Medicaid directors' inadequate pay may hurt program's success

Medicaid is typically a state's largest centrally managed program, and has significant impact on other healthcare sectors nationwide. But despite the program's complexities, it does not always have the tools to maintain operational success.

In a new report issued by the Milbank Memorial Fund, former Arkansas Medicaid Director Andy Allison, Ph.D., analyzes the current state of Medicaid program administration and suggests that Medicaid leaders' compensation levels may be part of what's holding Medicaid back.

For instance, Allison points to a 2013 survey that found about 9 percent of Medicaid directors earned more than $200,000 per year, while about 23 percent earned between $150,000 and $200,000.

Corporate CEOs, on the other hand, earn 10 to 20 times as much as Medicaid leaders--CEOs in the top 1,000 corporations earned at least $1 million more for each 100-firm increase in their company's rank. Aetna CEO Mark Bertolini, for instance, earned a total $15 million last year. 

So while profit sharing and stock options are not allowed under Medicaid, as Allison notes, other compensation efforts would work, such as pairing incentives with guaranteed employment contracts. These arrangements, in turn, could ensure a level of protection in a Medicaid director's career.

As a result of the significant pay gaps, Medicaid directors tend to stay only about two-thirds as long in their jobs as do leaders in the public and private sectors, according to the report. What's more, the irregularity regarding pay appears to be inconsistent with the public's interest in attracting and attaining leaders.

Allison recommends that state leaders review organization and leadership of programs funded through Medicaid, in addition to the programs' goals. This would then allow for the administrative structure to align with the directors' financial and long-term needs.

For more:
- here's the report (.pdf)