Jeb Bush’s Medicaid Reforms Are Working

Jeb Bush is often called a “moderate.” Yet that may be more because of his style than his political beliefs. While he was governor of Florida, Bush was probably the most aggressive reformer of any governor in the country. Both in education and in health care, he did things that had never been done before.

Since health care is the No. 1 domestic-policy issue, Bush’s Medicaid reforms are perhaps the most interesting. Although this may come as a surprise to some, Medicaid is not completely run by the government. More than two-thirds of Medicaid recipients nationwide are in private health plans these days. And Florida has pushed the boundaries of privatization.

Here is the back story. Although Medicaid pays providers lower fees than other insurers pay, the total cost of care is often much higher. A study in the Annals of Surgery examined outcomes for almost 900,000 individuals who underwent major surgical procedures from 2003 through 2007. The study found that:

• Medicare, uninsured, and Medicaid patients were 54 percent, 74 percent and 97 percent, respectively, more likely to die than those with private insurance.
• The average length of a hospital stay was 5 percent shorter for the uninsured, 19 percent longer for Medicare patients, and 42 percent longer for Medicaid patients.
• Medicare patients cost 10 percent more than the privately insured and Medicaid patients cost 26 percent more.

Can marketplace incentives improve on this record? Under Governor Bush’s leadership, Florida began giving Medicaid recipients some of the benefits of choice and competition. More than half of those eligible joined the private-sector program, and about 70 percent of those enrolled make an active choice of a plan each year. Plans are allowed to modify benefits and add on additional benefits. They can charge copayments for services, and these differ quite a lot from plan to plan. The recipients receive counseling, have access to a nurse hotline, and are rewarded for healthy behaviors with contributions to a personal Health Saving Account.

The Florida demonstration project began with two counties in 2006 and expanded to three more the following year. Under Governor Rick Scott, the state has now received a federal waiver to go statewide. Although critics may never be satisfied, a peer-reviewed study by University of Arizona economists Michael Bond and Emily Patch suggests success on all fronts: lower costs, higher quality, and greater access to care.

Cost. According to available federal data, during the 2006 to 2009 period, per capita Medicaid expenditures in Florida increased 5.2 percent, whereas per capita costs in the reform counties increased only 1.4 percent. While the authors say this doesn’t “prove” the reform has lowered costs, it is certainly “encouraging.”

Access to care. Medicaid patients often make unnecessary visits to hospital emergency rooms because so many doctors either won’t see them or can’t see them until after a long wait. The Florida average for nonemergency care is 16.4 visits per 1,000 Medicaid enrollees. By contrast, the average for the reform health plans is 15.1 visits per 1,000 enrollees.

There has also been a significant increase in access to specialists. The number of patients in reform plans receiving dermatological care rose from about 10 per 1,000 beneficiaries to 13 per 1,000; neurological care rose from about 21 to 27 per 1,000; and orthopedic care rose from 25 to 27.

Quality. Measures of patient outcomes show that plans in the demonstration counties had more improvement than the counties with conventional Medicaid. With respect to diabetic care, for example, the rate of glucose testing for the Florida demonstration counties was above the national average, while the rate in traditional Medicaid was below the average. Control of glucose levels by diabetics in the reform counties exceeded the national average, while the performance in nonreform counties was below it.

The economists conclude that the expansion of “privately administered Medicaid health and drug plans statewide has the potential for substantial savings to Florida taxpayers and better care for the poor and disabled.”

Health care is one of those issues that too many Republicans tend to ignore. Yet the free-market principles that they claim to believe in can solve a lot of problems in this sphere. Jeb Bush was one of the first to discover this.