Editorial: Medicaid savings are increasingly suspect
The Register's Editorial 11:37 p.m. CDT October 8, 2015
Perhaps Gov. Terry Branstad thought he could quietly privatize Iowa’s Medicaid program. Instruct a state agency to hand over administration to managed care companies, issue a few press releases about “modernization,” quickly secure federal approval and hope no one raises a fuss.
Except when 4.2 billion public dollars and health care for 560,000 Iowans are on the line, people eventually pay attention to the details. It doesn’t take long to realize privatization makes no sense.
For decades, Iowa’s Medicaid program has been largely operated by the state, which is not interested in turning a profit or pleasing shareholders. It has held down costs, reduced fraud and offered seniors less expensive alternatives to nursing homes. Insuring the average Iowa Medicaid recipient costs taxpayers less than insuring the average Iowa lawmaker. While state-managed Medicaid spends 4 percent of its dollars on administration, managed care companies could spend up to 15 percent on administration. That is public money not spent on health services for Iowans.
Yet the Iowa Department of Human Services is charged with putting lipstick on the governor’s privatization pig. That is no easy task. The administration describes the plan as “patient-centered” and the key to improving “quality and access” in health care. It has so far produced no evidence this model has improved outcomes for patients anywhere else — likely because it cannot find such evidence.
But there’s still that $51 million in first-year savings privatization is supposed to yield, right? Though state workers have never explained how that will be achieved, they can’t just make that up, can they?
Well, last week a state official testified in a court hearing that number is not based on a specific analysis of Iowa’s program, but is the midpoint of estimates from unidentified “experts.” At least one of those estimates projected the state would save nothing. Zero. Not a dollar.
The more Iowans find out about the push for privatization, the more scandalous it looks.
The governor received nearly $40,000 in campaign donations from managed care companies over the past few years. Shortly after being reelected last November, he announced his administration would seek bids from private companies to administer Medicaid beginning Jan. 1, 2016. The public later found out one company hired a former Republican lawmaker-turned-state consultant to help write its winning bid.
The DHS ultimately selected four companies that have faced hundreds of millions in fines and more than 1,500 individual sanctions in other states while rejecting three companies that listed no history of violations. Iowa has not secured federal approval to privatize, and many Iowans are encouraging the Obama administration to deny permission. Meanwhile, the state is poised to inform more than 500,000 Iowans who their new health administrator will be in a few months. It is also dealing with allegations of fraud, nepotism and inaccuracies in its procurement process.
And those companies salivating at the windfall of public money must secure agreements with health providers, hospitals and pharmacies across the state to serve half a million Iowans. The director of a clinic with 34 mental health providers said late last month that he had not yet seen any contracts and had no idea what reimbursement rates might be. “I fear contract negotiation with us will take a number of months,” he wrote in a letter to the Obama administration.
Any hopes the governor may have had for a quick and quiet Medicaid makeover have been dashed. The next press release from his administration should announce the privatization plan is being put on hold or scrapped.