Contracted Out Medicaid and Healthcare Access for Low-income Families: Connecticut’s Managed Care Withdrawal

• In Event: Medicaid and Drug Policy

Abstract

Since the 1980s, under New Public Management reforms, states have increasingly 'contracted out' public services to private entities, aiming to enhance efficiency and service delivery. This trend persists, with many states now delegating the administration of Medicaid programs to private insurance companies. As of 2024, 74% of Medicaid beneficiaries are enrolled in private managed care plans.

Many states chose to introduce managed care in their Medicaid programs during the 1980 and 1990s. Most states continue to use managed care today and have expanded its penetration. However, unlike other states, Connecticut decided to eliminate managed care in Medicaid in 2010 after 15 years of implementation. Connecticut is the only state to withdraw managed care among those states that have adopted it historically. The main reason for this change was that MCOs did not fully take responsibility for providing healthcare; instead, they increased prior authorization requirements, provided narrow provider networks, and offered low reimbursement rates to providers.

The aim of this study is to reassess the effect of managed care on healthcare access at the state level. Specifically, it addresses the research question: “How does the elimination of managed care in Medicaid affect healthcare access for Medicaid beneficiaries?” By focusing on Connecticut's decision to remove managed care from its Medicaid program, this paper evaluates the impact of this policy choice compared to other states that continued to implement managed care. Utilizing data from the 1996-2020 Behavioral Risk Factor Surveillance System (BRFSS), the study employs a causal inference method known as the synthetic control approach. This approach uses pre-treatment outcomes to assign different weights to control units, making them most comparable to the treatment group. It allows for the estimation of valid counterfactual outcomes.

Preliminary results indicate that eliminating managed care in Medicaid improved healthcare access for Medicaid beneficiaries in Connecticut. Specifically, removing managed care led to an increase in care-seeking behavior without concerns about costs and a rise in routine check-ups. These results suggest that expanding managed care might not be the best policy decision for enhancing healthcare access, and that state governments could implement Medicaid programs more efficiently and transparently based on streamlined management strategies.

Author

• Soyun Jeong, University at Albany - SUNY