Column: AZ Medicaid program a model for national reform
As a recently elected physician legislator, I have the opportunity, thanks to this historic budget crisis, to scrutinize almost every department and program that Arizona funds. One of the largest is our state Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), which has a projected 2010 budget of more than $7 billion.
In the hospital, I treat many AHCCCS patients, but my knowledge of the system was cursory. The more I learn about AHCCCS in the Legislature, the more impressed I am with the program. Arizona may very well be sitting on the solution to our national health-reform debate.
The Arizona Health Care Cost Containment System was created in the 1980s to serve as Arizona's state Medicaid program. Arizona was the last state to establish such a program that allowed the introduction of a model that had not been previously attempted in other states - managed care instead of fee for service. This setup relies upon a public-private partnership between the state of Arizona and health plans that bid for service contracts. The health plans have a statutory profit cap of 8 percent; however, most only achieve margins of about 1 percent.
The bidding process is voluntary and competitive. Companies continue to seek contracts despite the relatively low profit potential, in part, because the winning bidder receives a large guaranteed pool of patients with significantly lower associated marketing expenses. Eligible patients who enroll in AHCCCS get a series of choices once they qualify for services. They are given the choice of an available health plan in their region. Then they can select a primary care provider from a list or allow the system to assign one on their behalf. More than 80 percent of the primary care doctors in Arizona are contracted providers. Prescription drug coverage is generally quite broad and highly subsidized. AHCCCS members can go to just about any hospital for their acute care needs.
All told, about 1.3 million Arizonans, or 20 percent of the state population, rely on AHCCCS for health coverage. Many thousands have been added recently due to soaring unemployment and record numbers of qualified applicants. Compared to other states, the proportion of Arizona's population enrolled in the state's Medicaid system ranks near the top.
I would like to dispel a common misconception about AHCCCS. It seems many people assume care provided through our state Medicaid system is of low quality. That assumption is absolutely, unequivocally wrong. AHCCCS not only covers many Arizonans, it covers them with a remarkable degree of quality and efficiency. In fact, the benefit package for AHCCCS members is as good as or better than most private plans.
Furthermore, AHCCCS requires contracted health plans to focus on prevention, including weight management, immunizations, and screenings for blood pressure, colorectal and breast cancers, diabetes and cholesterol among others. The health plans happily oblige because they recognize that prevention keeps their patients out of the ER and out of the hospital in the future, saving money in the long run.
As for efficiency, the Kaiser Foundation recently ranked AHCCCS as the least expensive to operate of all 50 state Medicaid programs, citing the per-member per-month costs as the lowest nationally.
Combined with the impressive set of benefits AHCCCS provides, Arizona taxpayers truly receive the most bang for their buck. The low per-member costs are due in part to low administrative overhead for the program. Despite being one of our largest government bureaucracies, AHCCCS only diverts 3.3 percent of its total budget to administrative expenses.
Finally, provider reimbursement rates for services to covered patients are surprisingly competitive compared to other state Medicaid programs. Some estimates place AHCCCS into the top five or 10 programs based on these rates, however, recently enacted budget reductions could have a negative impact on that standing.
AHCCCS has been working well for the people of Arizona for more than two decades. Our state Medicaid program has proved that this model for health care delivery can and does work. Given the similarities between AHCCCS and some of the ideas being discussed nationally, health-reform proponents would be well served to closely examine AHCCCS and learn from its accomplishments.
One of my patients recently shared his thoughts with me about the health-reform debate from his hospital bed saying, "It's time for the human family to come together and take care of itself."
I was struck by the elegance and simplicity with which he distilled the very essence of our ongoing labors. His point is well taken. If we are truly committed to resolving the problems facing our health-care system in a meaningful way, we will keep the focus on patients and people. I am confident that we will come to a solution that is agreeable to all parties.
I humbly suggest that we look to AHCCCS as a proven, efficient model for national health-care reform.