UnitedHealth report projects $366B in potential Medicaid savings; some skeptical of motives

The federal and state governments could save $366 billion over the next 10 years through an update to Medicaid's technology, a greater reliance on coordinated care techniques and moving more Medicaid beneficiaries onto managed care plans, among other actions, according to a report released by health insurance giant UnitedHealth Group on Thursday. Those savings, the insurer said, could help offset the roughly $430 billion cost of Medicaid expansion from 2011 through 2019. 

UnitedHealth projects the following savings breakdowns: 

  • $93 billion due to "broader use of coordinated care techniques," which would improve quality care access.
  • $140 billion due to more use of managed care to support patients in need of long-term care.
  • $133 billion due to updating Medicaid's health IT systems, including in-state health information exchanges.

UnitedHealth currently has about 3 million Medicaid members, meaning expansion of Medicaid in 2014 likely will mean big business for the insurer, reports Reuters. "The share of Medicaid enrollees in managed care plans rose from 56 percent to 71 percent in the past 10 years according to the Kaiser Family Foundation," the article said. "The companies bid for contracts awarded by states." 

Still, UnitedHealth executive vice president Simon Stevens called the report a "practical road map" that would help states to "realize significant savings" and allow underserved patients better access to quality care. He told the Wall Street Journal that "the report isn't meant as a new business pitch for AmeriChoice"--the company's Medicaid management program.

"There is actually an opportunity to generate savings out of the Medicaid program and put that back into primary care," Stevens said, according to Bloomberg News. "We think there is a circle that can be squared here."

Brett Chase, author of Portfolio.com's blog Heavy Doses, however, is skeptical of Stevens' assessment. "It happens that UnitedHealth has a managed care company that will handle Medicaid patients for states on contract basis, a low-margin business that potentially can expand greatly thanks to Obama's reform," Chase wrote. "It looks like UnitedHealth is making a strong bid for the business." 

The report was the third released by UnitedHealth in the last year. According to the Associated Press, the insurer's first two reports focused on how the federal government could save $540 billion in Medicare spending and how technology improvements could create $332 billion more in savings.

For more information:
- read the report and its accompanying press release
- read this Reuters article
- check out this Bloomberg News piece
- here's the Wall Street Journal Health Blog post
- check out the Heavy Doses blog post
- read the Associated Press article

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