Private health insurance companies stand to reap a bigger share of the Medicaid business as states deal with budget shortfalls and increased spending on medical care.
Illinois, North Carolina and Oklahoma are among the larger states moving more of their states’ Medicaid beneficiaries under the management of private insurers over the next two years. In addition, Florida and Mississippi are renewing Medicaid managed-care contracts with states, according to Medicaid Health Plans of America (MHPA).
“More states are moving away from the fragmented care of the antiquated fee-for-service model towards the capitated coordinated care model of managed care organizations,” said Jeff Myers, president and CEO of Medicaid Health Plans of America. “We expect this trend to continue, especially as more states consider Medicaid expansion: states will realize that such a move can only successfully be made with the budget predictability that managed care provides.”
It could mean hundreds of thousands of new customers for health insurance companies like , , , Molina, and Blue Cross and Blue Shield plans that are already growing their Medicaid businesses.
In Illinois, for example, Gov. Bruce Rauner has announced plans to move more than 80% of the state’s Medicaid beneficiaries into private health insurance plans. The state is amid a bidding process for participating plans in what Rauner is calling a “Medicaid managed care reboot.”
Illinois’ move will whittle the number of plans down from 12 to “up to seven” in an effort to “reduce the administrative complexity,” Felicia Norwood, director of the Illinois Department of Healthcare and Family Services said in an interview. “The new Medicaid managed-care system will have more effective procedures and guidelines.”
Managed-care plans have already taken on an unprecedented role in providing health coverage to poor Americans. Part of this trend was fueled by the 31 states that opted to expand Medicaid coverage under the Affordable Care Act.
Consulting firm PwC says 73% of Medicaid beneficiaries across the country–or 54.7 million of the 75.2 million Americans covered by Medicaid–are enrolled in private plans that contract with the Medicaid program. The figures are based on PwC’s 2016 report, which is the consulting firm’s most recent.