Last week the Florida Legislature passed historic legislation to begin a statewide transformation of Florida’s Medicaid program. This legislation will empower participants to choose coordinated health care plans that best meet their needs, while encouraging innovation, efficiency, and improvements in the caliber and availability of health care.
Florida’s new model will use time-honored market principles to drive better results and place a greater focus on the diverse needs of the 2.2 million vulnerable, elderly and disabled Floridians who rely on Medicaid. It will improve health outcomes of these participants by enhancing their access to quality care and creating flexibility and incentives for providers and consumers to focus on prevention. Florida’s Medicaid reform will also stabilize the program’s costs while maintaining current eligibility and broadening the scope of services we provide. We will empower consumers with unprecedented choice and unleash the innovative and competitive talents of providers.
The first phase of the reform plan will be implemented in Duval and Broward counties in 2006. More than 200,000 participants in these counties will soon have the opportunity to receive better health care and costs will become more predictable, allowing the state to better manage spending.
With legislative approval, we will expand Medicaid reform to the rest of Florida within five years after closely reviewing results and best practices in the pilot counties. Careful monitoring of outcomes and financial impact during the initial phase will allow for adjustments going forward. Transparent results will help to protect beneficiaries and assure legislators that the reforms are delivering promised improvements.
Our vision of Medicaid respects and trusts people to make decisions about their health based on their personal needs. Participants, with the assistance of counselors, will choose the best plan for them. Or, they can choose to opt out of Medicaid plans and use their state-paid premium to purchase insurance in the private market. Under reform, the premiums funded by Medicaid will be risk-adjusted — higher premiums will be paid for sicker people who use more health services. Medicaid consumers will then have the right amount of resources and the purchasing power to choose a coverage plan or a network of providers offering a service delivery system that best suits their needs. Risk-adjusted premiums create a financial incentive for managed care plans to identify illness early and appropriately manage chronic disease. Achieving better outcomes will be a shared responsibility with participants who will be motivated to make healthy choices in order to earn enhanced benefits. Participants who qualify will be awarded credits for additional, approved health services not covered in their plan. We envision a Medicaid market with robust choices offered by a variety of traditional insurers, managed care organizations and provider-service networks created to serve unique needs of specific Medicaid populations. To create this potent market, Florida’s plan encourages the formation of networks of doctors, hospitals, pharmacies and other providers with common service goals and commitments to specific patient populations. These provider service networks will offer service plans and benefits packages targeted to meet the needs of the patients they serve, and will compete with insurers and HMOs for Medicaid patients. Instead of the one-size-fits-all benefit design of today’s Medicaid, reform will enable certified managed care plans to compete for consumers by offering innovative care, convenient networks, and optional services. This will harness the power of the marketplace to drive inefficiencies and fraud out of the system. In a competitive market environment, health care providers will search for ways to raise the quality of care and lower costs. And by introducing incentives to reward healthy lifestyle choices and giving consumers more input into their health care, we will improve the health of our citizens. We have seen the value of this approach on a smaller scale already, through Florida’s Agency for Health Care Administration’s disease management program. This program is aimed at chronically ill, high-risk Florida Medicaid patients. Care managers in the program educate patients on treatment plans, help patients monitor their health, and coordinate their options. There are thousands of Floridians on Medicaid who would benefit from this focused approach. Last year, 84 percent of Florida children on Medicaid received no preventive dental care. Less than half received annual checkups. With little focus on preventive care, it’s no surprise that emergency room visits are the rule rather than the exception in the fee-for-service population. In addition, the inefficiencies in the system caused by lack of choice, lack of focus on preventive care, and lack of competition have made Medicaid’s growth unsustainable.
This year, despite aggressive efforts to curb growth by fighting fraud, streamlining preferred drug lists, and expanding use of managed care, Florida’s Medicaid Program will cost Florida a record $15.5 billion — nearly 25 percent of the state budget. Since 1999, our Medicaid costs have risen 120 percent.
Florida’s average annual general revenue growth since 1999 is 5.5 percent. However, that robust rate of growth cannot keep up with Medicaid costs that have risen an average of 13 percent each year during the same period. If left unaddressed, Medicaid could consume nearly 60 percent of the state’s budget by 2015, draining valuable resources away from education, public safety, and other services. This growth is not only unsustainable; it creates no corresponding increase in the quality or availability of services for the people who rely on Medicaid for health care.
Florida’s demographics add pressure to the situation. Our population is older than the rest of the nation, and Florida has one of the most diverse populations in the country. Florida today is a microcosm of America 10 years from now. As the nation’s population ages and diversifies, more states will face the acute crisis that Florida battles today.
Effective Medicaid reform will happen by giving states like Florida the power and the flexibility to build a Medicaid system for the 21st century. Last week in Florida we took an important step to not only better serve Floridians, but also offer a model for other states to follow, and give millions of citizens the health care they deserve.
Jeb Bush is governor of Florida.