deloitte’s Center for Health Solutions which authored the report, created four scenarios and tested them against the ten largest states, examining the resulting the cost trends.  The four scenarios covered actions ranging from doing nothing to a worst case of a 40% increase in enrollments and no cost cutting measures.  The result wasn’t exactly uplifting. The report shows that even with the new federal reforms states are in for a rough ride, “while the bill states that new Medicaid enrollees will be subsidized through 100 percent federal funds from 2014 to 2016, state budget deficits are projected to be more than $350 billion between 2010 and 2011, a dangerous fiscal scenario for which there is no short-term solution.”

Dr. Paul Keckley, one of the report’s authors underlined the lack of help for states going forward, “there is currently no coordinated, comprehensive system of the provision and financing for long-term care services in the United States. States are left to fend for themselves, and they will have to find ways to meet the demands of the health care reform bill with decreasing resources.”

Despite this grim picture, Campbell did point to some areas where states can have immediate impact or are already making strides. He sees significant opportunities in the emerging field of health care analytics – which looks at health trends over populations and makes recommendations based on those trends. He also said there may be more to learn from long term care waiver programs and personal care programs.

Although not directly covered in the report, I asked Campbell about the impact on public safety net care providers like clinics – he was quick to point out that the public safety net is an important piece of the puzzle and one that is experiencing its own changes.  “The public safety net is evolving through investments, in some cases that may mean an upgrade in capacity and care. In some cases it might mean more public-private partnerships or being sold to private concerns outright.”

Ultimately, states are going to have to start making choices about what to do early. Campbell put the report into perspective with this comparison, “if the largest state Medicaid programs were corporations, all of them would rank on the Fortune 500.”

The full report is available for download here.

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