Private Power in Public Programs: Medicare, Medicaid, and the Structural Power of Private Insurance
Published online by Cambridge University Press: 27 January 2023
In 2019, nearly 70 percent of Medicaid beneficiaries received their health insurance coverage through a private, managed care organization (MCO). Twenty-five years earlier, 9.5 percent of Medicaid beneficiaries were enrolled in MCOs. This dramatic growth in Medicaid managed care enrollment represents the delegation of significant power by federal and state governments over a critical social program to private actors and market forces. Medicare, too, experienced a similar pattern of transformation. Together, Medicaid and Medicare, two critical pillars of American social policy, paid more than half a trillion dollars to private insurance companies in 2019 to provide public health insurance to 75 million people. This manuscript examines the policy consequences of building private firms directly into the structure of American social policies. In contrast to existing work on “submerged” or “delegated” policies, this manuscript highlights the structural power that such policies bestow on the government's private partners and develops a new theory of structural power in which firms are able to constrain health policy reform through their threats to disrupt the delivery of public policies and social benefits to millions of people across the United States.
- Research Article
- Copyright © The Author(s), 2023. Published by Cambridge University Press
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29 In The Political Life of Medicare, Jonathan Oberlander has argued that throughout much of its history, Medicare was governed by a “political consensus.” During this period, any changes made to Medicare were all made within Medicare's original social insurance structure. This political consensus, according to Oberlander, broke down after the 1994 elections. According to Oberlander, the 1994 elections and the Republican Revolution brought the era of bipartisan consensus and compromise to an end.
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114 The ACA required that insurance companies provide cost-sharing reductions (CSRs) to people between 100 and 250 percent of the federal poverty level. In 2018, the Trump administration stopped reimbursing insurance companies for the cost of CSRs. Despite the termination of CSR payments by the federal government, insurance companies are still required to offer CSRs. As a result, insurance companies have increased premiums, which has driven the premium subsidies higher.
115 Between March 1, 2010 and March 1, 2020, the stock value of UnitedHealth increased by 758 percent; Centene, 889 percent; Molina, 733 percent; and Humana, 571 percent. These four MCOs are representative of the industry, with high exposure in Medicare Advantage, Medicaid, or both. Over this same period, the Nasdaq increased by 360 percent and the Dow Jones Industrial Average increased by 102 percent.
116 Barack Obama, interview by George Stephanopoulos, This Week With George Stephanopoulos, ABC, September 20, 2009.
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121 Marilyn B. Tavenner and Scott B. Serota, Letter to Mitch McConnell and Charles Schumer, July 14, 2017, https://www.ahip.org/documents/Joint-AHIP-BCBSA-Consumer-Freedom-Option-Letter-FINAL-071417.pdf.
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127 Congressional Budget Office, “American Health Care Act: Budget Reconciliation Recommendations of the House Committees on Ways and Means and Energy and Commerce, March 9, 2017,” March 13, 2017, https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/costestimate/americanhealthcareact.pdf.
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137 As of June 2022, there were twelve states that had still not expanded Medicaid under the ACA. On June 1, 2022, North Carolina, which is one of the twelve remaining holdout states, passed legislation in the Senate to expand Medicaid under the ACA. The legislation then moved to the North Carolina House, but voting has not yet occurred. Since 2018, seven states that had previously refused to expand Medicaid have since expanded Medicaid either through legislation or ballot measures.