The departure of the last HMO from the system all but puts Colorado’s long- suffering Medicaid managed-care program out of its misery, lawmakers and health care analysts say.
Colorado’s Medicaid HMO system was created in the mid-1990s in an attempt to hold down spiraling health care costs for the poor, elderly and disabled.
The system, however, was plagued by lawsuits, then by recession-driven budget cuts.
“Medicaid managed care in Colorado is essentially dead,” said state Rep. Bernie Buescher, a Grand Junction Democrat who leads the legislature’s Joint Budget Committee.
The final blow came Tuesday, when Colorado Access, the last private Medicaid HMO, said it was leaving the Medicaid business and laying off more than half its 250 employees.
The 65,000 poor and sick people in Colorado Access will be moved into the general Medicaid system, state officials said. Those people will face the challenge of navigating that system on their own and finding doctors willing to see Medicaid patients.
After years of losing money on Medicaid – $7.4 million in 2004 – and a looming 15 percent cut in the rate the state pays for Medicaid, nonprofit Colorado Access had no choice but to bail out, said chief executive Don Hall.
The passage of Referendum C last fall allows lawmakers to put back some of the millions stripped from Medicaid in recession years. But it’s too late to help Colorado Access.
State law spells out a formula for Medicaid reimbursements – based, among other things, on past Medicaid spending – said Lisa Esgar, director of operations and finance for the state Department of Health Care Policy and Financing.
That spending took repeated hits over the past few budget- cutting years and now forms the base line for calculating future reimbursements.
For fiscal 2006-07, Medicaid and related programs for the poor will get nearly $3 billion in state and federal funds, according to state budget projections. Medicaid enrollment is expected to hit 429,000 in the coming year – up from 295,000 in 2001-02.
Even as Colorado’s Medicaid managed-care program wanes, states across the country are moving in the opposite direction.
In June 2005, 62.9 percent of all Medicaid enrollees were in some form of managed care, up from 10 percent in 1991 and 56 percent in 2000, according to the Kaiser Commission on Medicaid and the Uninsured.
“I think states have realized that managed care could be a way to address people with chronic conditions that may need disease management and as a way to control care and control costs,” said David Rousseau, an analyst with the Kaiser Commission.
It is not clear, Rousseau said, just how much money states are saving through managed care.
“We’re going to have to figure out ways to make changes in the Medicaid system,” Buescher said. “It quite simply is more expensive than we can afford.”
Staff writer Karen Augé can be reached at 303-820-1733 or kauge@denverpost.com.
