(The following was submitted to the Sioux City Journal in response to this editorial that appeared on December 20.)
The Iowa Hospital Association has been analyzing and evaluating the state’s plan for privatizing management of the Medicaid program since it was announced nearly a year ago. But long before that, IHA and Iowa’s hospitals accumulated years of experience with this arrangement through Magellan’s contract to manage Medicaid behavioral health services.
It is that analysis and experience that has led IHA to oppose the state’s privatization plan.
With Iowa’s low cost per beneficiary and minimal administrative overhead, the managed care companies will struggle to return any savings to the state. But make no mistake; these huge, for-profit, out-of-state companies that have fought tooth and nail to win a contract from the state will do everything they can to make money from this deal. To accomplish that preeminent goal, they will restrict access to care and they will reduce payments to providers.
This is not a guess or a threat; it is what managed care companies have consistently done across the nation to meet their business goals. In other states, these companies are known not as care managers, but money managers. They control costs by limiting access to care and reimbursement for care to meet their obligations to shareholders. With these restrictions in place, they may even save the state some money, but rest assured that savings will come at a price for Medicaid beneficiaries and the people who care for them.
And be aware that these companies are far more dedicated to shareholders than taxpayers, as evidenced by the research. A rigorous and recent Medicaid managed care study by the Robert Wood Johnson Foundation found that “any potential savings will not be significant” and that those savings “generally are due to reductions in provider reimbursement rates rather than managed care techniques.”
Meanwhile, Iowa hospitals and the state have already been working together to coordinate care and reduce costs. Through existing Accountable Care Organizations, Integrated Health Homes, the State Innovation Model and the Iowa Health and Wellness Plan, efforts are underway and creating positive results in Iowa – without the additional cost to taxpayers to cover an out-of-state company’s profit margin. In fact, the University of Iowa Public Policy Center released a report just this past March indicating that existing care coordination through Iowa’s Primary Care Health Home Program has generated 20 percent in savings ($11 million) in its first 18 months.
With results like these already occurring, why is the state looking to eliminate successful programs for an unsuccessful, unnecessary privatized model? And why is the Journal’s editorial board endorsing this plan, especially given the well-reported legal and ethical misdeeds of these companies as well as their botched rollout of the Iowa plan, which has been so poorly managed that the federal government was forced to step in and delay it?
There is no reliable evidence that Medicaid privatization reduces costs, improves quality or increases access to care. This is why Iowa’s hospitals encourage the Journal to reconsider its position and look beyond the claims and promises of companies that have no stake in Iowa, but simply seek to make money off of vulnerable Iowans.