New Letters Show Kim Reynolds’ Medicaid Privatization Is Falling Apart

Just one week ago Senate Democrats pressed Iowa officials at an oversight meeting how the state was saving all the money it claimed on the Medicaid privatization system. They were met with vague answers and generalities. Today the real answer became more clear thanks to an open records request from the Des Moines Register: Iowa just isn’t paying the healthcare companies.

“Catastrophic” was the word used by one of the managed care organizations to describe the current state of affairs with the Reynolds/Branstad privatization effort, in a letter they sent to state officials. The state’s actions “jeopardizes the sustainability of the Iowa Health Link program,” said another. The three organizations’ blunt appraisal of the setup confirmed many Iowans’ worst fears about the rushed and secretive switch over to a privately-run Medicaid system.

Last year Lt. Governor Kim Reynolds and Governor Terry Branstad embarked on a unilateral, massive restructuring of how Iowa delivers healthcare to Medicaid recipients. Three for-profit healthcare corporations were given control of running those health services, which serve Iowa’s disabled citizens and others most at need of help. The structure ended up much less transparent than the public version and legislators were quickly flooded with horror stories of healthcare providers going unpaid and patients having to traverse a new system full of red tape that didn’t always provide the same care as the former.

Reynolds and Branstad have claimed that the state has saved more than $110 million, but Democrats poked holes in that rationale throughout the process.

“This savings thing has kind of been a phantom number for some of us. It’s a guesstimate, right?” State Senator Joe Bolkcom challenged the state administrators at the hearing last week. “It’s kind of been a smoke and mirrors and I sure hope that at some point as you continue to tell us that we’re saving money that we can tie it back to specific services or conditions that change.”

The reply from the Department of Human Services chief financial officer hedged on the details.

“Savings to the state from our perspective is the difference between what we would have paid for the program and what we will pay for the program now,” said Jean Slaybaugh of DHS.

The senators complained to the state officials about the lack of detailed data they were providing to the public. It turns out the private managed care organizers were running into the same problems. They complained that the original cost estimates provided to them before the program began had “major discrepancies” and were “severely underestimated.” AmeriHealth said they were “extremely disappointed” in the offer and even accused the state’s extra funds as being “not actuarially sound and is not acceptable.” They also complained that they weren’t getting good communication from the state’s actuary firm.

“As a state legislator, when you’re working with taxpayer dollars, I want to make sure there’s some sustainability here,” State Senator Liz Mathis told the managed care administrators last week. “We don’t want to see someone leaving and leaving Iowans in the lurch … The state is going to save $118 million, at the same time you’re sitting here losing money … The Governor said you were in for the long run, which I hope that’s still true.”

The healthcare administrators as well dodged on committing to anything, and wouldn’t say whether they might raise rates in the next fiscal year. But given today’s revelations in the released documents, it seems like there is a very real possibility that Kim Reynold’s and the state’s handling of the transition could lead to one or all of the healthcare companies abandoning the system. That would leave tens to hundreds of thousands of Iowans with serious health issues out in the cold, all thanks to Branstad and Reynolds’ unilateral decision.

by Pat Rynard
Posted 12/21/16