Medicaid Mission

At first glance, you might wonder what the Japanese auto industry has to do with managed healthcare in the United States. For Anthony Horbal, founder and CEO of Erie, Pa.-based Ion Health Inc. and Mike Nelson, Ion Health's president and director, Japanese automakers just might have provided an epiphany.

"I was a hospital board member back in the early 1990s at the beginning of managed care as we know it today," Horbal says. "I remembered hearing Lee Iacocca say that every new Chrysler could be sold for $1,100 less if his company's healthcare were managed. In the early '80s, cars manufactured by Chrysler actually contained more in medical costs than they did in steel. The only way Chrysler was going to be able to be competitive with the Japanese was to manage healthcare costs. Iacocca was one of the key individuals in America to call attention for the need to manage healthcare costs."

Looking back, you wonder if Iacocca's call to be more competitive was either overlooked or understated. But that call made an impact on Horbal.

"I decided to strike out on my own and I applied for an HMO license in my home state of Pennsylvania," he says.

Near the end of 1994, Horbal co-founded Three Rivers Health Plans Inc., one of the first Medicaid contractors in the Keystone state. Within four years, the group had 120,000 members and annual revenues in excess of $200 million.

Just as leaders like Iacocca had forewarned, major changes were taking their toll on the U.S. workforce and changing the face of healthcare, as well. "In America, we've seen an employment shift. Many of the blue-collar factory jobs that were full of benefits are gone. Especially in the east, we've seen the uninsured segment of the population explode. In the Great Lakes Region-some call it the Rust Belt-we see empty factory after empty factory. We see those states with high unemployment, large out-migration and job-change status. As a result, many have become Medicaid-eligible," Horbal says.

Just how has this workforce shift impacted healthcare? "The biggest difference is in the large number of people. Two out of six babies born today in America are being born into Medicaid," Horbal says. "They are relying on the government to pay for the baby's healthcare and delivery. It's a problem in our nation and in society in general."

The number of Medicaid patients has grown dramatically over the past two decades. Pennsylvania spent more than $10 billion on Medicaid in 2004 covering nearly 1.5 million recipients.