One Year Ago Terry Branstad Unilaterally Privatized Iowa’s Medicaid Administration.
It Has Been A Disaster.
One year ago today – April 1, 2016, Governor Terry Branstad completed his goal of handing huge amounts of taxpayer money over to private business based on some vague promises. If my memory serves me, there were never any documents produced that gave any details as to how this was to be accomplished.
So one year ago, totally ignoring warnings from Democrats, the health care industry including providers and hospitals, and the end consumers, Branstad handed over the running of Iowa’s Medicaid system to 3 administrative companies.
The three Managed Care Organizations (United Health Care, Amerigroup, and AmeriHealth Caritas) take nearly 15% right off the top of Iowa’s $4.9 Billion Medicaid system. That is somewhere in the neighborhood of $750 Million per year. Prior to the unilateral privatization by Governor Branstad the cost to administer Iowa’s Medicaid program was pegged at 4% or about $200 Million. http://iowastartingline.com/2017/01/02/a-plan-to-fix-iowas-medicaid-mess-and-expand-healthcare-access/
One of Branstad’s selling point – although there was no selling of this change just an imposition from the top – was that the MCOs would be saving Iowa $110 million a year. Simple math shows that paying an additional $550 million to save $110 million leaves a deficit of $440 million.
As if that wasn’t bad enough, the MCOs immediately started pushing for more money even before the ink was dry on the contract. Branstad threw them an additional $33 million in October, but they wanted much more.
Back in December, the Des Moines Register (via the Commercial Appeal) reported that Iowa upped the offer to the MCOs, but the MCOs scoffed at the offer:
“One managed care executive wrote that Iowa’s recent offer to give the companies an extra $127.7 million in state and federal money this budget year “is not acceptable.” He added that without major changes, the privately run Medicaid program could be unsustainable. None of the three companies has agreed to accept the size of the increase in money they would receive for covering poor and disabled Iowans.”
There is no mention which budget pot that this money would come from, but it is quite reasonable to imply that the money would come from your tax dollars in some form and from cutbacks in care for Medicaid recipients. In short Branstad’s Medicaid privatization plan has been little more than a scam to funnel money from your pocket and mine into the the corporate pockets of the insurance companies that ultimately own the MCOs.
What we get in return for our tax dollars being funneled to these corporations is is less care for those who desperately need it. This is what Republicans call a win-win.
Adding another $130 million to the $750 million already coming out of the care pot makes the total percentage for administration nearly 20% as opposed to the previous 4%. Thus the funds available for actual care dollars is reduced from 96% to about 80%. Or in dollars that is $900 million to save $110 million. Seems like a really bad deal to me.
As a taxpayer, I would much rather see my dollars go into the actual care of patients, especially those who can’t afford for whatever reason to pay for themselves.
One other question that still goes begging is just where this extra payment for the MCOs will come from. Does it come from the Medicaid pot or will it come from some other state fund? Remember that the REC (Revenue Estimating Conference) has twice already this year warned that the state will be way short on estimated revenues. This has lead the legislature to make across the board cuts to budgets and to consider tapping the rainy day fund.
Branstad’s and Iowa’s experience with this Medicaid disaster is one of the simplest examples to use when showing the difference between a single payer system and anything with a middle man between you and your doctor, no matter how rich or poor you are. As illustrated here, we see that the MCOs speak little of the care that the end user gets which should be the focus of such a system. Instead the focus is on the money that the private, for-profit middle man is getting. Restricting care is one of the ways to ensure their profit.
Using Iowa’s experience it is easy to see that getting the care is best done through a system with low administrative cost with adequate safeguards and checks built into the system.
Last week Paul Ryan expressed a dream how important cutting Medicaid is to him and no doubt millions of other Republicans when he said:
“We’ve been dreaming of this since I’ve been around,” Ryan says, before interrupting himself to clarify exactly how big of an opportunity this is, “since you and I were drinking out of kegs.”
Because, you know, if you can’t pay for your own health care then face the consequences.
Democrats on the other hand would love to see a single payer system with all citizens treated the same – no matter their health or wealth with no one between you and your doctor skimming off the top and adding nothing.