Florida's aggressive bid to move Medicaid into the private market almost drew Blue Cross and Blue Shield of Florida into the business of covering the state's low-income and disabled citizens but the plan proved to be too great an investment for its tastes.
The Jacksonville, Fla.-based insurer took a hard look at entering the Medicaid market as Florida officials completed a plan they hoped would eventually shift most of the state's 2.2 million Medicaid enrollees into commercial managed-care. In the end, though, Blue Cross executives rejected as too expensive any effort to launch disease-management and prevention plans for Medicaid's high-demand patients: the disabled.
"I can't say that we'll never look at it again," said Carl Homer, vice president of corporate strategy for the Florida Blues. Successful Medicaid managed-care insurers typically concentrate solely on that market, he said. Florida's Blues lacks programs on the scale necessary to cost effectively meet disabled patients' needs. Roughly 41% of Florida's $15 billion Medicaid expenses go toward disabled patients, who make up just 17% of enrollees, he said.
Whether or not other insurers will arrive at a similar conclusion remains to be seen. But the success of Florida's Medicaid overhaul-touted by Gov. Jeb Bush as consumer-driven reform-hinges on insurers competing for Medicaid enrollees by tailoring benefits to meet patients' needs within Florida's budget. Its proponents say competition, coupled with information on insurers' success, will improve care and help manage Florida's spiraling Medicaid costs, which have grown an average of 13% per year during the past six years, according to the state.
In mid-October, Florida won federal approval to pilot its Medicaid overhaul in Broward and Duval counties as early as July 1, 2006 if Florida's Legislature authorizes the deal. The proposal allows plans to customize benefits to serve specific patients, such as those diagnosed with HIV.
"The big question will be `What will the plans do?' " said Sharon Long, a principal research associate at the Urban Institute, a health policy and research not-for-profit in Washington. Long co-authored a study published this summer in the journal Health Affairs examining why insurers stay or exit Medicaid managed-care markets.
Long found plans with greater enrollment were more likely to remain in the Medicaid market. To secure sufficient enrollment, insurers in Florida's two-county pilot may weigh the costs of offering one plan to attract many enrollees or offering many plans to attract patients in several niche markets, she said.
The risk is insurers will devise plans to attract Medicaid's healthiest patients. Architects of Florida's Medicaid overhaul say the state will offer risk-adjusted payments for insurers to prevent such selection by guaranteeing sufficient payment, regardless of patients' illness or costs. Long warns such risk-adjustment must be extremely sophisticated to succeed.