Medicaid Privatization Opponent Questions The Program's Viability

Dec 22, 2016

Opponents of the privatization of Iowa’s Medicaid system say recent revelations show the program should not be run by for-profit companies. A Des Moines Register report this week revealed the three companies in charge of Iowa Medicaid say they are facing dramatic losses.

When private companies took over Iowa’s Medicaid system in April, many wondered if they could make a profit. The companies claimed profits would come as a result of better management, but now they say underfunding is threatening the program’s stability and that state payments are insufficient.

In October,  the state agreed to pay the three managed care organizations an additional $33.2 million, citing unexpected increases in pharmaceutical costs. Due to matching federal funding, it boosted the entire rate increase to $127.7 million. 

But the Register's report showed the companies are saying this increase is not enough. 

"I'm hopeful the companies will continue to be involved, but I think there's a definite risk that one or more might pull out," says State Sen. Joe Bolkom of Iowa City, a vocal opponent of privatization. "It might be time to have a conversation about transitioning back to the way we used to do it."

Governor Terry Branstad says Medicaid privatization will still save Iowa more than $100 million in the next budget.