Markets and public programs: Insights from Oregon and Tennessee

Medicaid is the major national program promoting access to care for low-income populations, but the program also is a federal-state partnership. With costs rising and universal access still a remote objective, many states have turned to market-based strategies involving managed care, with the goals of generating savings for the state, improving access for Medicaid beneficiaries, and sometimes, expanding coverage to those who were previously uninsured. Yet Medicaid is a complex social insurance system that over time has been used to finance a variety of needs, often using cross-subsidies. In addition, states vary in both the scope of their Medicaid programs and the sophistication of the skills and resources they can bring to bear in shaping them. Understanding how these influence the ability to implement market-based strategies in Medicaid and what the effects of these strategies appear to be is of crucial importance because most states now include some features of this approach in their programs.