Making money from Medicaid? Not likely

In this recently published piece, American Enterprise Institute (AEI) health care business expert J.D. Kleinke explains that insurance companies that are rushing to acquire Medicaid managed care companies at above-market prices are chasing "fools' gold."

  • More patients does not mean more money: Although 8 to 16 million more patients (including 9 million "dual eligibles" who will be forced off Medicare to the cheaper Medicaid) will added to the Medicaid rolls by the Affordable Care Act (known as Obamacare), Medicaid remains the poorest, toughest segment of our health care system which has numerous challenges that make financial losses seem a certainty.
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  • Even if they win, they lose: Kleinke explains that even if a company is somehow able to find a way to make a profit, they will be driven into failure by governments squeezing the profits out of the insurance companies, and vilified by the public as profiting off the poor.

 

"The health insurers already got a face full of cold water with this under Obamacare: new administrative cost and profit margin regulations set at completely arbitrary numbers. Those numbers will appear generous when the Medicaid gold proves to be nothing more than a very big flash in a very broken pan."  -- J.D. Kleinke, AEI

Read the full piece here.

J.D. Kleinke is a resident fellow at AEI and is an expert on health care business strategy.  He can be reached at jd.kleinke@aei.org. 

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About the Author

 

J.D.
Kleinke
  • J. D. Kleinke, an expert on health care business strategy and entrepreneurship, was instrumental in the creation of four health care information organizations. He has also advised established and start-up companies on health care business, product and technology strategy. Mr. Kleinke writes on the business of health care, health insurance and benefits as well as about doctors and the culture of medicine. His books include Bleeding Edge: The Business of Health Care in the New Century (Jones & Bartlett Learning, 1998), Oxymorons: The Myth of a U.S. Health Care System (Jossey-Bass, 2001), and Catching Babies (Fourth Chapter Books, 2011). At AEI, he is studying the interplay between health policy, health care market dynamics and health venture formation; the influence of information technology and medical technology on the overall health economy; and the impact of medical culture on health care organizations, markets and public health.

  • Phone: 202 862 5846
    Email: jd.kleinke@aei.org
  • Assistant Info

    Name: Catherine Griffin
    Phone: 202 862 5920
    Email: catherine.griffin@aei.org

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