Medicaid plan is gift for private firms
From Social Security to Medicare, Republicans have pushed to privatize government entitlements. Now Gov. Terry Branstad seeks to hand over management of Iowa’s $4.2 billion Medicaid program to a few private companies.
The public should be skeptical. The more than 500,000 poor and disabled individuals and families in Iowa who rely on Medicaid should be asking questions. The federal government should be reluctant to approve the waiver that Iowa needs to privatize a program funded by state and federal dollars.
In recent presentations to the public, state leaders have unveiled a lot of numbers intended to show Medicaid is expensive. What they do not provide is context.
For example, they emphasize the cost of Medicaid has grown 73 percent since 2003. They do not share that the cost of employer-based health insurance in Iowa has grown about 80 percent over the same time period, according to researcher David P. Lind Benchmark.
In fiscal year 2013, a Medicaid recipient in this state cost an average of $5,491 — less than the per-person cost in 29 other states and much less than people insured by private coverage. For an adult who is not a senior or disabled, Iowa spent an average of $2,000 on health care, less than that spent in 47 other states, according to research from the Kaiser Family Foundation. Health insurance for a state lawmaker costs Iowa taxpayers about $9,000 per year.
Iowa’s Medicaid spending is not out of control.
Administrative costs are low because the program is largely managed by the government, which is not beholden to stockholders or obligated to pay huge CEO salaries. The cost of operating the program is currently 4 to 8 percent, according to the Iowa Department of Human Services, which oversees Medicaid. When privatized, the cost could grow to as much as 15 percent. Those are dollars not spent on actual health care.
The Branstad administration needs to explain how funneling public dollars to profit-seeking companies will cost less. Generic promises about managed care resulting in “efficient, coordinated and high-quality health care” are not enough. Iowans need evidence the managed care model will actually save money and improve care.
Such evidence is hard to come by. In fact, several studies have shown managed care either saves no money or ends up costing more than traditional, fee-for-service Medicaid, according to a 2012 report from the Robert Wood Johnson Foundation. The reason: Medicaid has already taken many steps to rein in costs.
In the past, the state has trumped its successes in reducing fraud, keeping seniors out of expensive nursing homes and holding down spending on drugs. The program saves a huge amount of money paying providers less than other insurers for health services. Now, however, they argue managed care companies can do a better job.
Privatizing Medicaid will make the cost of the program more predictable, as the state will pay fixed monthly fees to companies that assume responsibility for Iowans’ care. But will the number of visits to providers be limited? Will records remain available to the public? How much money will be shifted from covering care to paying administrative costs? Will fewer physicians accept Medicaid patients?
In its comments to state officials, the Iowa Hospital Association noted that managed care companies reduce costs by denying coverage for services, including emergency room visits. The association is “deeply concerned” that the private model could reduce access to care and reimbursement rates for providers.
All health-care providers should be concerned. So should anyone who relies on Medicaid. So should anyone who cares about vulnerable Iowans.