WASHINGTON (July 18, 2011) — Healthcare analysts are paying close attention to discussions about the federal matching rate paid to states for Medicaid in Washington's debt-ceiling negotiations, according to a weekend report from Citigroup's Citi Investment Research.
Writing about the managed-care segment, analyst Carl McDonald referred to this area “one of the few potential negatives” in the talks to raise the federal debt ceiling by the Treasury Department's Aug. 2 deadline.
“There has been talk about changing the calculation in a way that would result in fewer federal dollars being transferred to states,” Mr. McDonald wrote in his report. “The states, of course, aren't too thrilled by this idea, as they are already struggling to control Medicaid costs. If it happens, it would presumably pressure the Medicaid managed-care industry, heightening what is already a difficult budget situation in the states,” he continued. “Otherwise, most of the proposed changes have more impact on provider groups, such as initiatives to charge higher co-pays for lab tests and home healthcare.
Meanwhile, the report said analysts are not aware of discussions to directly reduce Medicare Advantage reimbursement—something they said would have been targeted a few years ago. One likely positive in this segment, the research note said, is a proposal to require Medicare Supplement plans from offering first-dollar coverage. “If implemented, this would presumably cause Med Supp premiums to fall, but overall, we'd argue the change would make Med Supp policies more difficult to sell to seniors, potentially increasing the attractiveness of the Medicare Advantage product.”
Another proposal is Medicare means-testing—which President Barack Obama mentioned as an option in a news conference July 15—but the effect of that would be neutral, according to Mr. McDonald's analysis.
This report appeared in Modern Healthcare magazine, a Chicago-based sister publication of Tire Business.