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McCrory, Wos announce plan to privatize Medicaid

Gov. Pat McCrory announced an ambitious plan Wednesday to privatize the state’s Medicaid system, a move that he said will mean better treatment for patients and save taxpayer money.

But medical groups are already questioning whether the proposed changes will improve the quality of health care, or a way to slice off profits from a taxpayer-funded program for companies.

The head of the N.C. Medical Society Robert Seligson issued a statement Wednesday saying the group was interesting in learning more about the privatization plan, but was prepared to be critical if it didn’t put patient care first.

Gov. Pat McCrory and N.C. Health and Human Services Sec. Aldona Wos at Tuesday's press conference.

Gov. Pat McCrory and N.C. Health and Human Services Sec. Aldona Wos at Tuesday’s press conference.

“[I]f the administration’s idea of reform is bringing in out-of-state corporations so they can profit by limiting North Carolina patient’ access to health care and cutting critical medical services to our state’s most vulnerable citizens, that is not change we can support,” Seligson said.

He added, “We question the wisdom of handing off this important function off to Wall Street.”

McCrory, the state’s new Republican governor, made the announcement Tuesday with his Health and Human Serves Secretary Aldona Wos and said the privatization and move to managed care will be a solution to fix a “broken Medicaid system.”

“The system does not treat the whole person,” he said.

(Meanwhile, U.S. Sen. Richard Burr, the state’s senior senator, was in Winston-Salem to praise Community Care of North Carolina, a public-private partnership at risk of being shut down under McCrory’s proposal. Click here to read more.)

The state would move from managing the $13 billion Medicaid program within state government to contracting out to three or four comprehensive care entities, which would get paid on a monthly, per-patient basis to provide health care, including mental health and dental coverage. Wos said she hopes to put out a request for bids in six months, and have the new system running up in 2015.

The expansive overhaul, introduced just two months after Wos and her Medicaid director Carol Steckel asked for input of how to change the state’s system, will need to get approved by both the state legislature and the federal Medicaid system.  Legislators were briefed on the plan Wednesday morning.

Medicaid provides health care coverage for low-income children, parents, disabled and elderly residents, using federal and state dollars to pay for the required coverage. The shift will be significant for North Carolina, which has been praised national for programs like Community Care of North Carolina, a provider-run network that connects high-risk patients with primary care doctors to better managed care and

The reform, Wos said, would build on that model, though CCNC would have to apply through a bidding process to continue doing work with the state’s Medicaid population.

“The point of this reform is to create a system that’s sustainable,” Wos said. “This is not a budget exercise.”

Wos said it was too early in the process to say if state employees would be cut, as administrative oversight moves to whichever groups the state ends up contracting with.

The reforms stemmed from a February request the department put out to seek new ways of running Medicaid.

The N.C. General Assembly and Gov. Pat McCrory opted earlier this year to reject federal funds and not expand Medicaid to include another 500,000 people in the program hovering slightly above the federal poverty line. The main reason given was a “broken” Medicaid system that state leaders say was detailed in an audit released Jan 31 by N.C. State Auditor Beth Wood, a Democrat. Wood’s audit, done at the behest of state legislators, found the state health department failed to accurately forecast its needs, spending $1.4 billion more in 2012 on Medicaid than what the state legislature budgeted for the mandatory health services.

McCrory and Wos said they want to take the state off the hook for overruns like that in the future, by contracting out  the management of Medicaid.

The auditor’s office also painted North Carolina as having a flush administrative budget in its audit, though comparisons made in the audit were to states that run their Medicaid programs very differently than North Carolina.  Some national experts say it’s folly to make state by state comparisons because of the huge variety and hidden administrative costs in states that, unlike North Carolina’s current system, mostly contract out with health insurance providers to manage Medicaid.

Correction: An earlier version of this post incorrectly stated the day McCrory’s plan was released. It was released on Wednesday.

18 Comments

  1. david esmay

    April 3, 2013 at 3:13 pm

    That sucking sound we’ll be hearing is public money being vacuumed up by insurance companies providing sub-par, but very expensive health care. McCrory, proving once again he’s a corporate concubine.

  2. Bobby Jones

    April 3, 2013 at 3:20 pm

    The outcomes related to the divestiture of mental health services gives us a glimpse of the disaster that is possible through further privatization of medical services. The state program was much more effective prior to the 2004 closure of county mental health offices. Since that time it has always appeared that too great a percentage has been spent on the administration/authorization of services, through the various LME’s, and too little on the actual provision of services.

  3. Alex

    April 3, 2013 at 3:44 pm

    The only Medicaid sound I’ve heard david over the last 15 years is public money being doled out foolishly by inefficient state bureaucrats who could never see all of the fraud and abuse going on with the program.

  4. [...] in Winston-Salem was on the same day the state’s new Republican governor was in Raleigh to introduce a plan to privatize Medicaid, the “Partnership for a Healthy North [...]

  5. Doug

    April 3, 2013 at 4:47 pm

    So I guess the motto will be “we suck less”?

    Seriously, only good should come from this. Some competition in the Medicaid arena is what is needed. The free market works in almost every other case out there and should provide efficiencies un thought of by government. This might even be the way to cover more people at a lower cost in the end…but expect the libs to be trashing the program the whole way even if it accomplishes what they want in a different way, it is all about their way or the highway.

  6. Gene Hoglan

    April 3, 2013 at 5:33 pm

    Which part of Medicaid are they privatizing? Disbursement’s been privatized for decades. Shoot, Ross Perot’s company used to handle claims.

  7. Ron Schieve

    April 3, 2013 at 7:23 pm

    Is this another ‘privatization’ effort like the mental health disaster in NC? Republicans need to learn that ‘privatization’ is never an answer. This is a thinly disguised gift to the business sector; at the expense of those least able to contribute further to corporate welfare. When its over and done, another administration will attempt to repair the damage; much like what needs to occur in the current NC mental health system. What a joke…

  8. Doug

    April 4, 2013 at 10:38 am

    Ron, they are attempting to reverse the damage. Our system has been broken specifically because the government is involved. Unlike in the private sector when the government attempts something you ALWAYS get less of it, a lower quality product, and it costs exponentailly more than it should. You cannot name one product or service the government provides that does not meet at least two of those criteria..even the things that government is supposed to be doing fall in those categories.

  9. Emma

    April 4, 2013 at 10:40 am

    What’s that? Louisiana’s Sec. of the Dept. of Health and Hospitals resigned recently due to an investigation of Medicaid contracting fraud. Carol Steckel’s resume of disaster is not hard to follow from Riley’s Alabama at the height of its Karl Rovian corruption to Jindal’s sinking ship of state. Go back and read to stories to see our future headlines.

  10. Doug

    April 4, 2013 at 10:48 am

    +1 Emma

    In a government program of this size you are definitely going to have fraud. Unfortunately things like bribery, graft, corruption are not exclusive to governments in other countries…or one political party. Medicaid and Medicare being something the government should not be involved in in the first place is the problem.

    And as my friend jlp so eloquently noted below, we need to give the program time to see how it works. Heck, liberals are supposed to be for radical changes so this shake up of the government should be right down ya’ll’s alley…….only reason to be against it is that you are not doing it and think the status quo is the way to go.

    jlp75
    April 1, 2013 at 6:46 pm
    “There is not enough information to determine if we are on the “right path”. Many decisions good or bad take years or even decades to take significant effect.”

  11. Emma

    April 4, 2013 at 11:10 am

    The health of its citizens is exactly the thing government should be involved in, not profit-seekers accountable only to their shareholders.

    Jlp75 was being kind. I, on the other hand, am taking Ben Carson’s words about political correctness (otherwise known as good manners) to heart and plan to call out the malarkey when it raises its head.

    Regarding that “right path” you think we are headed down, the history of the last thirty years guarantees that this path is a road to ruin and as George Carlin would say “that invisible hand is giving us the finger”.

  12. david esmay

    April 4, 2013 at 1:10 pm

    Our Right wing nut trolls are stretching the boundaries of ignorance on yet another issue. Privatizing Medicaid is nothing less than a shameless redistribution of the public’s wealth into a few private hands. Handing over an efficient government program to private insurers serves two purposes, giving corporate giants like United Health Care and Blue Cross, their executives and shareholders unlimited access to hundreds of billions of taxpayer dollars and shifting the focus of the program from providing healthcare to providing private profits into as few hands as possible

    Private healthcare is far more expensive than Medicaid, whose administrative costs are about 6%, compared to the 30-40% of private insurers, most of which goes to corporate salaries. For premium each dollar spent, just a few pennies go to actual healthcare, the rest goes into the pockets of the corporation.

    There’s a reason why the quality of healthcare in this country ranks near the bottom of modern industrialized nations, we operate healthcare as a business not a service, and in a business, profitability trumps quality of service.

    The reason DAG McCrory and the GOP Ignorant Caucus denied the expansion of Medicare to 500,000 NC citizens is because lobbyists for private insurers are trying to figure out how they can get those tax dollars into their employers hands, a big juicy “free lunch”. They are looking at a potential payday that could result in hundreds of billions being handed to them for doing essentially nothing.

  13. Alex

    April 4, 2013 at 2:27 pm

    Conspiracy theories are running wild here…. it may be time to call Jesse Ventura !

  14. david esmay

    April 4, 2013 at 2:40 pm

    Alex the troll, your retort refutes nothing anyone has stated.

  15. Alex

    April 4, 2013 at 4:29 pm

    According to Wilkopedia…..”Paranoid personality disorder (PPD) is a mental disorder characterized by paranoia and a pervasive, long-standing suspiciousness and generalized mistrust of others. Individuals with this personality disorder may be hypersensitive, easily feel slighted, and habitually relate to the world by vigilant scanning of the environment for clues or suggestions that may validate their fears or biases. Paranoid individuals are eager observers. They think they are in danger and look for signs and threats of that danger, potentially not appreciating other evidence.”

    What more can I say?

  16. Janice

    April 4, 2013 at 10:17 pm

    After all thats happened in the private sector in the last few years and the government having to bail out all those companies,banks,etc. I don’t trust the privatizing of medicaid or any other medical care I pay for with my tax dollars. Profits are what business is all about and business don’t always care about how they make a profit.

  17. Doug

    April 5, 2013 at 9:05 am

    Alex,
    You are getting to dave, the facts are adding up and not in his favor. He starts calling posters trolls once he is out of propaganda. Keep up the good work!

    Oh and Emma you are right, the path the Dems have led us down these thirty years has helped us go to ruin. Just look up what caused the housing crisis…there were laws in the 90′s that made banks make loans to people with bad credit (CRA act)…..Dems are behind the “Great Society” scam. You are right on Emma, we cannot keep the ponzi scheme going.

  18. Brian VanHoff

    April 7, 2013 at 11:32 pm

    As has already been pointed out, the profit motive is the driving force behind successful (my word) business models, and in the pursuit of profits, the business owner dispenses her resources in an attempt to maximize her personal profits. It happens to be that in this particular case the profit-seeking, business owner has at her disposal the power of the legislature. Now that is hopefully not a resource under her direct control, but through the lobbyists, which have already been mentioned, the business owner has her republican and democrat friends (puppets?) legislate taxpayer money into her pockets under the auspice that it wil bring relief to the poor and otherwise needy or downtrodden portion of the population. Perhaps we should consider taking that power from the business owners and forcing honest business to procede as much as is possible.