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Reform Update: Will lack of Medicaid expansion hurt C-suite recruiting?

By Melanie Evans
Posted: April 9, 2014 - 4:45 pm ET

One recent executive-level job candidate caught Dennis Kain, a president with search firm Tyler & Co., by surprise when she declined to work in a state that failed to expand Medicaid.

Speculation around how the Affordable Care Act could affect labor markets (PDF) has largely centered on employers' reactions to a coverage mandate for full-time workers, and how Medicaid expansion could decrease employment and earnings. Early research on the latter topic suggests Medicaid expansion will not diminish jobs or pay.

But could Medicaid growth become a recruiting advantage for hospitals and health plans in expansion states?

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“It certainly opened my eyes,” said Kain. “It was the first time I'd heard it.”

Job seekers who choose to limit their options to states with Medicaid expansion will rule out employers in roughly half the country, though that may change.

New Hampshire last month agreed to Medicaid expansion and Virginia may follow suit.

States are not required to expand Medicaid after the U.S. Supreme Court struck down a penalty to enforce expansion. Nearly half of states rejected expansion, leaving 5 million uninsured adults ineligible for coverage, by one Urban Institute estimate.

States that did expand coverage reduced the number of uninsured residents by 3.6 million between September and March, a new RAND estimate said. The newly insured gained access to primary and preventive care, and one recent study of Oregon's early Medicaid expansion suggested they are using it.

Primary care visits and prescription requests increased by 35% and 15%, respectively, among newly insured Oregonians, researchers reported last fall. Meanwhile, hospitals have gained insurance revenue for poor patients who could not otherwise afford care. “There is so much that's hanging in the balance,” Kain said. “You end up with such different marketplaces.”

In addition, top executive turnover could make an already challenging recruiting job more difficult for health systems in non-expansion states. Last year, one out of five hospital executives left their jobs.

Kain's experience could be an outlier. So far, no other job candidates working with Tyler have refused to work outside of Medicaid expansion states, Kain said. Other recruiters surveyed said they had not heard of job seekers rejecting work in non-expansion states. “It's not affecting our candidate pool,” said Heidi Leeds, a healthcare recruiter for Korn Ferry who largely works with Medicare and Medicaid health plans.

Recruiters with physician and executive search firms Cejka Search and B.E. Smith agreed.

Rulon Stacey, the newly appointed president and chief executive officer of Fairview Health Services in Minneapolis, said Minnesota's Medicaid expansion was not a factor when he considered the job. “Public policy has been a menace to our industry for a century,” he said. Executives are hired to meet the challenge of any policy circumstance, he said. “We manage around whatever the public policy is,” he said. Stacey joined the six-hospital Fairview from the University of Colorado Health, which operates four hospitals across Colorado, a state that has also expended Medicaid.

But Kain's encounter also could be the tip of a newly forming iceberg ahead for healthcare recruiters. “We'll see if it really develops,” he said.

February health spending spike led by drug, hospital costs

February's year-over-year national health expenditures increased at the fastest rate since March 2007, an analysis by the Altarum Institute's Center for Sustainable Health Spending shows. Spending on prescription drugs and hospitals accelerated the most rapidly in February compared with the same month the prior year, increasing 9.3% and 8.4%, respectively. Physician and clinical services increased 5.6%. The newly released figures take into account recently revised federal spending data, which show health spending increased more rapidly in the final three months of 2013 than previously believed.

The Altarum Institute estimates showed health spending sharply accelerated at the end of last year to a fourth quarter growth rate of 5.3% compared with 3.9% during the rest of 2013. The quickened spending preceded the January expansion of insurance coverage. “This suggests that forces in addition to enrollment growth are exerting upward pressure on spending,” the institute's recent spending brief (PDF) aid.

Value-based insurance under Medicare?

The CMS in coming months is expected to issue a request for information for a new effort from the Center for Medicare & Medicaid Innovation, the Affordable Care Act's laboratory for new payment models.

“CMS is seeking to partner with private payers to test innovations in health plan design for CMS beneficiaries, including but not limited to value-based arrangements, beneficiary engagement and incentives, and/or care coordination,” the agency said in a recent letter.

Value-based insurance uses benefit design to incorporate incentives for consumers to seek recommended medical care and avoid services with little or no benefit.

Advocates of the model argued in a recent Health Affairs blog post for Medicare changes that would allow incentives for recommended care or high-quality, highly cost-efficient providers. “Lowering or even eliminating cost barriers to high-value treatment has a huge potential to improve population health,” wrote authors Dr. Kavita Patel, Elizabeth Cliff and Mark Fendrick.

Follow Melanie Evans on Twitter: @MHmevans

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