Medicaid Has Great Responsibility Without Great Power

Since its inception 50 years ago, Medicaid has become one of the nation's biggest government programs. But most states don't treat it as such.
by | October 6, 2015
Andy Allison, the former Medicaid director of Arkansas and Kansas (AP/Danny Johnston)

Whether you’re in favor of expanding Medicaid or not now, there's no denying that the government health-care program has expanded in the past 50 years. Serving 70 million people, it accounted for 7 percent of the federal budget in 2012 and is on track to take up to 10 percent of the federal budget in 2025. Making more low-income Americans eligible for Medicaid in recent years has helped cut the number of uninsured Americans from 43 million to 26 million, and the program is expected to enroll another 14 million in five years. And it's the largest government program that's jointly funded by the federal government and the states.

But for all of its growth, Medicaid hasn't really improved its governance or increased its power. State Medicaid leaders have seen their responsibilities and influence grow exponentially, but extra resources -- like more administrative positions, pay raises and better technical assistance -- haven't followed, according to a recent report by the Milbank Memorial Fund. “The Role of State Medicaid Directors: A Leadership Imperative” calls for states to re-evaluate how their programs are run and how their directors are compensated.

During his time as the Medicaid director of Arkansas and Kansas, Andy Allison, the report's author, said he “knew the value of the experience, but I felt like I continually faced an underfinanced, undermanaged system.”

Medicaid’s role has changed dramatically since its creation in 1965.

“It used to just be a bill payer," said Matt Salo, director of the National Association of Medicaid Directors. "It was about how fast and efficiently you could pay a claim. Now it works with providers of all stripes and is a much more complicated beast. When you’re dealing with complex populations like the U.S., you have to evolve.”

The growth of Medicaid, combined with the stagnant growth of administrator’s resources, could be a reason for the high turnover among Medicaid directors. At least 23 have left their post since January 2014.

Many states don’t consider Medicaid a separate agency. More than half of states (plus the federal government) still have it lumped in as a division of a superagency like health and human services. Allison argues that states shouldn’t think of Medicaid as just another government program.

“It’s an atypical program and should be thought of as such," he said. "The breadth of responsibility program leaders have and the opportunity they have to drive change is singularly unique in government."

For all their responsibility, though, Medicaid directors often don’t have much control over services like substance abuse, mental health and long-term care. This fragmentation of responsibility was especially frustrating for Deborah Bachrach, the former Medicaid director of New York.

“Eligibility and enrollment went through county offices, and those people didn’t even report to me. States need to rethink where Medicaid falls on the totem pole of government.”

Higher compensation, according to the report, also may be necessary to recruit the kind of leadership that a state Medicaid leader needs. Medicaid directors currently earn an average of $146,753 a year -- far less than their peers in the corporate, hospital, insurance payer and university markets. Pay wasn't the sole reason Allison decided to move to the private sector, but "it was a factor."

“People working on state Medicaid programs have some of the hardest jobs in health care out there. We need to be empowering the power working in these programs so they can do both a better job and do the job the future is requiring. A higher salary is a way to find those people,” Salo said.

Still, changing the payscale of a government job isn’t something that can be fixed overnight.

“These are state government budgets we are talking about," Bachrach said. "So I don’t think we’re going to see Medicaid directors making the same amount as a Fortune 500 company CEO anytime soon."

In the meantime, the report points to a few states that have already started to change their Medicaid program.

In Tennessee, for example, the state's Medicaid director, Darin Gordon, reports to the commissioner of finance and administration but is ultimately accountable to the governor -- not just an agency head.

“Tennessee’s Medicaid director is someone who has weathered changes in party and administration over the past nine years," Salo said. "He is an example of someone who has shown his value to the program and to the state. TennCare just has [a] really well-run system right now.”

Arizona and New York are two other states that have been able to achieve some autonomy over their Medicaid programs. In Arizona, Medicaid is a cabinet-level agency, and the director reports to the governor. New York's program still has separate offices for mental health, substance abuse and developmental disabilities, but those budgets are consolidated under the Medicaid director. New York's Medicaid director works directly with the governor's senior advisers.

While organizational challenges have made life difficult for some Medicaid directors, Bachrach is optimistic that governments are starting to realize the impact the program has.

“Up until recently, Medicaid really didn’t get the recognition it deserved. Slowly but surely, though, as it has expanded throughout the years, it’s starting to become more appreciated within state governments.”