The following editorial was published in the Des Moines Register on July 19:
Elections have consequences. Among the consequences of electing a governor with an allegiance to privatized Medicaid: an additional $386 million in taxpayer money down the drain.
Gov. Kim Reynolds’ administration has agreed to give an 8.6 percent raise this fiscal year to Amerigroup and Iowa Total Care, the two for-profit insurers contracted with the state to manage the $5 billion health insurance program for poor and disabled people. Iowa Total Care has been insuring Iowans for less than three weeks.
It would be a different matter if the additional money were going directly to pay for services needed by vulnerable Iowans. But with privatization, a big chunk of it goes to insurers’ profit sheets.
Here’s what the 2016 privatization of Medicaid, led by former Gov. Terry Branstad and continued by Reynolds, has looked like: Vulnerable Iowans have lost care. One disabled man died after being forced from his home to an out-of-state facility. Health providers report not being paid by insurers. State workers scramble to address problems. Taxpayers, who were told privatization was supposed to save money, watch as the state for the second consecutive year agrees in secret negotiations to give insurers increases topping 8 percent.
Last year’s boost of $344 million meant legislators had to come up with more money in the middle of the budget year.
The governor’s solution: Throw more money at the mess. Reynolds and Medicaid director Mike Randol do not explain where the state is going to come up with its share — $115 million — to cover the latest pay raise to the for-profit companies. They attempt to put a happy face on all bad news related to privatization.
Reynolds says the state now knows what relying on for-profit insurers costs. “We’re not projecting or guessing. We have actual data we can base this off of,” she said.
Really? Where is that data? Explain how much privatization is going to cost going forward. If her administration has solid information, why did Randol decline to say whether the state will fork over more money next year?
Privatization is a choice. Branstad chose to put the state on this path without approval from Iowa lawmakers. Reynolds can choose to return Medicaid management to the state, which does not seek to turn a profit or please shareholders or pay huge CEO salaries.
Medicaid was operated by the state for five decades. It had low administrative costs, transparency and made timely payments to providers.
Now Iowa has high administrative costs, secret payment negotiations and struggling health providers.
Reynolds chooses to allow the state to be held hostage by private insurers who repeatedly demand more money, receive it and still jump ship. UnitedHealthcare and AmeriHealth both abruptly departed within the past two years, leaving vulnerable Iowans to figure out their care with a new provider. The two current insurers can pull out at any point.
Then what? The state will beg another for-profit company to manage a health insurance program that should be managed by government.
Under privatization, hundreds of millions of precious public health dollars go to insurance company “administration” instead of paying for knee replacements, heart surgery, medications, mental health counseling and other actual health care for Iowans. Reynolds can choose not to do that. She can choose not to give private insurers another pay raise.
And she can choose to be a Republican who really stands up to misspending and wasting taxpayer money. Iowa’s GOP leaders refuse to adequately fund everything from education to the environment, yet they say nothing when this administration shovels more money to for-profit insurers.
Meanwhile, Iowans are simply supposed to believe privatization is saving money and improving health, even though there is no evidence of either. Three years into this experiment, we are apparently supposed to shut up, pay up again, smile and nod.