Analysis: Moving All of Medicaid to Managed Care Would Save $63 Billion Over Next Ten Years

FOR IMMEDIATE RELEASE: July 21, 2017                          
Jeff Van Ness, (202) 286-4683



 Managed Care Saved Medicaid an Estimated $7.1 Billion in 2016


WASHINGTON—The Association for Community Affiliated Plans (ACAP) today issued a report authored by The Menges Group which quantifies the current and potential savings to Medicaid programs around the country realized by adoption of the managed care model.  Those savings – based on reasonable changes to the Medicaid – are only a fraction of the drastic cuts anticipated in plans to repeal or replace the Affordable Care Act. The report estimates that in 2016, Medicaid managed care results in nationwide savings of $7.1 billion, and projects savings from existing managed care programs to total $94.4 billion over the next ten years. The report also estimates that total savings of $63 billion – including $35 billion in federal savings – could be realized over the next ten years if all Medicaid fee-for-service (FFS) spending were to be moved to a capitated managed-care model. All savings estimates are relative to the FFS coverage setting.

Baseline data used to develop the estimates were obtained from annual CMS-64 state-level reports on Medicaid expenditures.

Managed care is poised to become the dominant payment model for Medicaid. As recently as 2010, capitated managed care represented just over a quarter of total Medicaid spending nationwide. That figure rose to 48.9 percent of national Medicaid expenditures by 2016, and this percentage will likely continue to increase.

“This report puts in black and white the fact that managed care can save precious Medicaid resources while at the same time maintaining a high level of access and quality care,” said ACAP CEO Margaret A. Murray. “Should Congress continue to turn to managed care’s predictable budgeting and quality management tools to effect further savings, they must assure that Medicaid managed care plans are reimbursed in an actuarially sound manner. If states are allowed to compromise or waive actuarial soundness, plans will consider dropping out of the Medicaid program. And states and Congress will be back at square one.”

This report draws a sharp contrast to the nearly $800 billion in cuts to Medicaid spending currently under contemplation on Capitol Hill. “There are ways to improve the efficiency of the Medicaid program, to be sure,” added Murray. “$800 billion in budget cuts are simply a different order of magnitude than what innovation and system reform can provide. These cuts aren’t trimming fat from the Medicaid program. They get at muscle and bone.”

To read the report in full, visit

About ACAP

ACAP represents 60 Safety Net Health Plans, which provide health coverage to more than twenty million people in 29 states. Safety Net Health Plans serve their members through Medicaid, Medicare, the Children’s Health Insurance Program (CHIP), the Marketplace and other health programs. For more information, visit


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