Reining in Medicaid Managed Care

by Chris Pope 

Subcontracting Medicaid to private insurers with MMC was originally intended to increase innovation and improve the efficiency of the program. But Medicaid benefits are highly standardized by law, and premiums paid to plans are typically not subject to competition. Whatever efficiency gains that MCOs may generate are usually more than offset by additional expenses they incur. Furthermore, MMC reduces the accountability of Medicaid by making it harder for policymakers to identify and adjust the drivers of the program’s spending growth.

The lack of transparency by MCOs has helped states inflate the federal funding they receive beyond what they are entitled to. Federal policymakers should not assume that MMC necessarily reduces costs. In fact, they should be wary that states are often embracing it primarily for the purpose of fiscal shenanigans and should enact reforms to make Medicaid expenditures easier to track.

[MORE]

https://manhattan.institute/article/reining-in-medicaid-managed-care