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Pharmacy Carve-Outs: How to Make Privatized Medicaid Even Worse

Summary: California recently inserted a private pharmacy benefits plan into Medi-Cal, despite evidence from other states that it adds costs. Thousands of patients have suffered medication gaps. All this makes no sense, if the goal is efficient, equitable, effective medical care.

Opinion: New Medi-Cal Rx Is Riddled with Problems, Hurting Those Who Need it Most
California Health Report
Mar 10, 2022
By Hector De La Torre

Despite warnings that the health of the state’s 14 million Medi-Cal beneficiaries would be threatened, on Jan. 1, the California Department of Health Care Services (DHCS) implemented Medi-Cal Rx, the questionable fee-for-service program that stripped pharmacy benefits from health plans and handed Medi-Cal prescription drug purchasing and distribution to a private, for-profit company. Now, a month into the new program, there are reports that thousands of Medi-Cal patients have been left without their medications for days or even weeks. Physicians are concerned that someone is going to die as a result of this flawed system. Remember, these are individuals in an already underfunded Medi-Cal system, and they are the same people who were disproportionately impacted by the COVID-19 pandemic.

As a former State Assembly member, I am appalled that DHCS moved forward with Medi-Cal Rx. Last November, I offered public comment expressing concerns about the system, versions of which had already failed in 10 other states. Those states expected cost savings, like those promised with Medi-Cal Rx, but they did not materialize. And in 2019, the Menges Group released a report that showed Medi-Cal pharmacy expenditures would jump more than 19 percent if California adopted a carve-out model.

Comment by: Jim Kahn

This policy looks like a classic but especially heinous example of corporate profit over all other considerations — notably health of public beneficiaries, and responsibly managing public funds.

Private Medi-Cal plans have their own serious problems. But adding a private medication plan is remarkable for insane counterproductive complexity layered on top of underlying dysfunction. It boggles the mind, after evidence from other states of serious problems with this strategy.

What could be the motivation? Here are some ideas:

1) Brainwashed faith in the magic of privatization.
2) Financial conflicts of interest, via campaign contributions and/or promises of jobs or other major monetary benefits.
3) Advice from analysts or advisors who are brainwashed and/or financially conflicted.
4) All of the above.

Time to switch cognitive and moral framework, to a “public good” approach – single payer.

Additional comment by: Don McCanne

Our editor Jim has appropriately reinforced the outrage demonstrated by former State Assembly Member Hector De La Torre. When we have a severely malfunctioning health care financing system in dire need of replacement, society is resorting to a patchwork approach that not only is inadequate, but is moving us backwards from where we need to be as far as privatization is concerned. Serving private corporate interests at the cost of patient care is outrageous. Dare I say that it is time to consider judicious citizen action to redirect our public representatives in the direction of health justice for all?

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