Last week was not kind to big
government advocates, as the Gov. Bobby
Jindal Administration officials reported that its privatization efforts had
yielded hundreds of millions of dollars in savings from health care initiatives.
If it wasn’t enough that private
operation of eight state hospitals seemed on course to save
$52 million this past fiscal year, or that privatization of the operations
of the Office of Group Benefits with other efficiency measures were expected to
save
$114 million, the jackpot was the amount from the first of the initiatives,
changing Medicaid from a fee-for-service to a managed capitation system.
Louisiana’s Joint Legislative Committee on the Budget was told by the
Department of Health and Hospitals that the predicted first year of savings
reached its $135.9 million goal.
Better, the figure could go much
higher. Presently, five different plans are available, with three using a model
of premium payment to an administrator coordinating providers and two where the
role essentially get combined. Data from the first 10 months of 2013 revealed
that on average the difference in payment per different kind of plan was about $13 per
client month, Thus, DHH has decided that as of February of next year the
only kind of plan offered will the premium payment kind, meaning about half of
the nearly 800,000 covered individuals will have to switch.
Upon doing so, the savings could
be substantial. The managed capitation plans cost $232.80 per member month,
while traditional FFS Medicaid cost $262.34. If the same gap continues for next
year that means that if the most recent total of about 918,000
regular enrollees (that is, not including elderly and disabled) stays the
same with all enrolled (new rules
will ensure this), the state will save over $325 million next year.
And that could grow because elderly
and disabled individuals receiving services under Medicaid waivers, currently
still operating under the FFS model, will begin migrating to the managed
capitation model. The ability to do this and any savings are harder to predict,
because the intense nature of some service provision lends itself poorly to the
managed capitation model and therefore would not work well, and of others that
can be managed, because these clients need so many and intense services that
the margins probably won’t be as great in the aggregate. Still, any savings
brings more taxpayer relief and the ability to serve more people.
Best of all, DHH notes no
reduction in the quality of care and hopes with new rules to improve it still,
mirroring the increase in services being offered under private state hospital management
and in the continued provision of benefits to state employees and retirees with
the only reductions occurring at the margins for efficiency sake. In the
aggregate, the three combined promise to produce, given these assumptions, $491
million in savings because of privatization next year, or about 2 percent of
the total budget but about 4 percent of all state-generated tax revenues, will
overall service provision not reduced in quality or quantity.
Those wedded to Louisiana’s
populist past, from gubernatorial
candidates to political
party politician hacks to special
interests and the big government ideologues that give them aid and comfort,
will not address, much less admit, these empirical verifications of the basic
understanding that when private sector providers of something exist in a competitive
marketplace, they always will perform that service more cheaply than government
at a level of quality no worse than government. That fact offends the
command-and-control mentality of these sycophants, and its inconvenience to their
worldviews should not be allowed to slow, much less reverse, the demonstrated
benefits privatization has had for Louisianans.
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