How Medicaid Really Works. We are seeing more and more companies…

We are seeing more and more companies popping up with a focus on Medicaid based populations.

Now let me quickly outline the difference between Medicare and Medicaid: Medicare covers people above 65, and is a national government plan, fully government-operated. It’s like healthcare systems in other developed countries, but only for seniors.

I am not making any judgement — just simply stating, right now. Medicaid covers 1 in 5, and is generally a health insurance plan for people that fall below certain income levels, disabled adults, and children.

A question I have and you likely are thinking is:

• Why was a whole new thing called Medicare developed differently than Medicaid?

But for now, we’re thinking about Medicaid — stop thinking about Medicare, guys. Today, you have to understand the depths, the oceans, the lakes, of how Medicaid really works.

Why Does Medicaid Work As a State System?

States decide Medicaid coverage — so governors and their state systems are in charge of some people’s healthcare — but there are some set people you have to cover, for example, pregnant women.

The reason states gained conversation in their healthcare system is states have a treasury — diverted to different areas, depending on the state. Now, the nation also does have a treasury — and does provide funding to each state. However, rather than the nation deciding how to distribute money, states decide.

Now it could be argued that Medicaid should not be nationwide (it’s not an impossible task). However, trust me in saying, no states would agree to the plan, because every cent going to healthcare would take away from the education sector, the technology economy, etc.

There are way more complex considerations — so let this be a priori, as you read and breathe more healthcare stuff.

What Does A State System Really Mean

Yes, states decide who to cover. But there is also something else!

Let’s play some Jeopardy. What are “certificate of need” laws or CON laws? Dramatic, right…

CON laws restrict what kind of healthcare services can be offered — and the key to understand is here — BY NON-MEDICAID PLAYERS WHO DELIVER CARE

Non-medicaid players make a lot more profit than Medicaid players. There was a reason Medicaid developed… to serve the people the commercially insured couldn’t make money off of, and didn’t want to. In return, governments would/will reimburse these players.

BUT if Non-medicaid players were allowed to compete with Medicaid players, that would be the end of conversation — companies serving Medicaid populations would just die out.

Here’s a great example I stole. Let’s say operating rooms are regulated by CON laws. If CON laws didn’t protect this area, competitors would open surgery centers and take away market share, and make shitty margins for Medicare-focused companies even worse.

Here’s a question I have, however:

• Why are providers focused on Medicaid populations, worried about competition, with providers that don’t accept Medicaid and are more costly?
• Is the idea that vertically integrated companies (who provide all types of services for the privately insured), would also offer Medicaid for just this one service, and use the capital they’re making on the other side to their advantage? (this is what I think the problem is)

Here’s about what’s below: you should think and know about it, but I don’t really have much to say right now:

Health economists argue for pulling back CON laws, because of this reasoning:

“CON laws protect hospitals and other providers that already control a given market…” (we need to make the health market more fair, to reduce prices)

Now, while this would reduce prices, it does seem like companies who deliver care to Medicaid-based populations do get shitty margins (because they’re serving seniors, lower-income etc.) — the services that they only offer seem to be the offset for this loss/risk.

I don’t have the data, so I’m sure — but that’s my take.

Wait, if they have shitty margins…

Do you remember the first line in this article? We are seeing more and more companies popping up with a focus on Medicaid based populations

I am really tired of saying the same long phrase again and again, genuinely — so let’s call these companies M Companies.

I can just imagine someone saying, “Goddamn you M Companies,” in Heaven or Hell (no dark humor here…)

Why are people building M Companies, if they have shitty margins?

Here’s the thing after COVID — people have realized they need a safe way to generate money because they need something to offset, healthcare costs, that will become very capital-intensive as the company scales. M Companies guarantee government reimbursement.

Here’s the other thing, that’s probably a bigger part of the reason. There’s a lot — I mean a lot of competition in healthcare, given the huge opportunity (especially with new digital advancements coming around, etc. M Companies get to… get rid of this competition in a Thanos snap… remember CON laws.

While M Companies are serving Medicaid-based populations, for the services under CON laws, they have a competitive advantage for everyone (not just seniors, lower-income, etc.)… like the example of operating rooms.

What I’m scared of, and may already be happening, is M Companies taking this advantage — becoming like a vertically-integrated company with a side of Medicare — and leading to rising healthcare costs.

With that, rethink about this:

Health economists argue for pulling back CON laws, because of this reasoning:

“CON laws protect hospitals and other providers that already control a given market…”

I started with how medicare really works, but I’ll end with

The US Government, Justice Department, etc. needs to be Closely Looking at M Companies For the Next Few Years