Everyone who will receive a 9% raise next year, please raise your hands — or clank your coffee mugs.
Among the very few who could do so are the insurance companies contracted to manage the State of Iowa’s Medicaid program this fiscal year, which started July 1.
Iowa is in Year 4 of the controversial and rocky transition from a state-run program to privatization of the $5 billion program serving 600,000 of the state’s most vulnerable citizens, the poor and disabled.
State officials disclosed Wednesday that they agreed to shell out $386 million more than they did last year to managed care organizations Amerigroup and newcomer Iowa Total Care. That’s a jump of 8.6%. The state will cover $115 million of it, and the federal government the rest. Last year, the increase was 8.4%.
There is a saying, “You get what you pay for.” We hope that it is holding true here. But hope is about all we can do, as there remain disagreement and disparities regarding patient outcomes and the financial impact of privatization.
Last November, the state auditor at the time, Mary Mosiman, said privatizing Medicaid saved the state $126 million in fiscal 2018. If so, the savings were barely half the rosy predictions given in 2015-16 by Terry Branstad, then the governor and impetus for privatization. The auditor’s number fell between the wide-ranging figures offered by Branstad’s successor and former lieutenant governor, Kim Reynolds. Even then, Mosiman’s conclusion was questioned by privatization critics, including state Sen. Pam Jochum, D-Dubuque, who noted that the figure did not include all of the money still owed health care providers.
Roughly 2% of the latest increase, officials say, is due to program and policy changes pushed by state legislators. The current contract increases the allocation for nursing facilities, certain health care facilities, including rural clinics, and providers of care for intellectually disabled. Reynolds said the extra funding is partly due to increased health costs generally and a response to health care providers who said they needed more money.
Iowans should recall that, as privatization was announced and implemented in 2015-16, the foremost defender of the decision (after Branstad) was Reynolds. As lieutenant governor and Branstad’s understudy at the time, it’s understandable that she would follow the company line. That she did.
Meeting with the Telegraph Herald Editorial Board in mid-January 2016, a couple of months before the official transition, Reynolds said, “It’s not going to be perfect. Any time you implement change of this magnitude, there’s always going to be some bumps in the road. There has been in every single state (that has privatized). But here’s the bottom line: We need to bring some stability to the cost of Medicaid.” Noting that the cost of Medicaid had risen 95% over the previous 10 years, without “healthy outcomes” for patients, she added, “I hope we can figure out a way to flatten that (expense) out or control it, or at least provide some stability in what it’s going to be.”
So far, not so good.
Costs under privatization have risen faster than they did when state government ran the program. And it should tell you something about stability when two managed care organizations in three years pull out; when a major health provider in these parts, Medical Associates Clinic, citing “instability and confusion in the Medicaid market,” opts to not contract with the newest managed care organization; when patients and providers remain upset; and when the governor abruptly dismisses the administrator she brought in just two years earlier to straighten out the mess.
Asked last week about the latest infusion of millions in light of the Branstad-Reynolds projections of savings under privatization, Iowa Public Radio reported, Reynolds responded that she is not Branstad. No, but she was his leading cheerleader for the transition. In any case, the governor said she intends to keep the Medicaid system sustainable for the long term.
To keep it sustainable, it must first be sustainable.
Iowa’s privatized Medicaid is not there yet, and it is incumbent upon the Reynolds administration to make it so — and soon. Hundreds of thousands of Iowans are counting on it.