Trump Administration officials have approved the Commonwealth of Kentucky’s request to increase the level of choice in its Medicaid program. Even critics will find it difficult to criticize the request too vociferously; after all, flexibility is a worthy principle.
But individuals on both sides of the political aisle may wish to scrutinize the manner in which the Bluegrass State will implement this principle in practice. Will their procedures be simple, efficient, and easily manageable? Or will they be so complex that state workers, medical providers, and recipients will struggle to understand them?
According to the program specifications, a $1,000 annual deductible will be imposed on each Medicaid health recipient. But it will not function as a standard deductible because Medicaid recipients possess extremely limited financial resources. They couldn’t possibly afford such costly burdens.
So who will finance their $1,000 deductibles? The amounts will be paid by government cash accounts, known as “administrative deductible accounts.”
The government, of course, will also pay the costs that exceed the deductibles. So why is the government bothering to create separate deductible cash accounts?
Because 50% of each recipient’s unused deductible dollars will be transferred into a My Rewards Account. And recipients will be permitted to select a variety of dental, vision, pharmaceutical, and gym membership services to be financed by those unused deductible dollars.
Could program managers have designed a less complex approach for providing Medicaid recipients with flexibility and choice? Indeed, they could have simply loaded $500 (or 50% of $1,000) in credit onto Medicaid identification cards, and then invited recipients to spend the credit on a menu of optional services. Such features are called cafeteria plans in the private sector; they represent relatively simple methods for offering flexibility and choice.
But instead of opting for a cafeteria plan approach, the Kentucky HEALTH Program chose to create a deductible that is not truly a deductible, but that is financed by a government account that is called a deductible, that in turn produces dollars that are multiplied by 50% and then converted to Rewards points, that in turn are spent on services.
How many government employees will be required to manage that system? How many will even be able to explain the system to baffled Medicaid recipients?
Indeed, in the health care sector, it is relatively easy to applaud Kentucky’s principle of flexibility. But if it is unable to implement that principle in practice, its initiative is likely to fail.