Medicaid provides health insurance to about 500,000 Iowans. For decades, the government program has been operated by the state, which is not beholden to shareholders. Spending has been held down by reducing fraud, paying lower reimbursements to providers and giving seniors alternatives to expensive nursing homes. On average, the annual cost to insure an Iowan with Medicaid is significantly less than insuring an individual with private coverage.
Yet Gov. Terry Branstad is seeking to hand over administration of the huge health insurance program to for-profit managed care companies. With $4.2 billion on the line, businesses are salivating at the idea of landing one of these contracts with the state.
Meanwhile, none of this makes sense to Iowans. Privatizing Medicaid will increase administrative costs as much as 300 percent. That is money not spent on actual health care. Iowans are worried about reductions in services, access to records and oversight of the private companies. A U.S. House of Representatives report found managed care organizations fail to report Medicaid fraud to state investigators, likely because they have no financial incentive to do so.