MONTGOMERY, Ala. -Just two states have governors who are physicians. Democrat John Kitzhaber of Oregon is an emergency-room doctor. Republican Robert Bentley of Alabama is a dermatologist. Their states may have little in common, but the medically trained governors have embraced similar Medicaid reforms.
Over the decades, Oregon has built a relatively generous Medicaid program and has been a bellwether for health-policy experimentation. Alabama, like most other Southern states, has run a bare-bones program with few optional benefits.
Launched last year, Oregon's Medicaid plan relies on local health-care organizations to coordinate all forms of health care, from acute medical services to mental health and dental care, all in an effort to lower costs and improve health.
Basically, the local entities, which may be headed by a hospital, physician group, community-service provider or a managed-care organization, are given a budget and challenged to beat it. If costs exceed the budget, the organization takes the loss.
Alabama lawmakers will soon consider a proposal from Bentley for a Medicaid overhaul based in part on Oregon's groundbreaking "community-care organizations." Although Bentley has said he would not support an expansion of Medicaid "under its current structure," the expected reforms are seen as paving the way for a possible expansion as early as 2015.
Last October, a commission established by Bentley began researching ways to restructure the state's Medicaid program to make it more efficient. The group concluded that Alabama should follow Oregon's path.
"It will be a heavy, heavy lift," says state health officer Don Williamson, who headed the group. But he said the overhaul is necessary if the state is ever going to expand Medicaid.
What the commission ruled out was privatizing Medicaid. While most other states, including Oregon, have expanded their use of commercial managed care in recent years, Alabama and a few other states have yet to start.
"Providers would not have supported the state just washing its hands and turning the entire program over to a commercial managed-care company," says Mike Horsley, CEO of the Alabama Hospital Association and a member of the governor's Medicaid advisory commission.
In general, Alabama health-care providers are concerned that managed-care organizations would cut payments to doctors, hospitals and other providers in order to hit cost targets under a state contract. They also worry that the companies could break their contracts or fail to renew if they're unhappy with their profits.
One of the primary reasons for privatizing Medicaid is that a private company takes over all of the management and is contractually required to hit an overall cost figure that is lower than what the state on its own had spent.
According to the commission's report, a group of managed-care organizations represented by United Healthcare said it could do just that. The group committed to reducing Alabama's Medicaid costs by even more than the commission had calculated it would save with a regional-care approach.
Managed-care companies said they could reduce state Medicaid spending by as much as 4 percent over five years; the state-run regional plan is projected to save up to 3.5 percent.
The companies also promised to deliver a new Medicaid plan for everything but long-term care that would be ready to run statewide by 2014.
"Regional-care organizations," the name Alabama has given its Oregon-like local health groups, likely would not be ready to operate statewide until 2015.
Still, the commission opted for the Oregon plan because hospitals, pharmacies and other providers said they would not support a managed-care plan.
The governor's proposal may split the state into regional-care and managed-care areas as a way to test both concepts, administration officials say.
Hospitals and consumer advocates are urging Bentley to accept the commission's recommendation to pursue regional-care organizations throughout the state.
Originally mandatory for states, the Medicaid expansion outlined in the Affordable Care Act was made optional by the Supreme Court last June as part of a decision that otherwise upheld the controversial law.
For states that choose to expand, the federal government will foot the entire bill for new enrollees for the first three years. After that, the state's share gradually increases to 10 percent of the cost.
After last year's elections, Bentley joined about a dozen other Republican governors in announcing he would not support the expansion.
Politically opposed to the health law, most GOP governors argued that even 10 percent of the cost in the future was too much for their budgets.
Since then, however, GOP governors in Arizona, Michigan, Nevada, New Mexico and Ohio have broken ranks, approving the Medicaid expansion. It is now up to their legislatures to decide whether they want to go along with it.