Big Bird's salvation? Apply analytics to Medicaid


Sunny days, keeping the clouds away, can you tell me how to get, how to get to Sesame Street?? Oops, sorry, was just day dreaming about younger days and the magic of an eight foot talking yellow bird. How great was Sesame Street? I learned counting, my abc’s, sharing, diversity, and even about respecting a grouchy old guy in a trash can. What a great set of messages for kids. Of course, today we have decided that Big Bird and his friends are the reason that we are having debt issues in America. Why are we even having this discussion, and I’m not asking based on the education and developmental benefits of Sesame Street. I’m asking based on budgetary common sense.

PBS gets $445 million from the Federal budget roughly every year. That sounds like a lot of money, and some people will say, well, let’s cut any and every part of government. In addition, those same folks use PBS to babysit their kids on occasion and benefit as children can learn basic skills. Heck, Charles M. Blow of the NY Times last weekend wrote a whole column on how much he benefitted from PBS growing up. So, the real question is, if Big Bird and Jim Lehrer are roughly taking up .012% of the Federal budget annually, why are we discussing them and not the large line items in the budget, specifically, health care programs like Medicaid and Medicare.

At a state level, Medicaid costs average approximately 13% of state budgets. That number has been steadily rising and not just at inflation rates. The dramatic rise of health care costs, in general, has led to Medicaid becoming the fastest rising cost within state budgets. Now, let’s be clear, government administered programs are considerably cheaper to operate due to pooled buying (you know, like Costco) and much lower administrative costs, roughly 6% vs 12% for private insurers and of course, there is no profit margin. This means government care is cheaper, and yet, still rising in costs, largely due to our fee for service system. The Affordable Care Act, known by many as Obamacare, is partially designed to address these rising costs by creating electronic records, all payer claims databases, and use all of that collective data to pinpoint areas of concern where costs can be contained. This means using analytics and accurately modeling the data to find areas that can be identified as potential areas of savings.

Another factor here is the ability to project costs forward within the Medicaid budget. This matters because its size impacts all other aspects of a state’s budget. Having models in place that can forecast the costs of Medicaid for the state in let’s say the next, 3, 6 or 12 months would be very valuable. This concept would help a legislature better plan for those costs and not have to backtrack on things like education or transportation as Medicaid costs change. Analytics could support “what-if” forecasting for the Medicaid budget, taking into consideration economic impacts that affect all budgets. For instance, if the unemployment rate rises by .3%, what impacts does that have on my Medicaid budget for the next 12 months. In my home state where we have a biannual budget, being able to model these costs more accurately is invaluable.

Many of us learned our numbers from Big Bird and The Count. Sadly, we have chosen to avoid the numbers that matter in order to score political points and put small programs that won’t change our deficit problem in Oscar’s trash can. Let’s be a little smarter than that. Let’s all show that we paid attention to Sesame Street.


About Author

Chuck Ellstrom

Sr Manager, Industry Consulting

Chuck Ellstrom manages a team of subject matter experts focusing on multiple policy areas in state and local government, particularly health and human services, justice and public safety and finance. Over the past 16 years, Chuck has worked on comprehensive grants intelligence solutions, disaster planning, disaster recovery operations, and interpretation and execution of client requirements. He has extensive expertise with the challenges of managing large infusions of Federal grant dollars and projects into states. In his seven years at SAS, Chuck has helped develop several SAS technologies, including a major disaster management intelligence solution. Before joining SAS, Chuck was Deputy Chief of Operations for North Carolina’s Division of Emergency Management where he was responsible for the management of 13 Presidential Disaster Declarations and statewide disaster response operations. A former field artillery captain in the U.S. Army, Chuck holds a bachelor’s degrees in history and political science, as well as a master’s in public administration (policy analysis), from East Carolina University. Chuck takes advantage of living in a hotbed for college basketball but officiating in multiple conferences throughout the southeast U.S. He is also a proud father of a rising 9th grade “soccer star."

1 Comment

  1. Krisa Tailor

    Great post. You’re absolutely right, and containing costs in Medicaid is absolutely a more necessary (and compelling) topic for debate. However, many leaders have decided to view cost independent from quality, not understanding the impact of their decisions on the quality of care received by individuals, and the resultant health of those individuals. While we should absolutely be talking about cost containment, the conversation should never be had without addressing the quality component. Moreover, if quality is not put at the forefront, we will continue to see that 13% rise. Better quality of care will always cost us less. Quality care, that is proactive and preventive, is what will help reduce costs for the states. If we want to see that number decline, we have to focus on providing the very best care. This is how we can ensure sustainability of the Medicaid program for my generation and beyond, and how we can continue it to be the effective government program that it is.

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