Medicaid Block Grant Talks Don’t Phase Private Insurers

With two-thirds of U.S. Medicaid beneficiaries receiving care from managed care organizations, private insurers are unlikely to suffer from the Medicaid block grant plan.

A majority of states contract with MCOs to provide coverage and the government space is still perceived as a prime growth strategy for large insurers such as UnitedHealthcare, Centene and Anthem, which alone provide coverage for approximately 40 percent of Medicaid beneficiaries across the country.

“We support offering state policymakers flexibility to design their Medicaid programs to best meet the needs of their citizens,” America’s Health Insurance Plans said in a Friday statement. “At the same time, funding mechanisms for Medicaid should not undermine Americans’ access to the care they need and deserve.”

The proposed Medicaid block grant plan would cap federal healthcare spending and force states to place a ceiling on the dollars pouring into a state’s Medicaid program. Still, more than 65 percent of Medicaid enrollees receive their care through a private insurer–it’s safe to say the big payers have market share.

In Arizona, 84 percent of beneficiaries receive coverage through an MCO and the spread is distributed widely amongst behemoths in the industry. UnitedHealthcare provides coverage to 25% of Arizona Medicaid enrollees, Mercy Care Plan claims 23%, and Steward accounts for 14%.

States wanting more sovereignty are attracted by the autonomy the plan offers, read more on how states win in last week’s Hertel Report primer on block grants.

The House on Tuesday passed a resolution officially condemning the plan, initiated by the Trump Administration, in a 224-189 vote, but it is not likely to move in the Senate.

Dubbed the Healthy American Opportunity, the plan would allow states to ask permission to end their traditional Medicaid program. It places caps on the money the federal governments allocates for states.

Analysts with Cantor Fitzgerald are maintaining an overall positive view on the managed care sector, despite news to cap state healthcare spending.

Hinting toward uncertainty, analysts wrote in a note:

It remains to be seen if/when/how many states will opt into the initiative. We continue to view Medicaid as a compelling growth area.

For more on the effect on private insurers, check out Healthcare Dive and Barron’s to read more.

Also, check out data from CMS and Kaiser Family Foundation for more insight into Medicaid spending.