Medicaid’s 49^th year has been as close to transformational as a half-century-old program is likely to get. Perhaps only the widespread transition to capitated managed care in the mid-1990s could be characterized in the same vein.

Most significantly, of course, this year has witnessed the implementation of the Affordable Care Act’s (ACA) Medicaid expansion. While just over half the states have bought into the optional expansion so far, close to five million additional low-income Americans now have access to health care coverage. In those states, there is now — for the first time — a foundation for universal coverage. That is downright transformational!  As B. Sommers et al. point out, coverage reduces mortality and morbidity, so it is clearly good for the population’s health.

New Vehicles for Delivery System & Payment Reform

Far less visible than the ACA’s coverage expansion, but perhaps more broadly transformational, are the ACA’s many inducements for delivery system and payment reform. Some of these have generated a good deal of attention – for example, the groundbreaking demonstration to integrate care for those dually eligible for Medicare and Medicaid. Others, like health homes, are more below the radar screen, but still have the potential, if pursued on a large scale – as in New York and Washington – to be transformational.

There is also a raft of ACA-supported delivery system innovations designed to hold providers accountable for both improving health and reducing costs. Inherent in these efforts are incentives to move away from fee-for-service payments toward shared savings and bundled or global payments. Arkansas has led the way in Medicaid with its episodes of care for which Principal Accountable Providers (PAPs) bear accountability with potential downside risk. Oregon has created regional Coordinated Care Organizations responsible for all the physical and behavioral health of Medicaid beneficiaries in a designated region.

Fueling much of the transformation in Medicaid delivery systems is the ACA-funded Center for Medicare and Medicaid Innovation (the Innovation Center). Perhaps getting the most attention is the State Innovation Model (SIM) initiative, which is driving statewide, cross-payer delivery system reform. The Innovation Center has also underwritten projects ranging from the replication of the hot-spotting, super-utilizer work in Camden, New Jersey, to Project ECHO’s use in New Mexico of telehealth-connected outpatient intensivists to treat those with chronic illnesses in medically underserved areas.

Beyond Medical Care: Full Accountability

Both of these last two examples are focusing on the highest-need, highest-cost populations with care needs that extend outside the medical sphere. It is this small subset (5%) of individuals who account for disproportionate expenditures (55%), many of which are for avoidable hospitalizations and institutionalizations. Medicaid has long been motivated to include services beyond acute physical health care, with EPSDT preventive services enacted in 1967 and home- and community-based services in 1981 being among the earliest acknowledgements of the need for non-medical interventions.

But, with ever-broadening recognition that addressing the social determinants of health is at least as important to population health as providing access to medical care, state Medicaid agencies are pioneering ways to integrate physical and behavioral health, public health, supportive housing, re-entry and jail diversion programs, and other social services.  Emerging Totally Accountable Care Organizations (TACOs) in Minnesota and elsewhere would ultimately blend or braid financing for all of these services in efforts to improve health and reduce the costs of caring for the highest-need Medicaid beneficiaries.

While people with mental illnesses who are homeless may be among those most obviously in need of integrated health and social services, Medicaid leaders know that millions of their other beneficiaries have inadequate access to decent housing, functioning schools, safe parks, adequate nutrition, reliable public transportation, and sustainable employment. Without comprehensive efforts to address these social factors, it will be impossible to improve the health status of the broader Medicaid population. These Medicaid leaders know that they have to work with state and local governmental and nonprofit agencies across the social services spectrum. The ACA creates multiple opportunities for Medicaid to pursue this transformational vision of healthier communities contributing to a healthier nation.