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Inside the Iowa House: Medicaid Privatization Problems Grow

September 21, 2018 9:21 am by: Category: 2018 Session Information, Health Care, Recent News Leave a comment A+ / A-

 While session ended last spring, we continue to hear many stories from Iowans that Medicaid privatization keeps getting worse, not better.

We’ve heard from Iowans who have been denied critical care and essential medical equipment like walkers and wheelchairs.  We’ve heard from others who have had services severely reduced or cut altogether.

In one case, an investigation by the Iowa Ombudsman found one of the Managed Care Organizations (MCO) that now run Medicaid, reduced a quadriplegic’s in-home care by 71% resulting in him being moved to a nursing home, which costs taxpayers an additional $1,815 per month.

Instead of holding these MCO’s accountable, we learned a few weeks ago that Governor Reynolds negotiated huge raises for the two out-of-state MCO’s.  The for-profit companies landed an 8.4% raise that will cost state and federal taxpayers another $344 million this year with no guarantees that they will stop denying care to Iowans.

There are several problems with this new deal for the MCOs.

First, when Medicaid was privatized a few years ago, Republican politicians promised big savings to Iowa taxpayers.  Since that time, the Governor’s administration has been unable to prove any costs savings to taxpayers.  Just after they got the huge raise, we learned the average total cost per year for each Medicaid member has increased by 11%, which is more than $10,000 per member.  Under privatization, the MCOs get to take up to 12% of our tax dollars to administer the program while administrative costs before privatization hovered around 4%.

Second, these private companies are doing everything they can to boost profits by taking more money from taxpayers.  The new deal gives them a huge increase in pay but still allows MCO’s to deny care to Iowans and starve health care providers by refusing or delaying reimbursements for services they’ve already provided. One MCO, AmeriHealth Caritas, terminated their contract in Iowa nearly a year ago and still owes Iowans as much as $14.6 million for medical care provided to disabled, poor, and elderly Iowans.

Finally, the huge payout to the MCO’s was higher than projected last session and puts a big strain on the state budget. When the legislature adjourned in May, there was a $160 million ending balance in the state budget. The state’s portion of the new raises to the for-profit companies is $103 million, which means the state is dangerously close to spending more than the 99% of state revenues that can be spent according to Iowa law.

If state revenues fall a bit short of estimates this year, it puts the state budget in a tough financial position again this year.  The potential budget troubles come just a year after the Governor and Republican lawmakers were forced to transfer millions to the state’s credit card and make mid-year budget cuts.

I’ve heard from so many Iowans who are deeply troubled that Reynolds and GOP lawmakers refuse to recognize Medicaid privatization is failing or take action to fix it.  Instead of reducing health care costs, privatization has added more chaos and instability to our health care system.

When session begins in January, we need to work together to end Medicaid privatization. Iowans shouldn’t be denied the health care they need, health care providers deserve to be paid, and our tax dollars shouldn’t be handed over to out-of-state companies to drive up their profits.

We must do better.


Contact Leader Mark Smith

CAPITOL:
Iowa Statehouse
Des Moines, IA 50319
515-281-3221

PHONE: 515-281-3054

EMAIL: mark.smith@legis.iowa.gov

CONNECT: www.iowahouse.org

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