John Livingston

Medicaid is in Trouble

I am John Livingston and I have practiced surgery and medicine in Idaho and the Military for over 47 years. On July 1st I retired from the practice of Medicine and surgery. I am Board certified in Internal Medicine and General Surgery.

I was appointed and served on The YHI Health Insurance Exchange Board for 4 years. Unless it pleases the committee, I do not want to get into the weeds of Medicaid budgets, or my own personal concerns about the operational problems with the program.

I do want to take a quick look back at the promise of Medicaid when it was founded in 1965 and how things dramatically changed with the implementation of the ACA (Obama Care) several years ago.

Medicaid was specifically designed to attend to the medical needs of those living on the margins who through no fault of their own cannot afford to take care of themselves. The ACA was established with the goal of providing improved “ACCESS—QUALITY—COST”. Since its implementation access has lessened dramatically, quality by any measure has deteriorated—it honestly is not really being measured at all, and costs have skyrocketed.

The problems with Medicaid are existential, ubiquitous, and are disguised under a diaphanous veil of government bureaucracy and an accounting system ripe for abuse. Nobody can fix Medicaid or the promise of Medicaid expansion by pruning at the edges.

As mentioned in other presentations, the only way for costs to the program to be cut are to cut access (which is currently being done by cutting reimbursement to providers who then drop out of the program), create incentives so the program will not be over utilized—co-pays and deductibles which are illegal, utilize a screening system for pre-existing conditions which would defeat the purpose of the program altogether, and increase the time from enrollment to eligibility for payment of services—which again would be illegal.

The options for types of programs currently offered fall into the broad categories of fee for service, Managed care, and value-based services. In commercial insurance programs physicians and providers have a choice of “excepting or not excepting assignment” That choice is not available to providers under Medicaid. Many physicians in our state choose to take care of Medicaid patients free of charge, knowing that the administrative costs of dealing with the government bureaucracy is more expensive—and they lose money with each patient— true charity which is also considered probably illegal, but which was practiced in past decades by “free health clinics” sponsored by churches and the IMA. Free clinics are almost a thing of the past as large hospital systems saw them as a threat in capturing Medicaid patients which they can get reimbursed for at a higher rate (than free!)

You have heard that the cost savings of managed care have never been realized and in one State (Connecticut) and soon maybe Rhode Island, managed care is being eliminated. The process of engagement between the providers and the insurance carriers is almost irrelevant and not an opportunity for cost savings.

Your committee has heard all about these controversies over the past few weeks but let me briefly address my concerns of the so called “Value Based Model” where good patient outcomes will be rewarded. I respectfully believe this has the potential of being a rabbit hole that nobody wants to go down. When economic incentives are made for good outcomes—a 2-4% increase reimbursement rate for providers, providers are incentivized not to take care of the sickest patients. Patients that take more time, will have an increased risk of bad outcomes, and will be shuffled from practice to practice as providers assess their own liability—medical, legal, and now economic. Access to care will once again be lessoned.


Medicaid enrollment has swelled in the United States from the start of the pandemic until last April from 62million to 87 million. Medicaid spending ballooned during that time from $613 billion to $867billion. When I first came on Board the YHI Exchange Board, 16% of people in our country had no health insurance. Pre pandemic that number dropped to 7.7% and it is now almost 8.5% as states are slowly disenrolling ineligibles. At a cost over 10 years of $9trillion.

AS the process of disenrollment has progressed across all the states, and as enrollment is expected to slightly decrease, what we are finding is according to the Wall Street Journal page A14 August 18th, “many individuals who were not disenrolled from Medicaid already had health insurance! They didn’t need Medicaid, but states kept them enrolled anyway! 20 million Americans who didn’t need Medicaid and already had insurance were enrolled in Medicaid!

The system is not only being gammed from the demand side (patients), but providers are gaming the system via upcoding—recoding—bundling, activation fees. It has become a game amongst providers and don’t forget many of these institutions are “non-profit” and Medicaid funds are “fungible”. We had a CEO of one of those institutions in Idaho report on IRS form 990 $18.5million/2yrs in wages salary and benefits! None profit? Medicaid fungible dollars?

On the demand side once again, there are folks of means who have accessed Medicaid for their own children as they reach the age of 18. One lobbyist who is well known in this building accessed Medicaid for his daughter when she turned 18 and he was making a high six figure income. I know of one former legislator that did the same while their daughter was enrolled in a private college. I know of others who have advised constituents to not make over 1 ½ times the Federal poverty level so that they would remain eligible for Medicaid.

The best way in my humble opinion to address this very broken system is to insist on an outside signed partner’s audit of the DWH—both financial and operational. Just getting a look at the supply chain Pharmacy Befit Manager rebates and kickbacks would be worth the price of an audit.

I also suggest that operational and financial signed partners audits be a requirement for participation of any organization in Idaho that receives over $100million of transfer payments. It is fast becoming past time to get serious.

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2 replies on “Medicaid is in Trouble”

John, you hit the nail on the head!

With 47 years in the medical field, your words should be a wake-up call for everyone in Idaho. Medicaid has become a bottomless pit, and we’ve got to stop throwing good money after bad. And speaking of money, can we talk about the ludicrous $4.5 billion spending bill that our legislature just passed? The largest in Idaho history! Are we serious?!

Your call for an outside audit isn’t just sensible; it’s downright urgent. We’re hemorrhaging taxpayer dollars in a system that’s lost its way. The ‘fungible’ nature of Medicaid funds is a glaring loophole that needs immediate closing. We can’t afford to let these funds be siphoned off for anything other than direct patient care.

Enough is enough. Let’s stop the bleeding and start fixing this broken system before it’s too late. Your voice is crucial, John, and it’s time for more of us to join the chorus demanding change.




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