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 [email protected] 

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J.D.
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