Opinion: Half a Century After Its Inception, What Can Medicaid Teach Us?

What Medicaid is beginning to discover, much of the world has already learned: Health is complex and encompasses more than just medicine

Joel C. Cantor
Today, we honor an innovator. She has transformed the American healthcare delivery system in many states, especially for our most vulnerable citizens. She has mitigated healthcare disparities and promoted gender equality. In part, because of her, we are coming to embrace a new idea that all Americans are entitled to basic health insurance. She has saved and improved millions of lives. She, of course, is Medicaid. And today she turns 50.

Despite acerbic campaigns to cut her funding over the years, Medicaid has become the nation’s largest source of healthcare. Nearly 70 million low-income Americans rely on her, including children, working parents, our poorest seniors, pregnant women, and the 10 million individuals covered by Medicaid expansion under the Affordable Care Act. She covers half of our country’s births, one-third of our children, and two-thirds of our elderly and disabled in nursing homes.

Dr. Jeffrey Brenner is the founder and executive director of the Camden Coalition of Healthcare Providers. Natassia M. Rozario is the coalition's associate counsel and associate director of policy and advocacy.
Greater access has led to greater costs for states, which run Medicaid under federal guidelines. Facing growing costs and shrinking budgets, states have used their Medicaid programs to drive healthcare innovation. They have deployed pilots focusing on the few patients comprising the bulk of the costs. Research shows that five percent of Medicaid patients drive half the program’s expenditures.

Those 5 percent of highest-spending patients in Medicaid suffer from complex medical conditions and a nexus of medical, behavioral health, and social issues. Nonmedical factors can exacerbate chronic conditions, leading to frequent hospital and emergency-room visits. An increasing number of state pilots focus on better and more targeted social services for these individuals to improve health outcomes and slow healthcare spending. The pilot programs are testing a theory that other countries have already adopted: When we invest more in social services, we reduce healthcare costs by preventing chronic conditions from becoming life-threatening illnesses requiring more expensive, invasive, debilitating, and risky medical care.

In New Jersey, concerns about costs have paved the way for innovation. Spending over $12 billion annually on Medicaid, New Jersey ranks 10th highest in total Medicaid spending in the country. The state recently enacted legislation authorizing Medicaid Accountable Care Organizations. These community-based organizations seek to reduce costs and improve outcomes by coupling access to primary care with extensive social services, especially for the most expensive patients. Through incentives, these organizations encourage communities to develop pilots, which include supportive housing programs for the chronically homeless and medically needy; targeted community-based care coordination for the highest-cost patients; citywide health databases among Medicaid providers to improve coordination; and community outreach programs engaging faith-based organizations.

New Jersey’s examples are a small sample of the scores of pilots burgeoning around the country. Amid this array of pilots, which are working? Which are failing? To rigorously evaluate programs, we need good data. Although the pilots are backed by ample anecdotes, we lack the necessary integrated datasets to answer the tough questions about their impact.

The good news is that states already generate huge amounts of data just by running programs. The problem is multiple legal and bureaucratic hurdles impede access to that data. Sometimes it is not even clear which agency holds what data, which is scattered among a complicated web of state agencies and their divisions. Information about social programs is also siloed from public health data, making it difficult to evaluate pilots that pair social services with health services. Without the ability to determine what is working and what is not, funding is cut for effective pilots; bad policies remain entrenched; and good policies never become realized. In the era of “big data,” we should do better.

A new type of database called an integrated data system can help. These systems protect privacy and data security while providing a framework to link health data with other social datasets, such as housing, education, employment, and transportation. Because integrated data systems makes use of data already collected, they offer a highly efficient way to conduct evaluations. They also have enormous potential for cost savings by promoting careful resource allocation to evidence-based programs, enhancing coordination, and reducing instances of inefficiency and redundancy of services.

States such as Washington are starting to establish integrated data systems to create smarter health and social programs. Integrated data systems allow for more rigorous evaluation and offer a more holistic understanding of a community’s health and the social forces that affect it.

In recent years, the most successful companies and organizations in the world have also leveraged the power of integrated datasets to design products and services to better serve customers and constituents. It is logical to conclude that, if applied, these same principles can provide a richer understanding of the Medicaid population. Coalescing around evidence-based solutions is the only way to assure that the limited resources available are used effectively and efficiently.

Implementing integrated data systems in more states will build smarter, better, and less costly Medicaid programs. The lessons learned from Medicaid pilots can also be more widely translated to the broader U.S. healthcare system, which is in desperate need of change. Although the U.S. spends more than any other country on healthcare, it lags behind much of the developed world in health outcomes, ranking last among the richest countries. What Medicaid is beginning to discover, much of the world has already learned. Health is complex and encompasses more than just medicine.

Ultimately, to deliver better care at lower costs for all American citizens, we must learn from what the great innovator of Medicaid has to teach us. And for that, we will need good integrated data.