Michael Randol, Iowa Medicaid Director, answers questions from the press during a news conference on Thursday, July 11, 2019, in Des Moines.
Kelsey Kremer, email@example.com
Iowa Medicaid Director Mike Randol’s belief in privatization is undaunted.
Randol agreed the state and federal governments should pay $386 million more to national insurers who are managing Iowa’s Medicaid program. But, he told reporters Thursday, he’s still confident taxpayers are saving money by having the work done by private companies instead of state employees.
“I’m a firm believer in managed care,” Randol said in a news conference.
It’s a controversial stance. Critics, including many patient advocates and care agencies, say the privatized Medicaid program has led to cuts in services without providing solid savings. But Randol and other supporters, including Republican Gov. Kim Reynolds, say it is making the system more efficient.
This is the second consecutive year that Iowa has agreed to give increases topping 8% to the insurers managing the $5 billion program. Randol declined to predict whether such large increases will be necessary to keep the program afloat next year. But he held firm to his belief that Iowa would be spending even more on Medicaid if it hadn’t switched to private managers in 2016.
“Those costs would be much higher” without care being coordinated by the insurers, he said.
Medicaid is the joint federal and state health insurance program for about 600,000 poor or disabled Iowans. Two companies, Amerigroup and Iowa Total Care, are being paid to run it this year. Two other national insurers, UnitedHealthcare and AmeriHealth Caritas, bailed out of the project over the past two years, saying the state wasn’t spending enough on it.
Randol told reporters that the system should stabilize now with Amerigroup and Iowa Total Care. “I’m very confident these two companies are here for the long term,” he said.
Rick Clark, whose daughter, Lindsay, relies on Medicaid for daily care, is skeptical. Lindsay Clark, 37, who has intellectual and developmental disabilities, was bumped off AmeriHealth and then UnitedHealthcare when those carriers pulled out. “I don’t think there’s anything to suggest it won’t happen again,” Rick Clark said in an interview.
Each time Lindsay Clark has to switch insurers, she gets a new case manager and sometimes has to shift care providers. Also, her father said, her care agency has been pinched to the point that it moved her from a house with one roommate to one with three roommates, which is stressful.
“I don’t think the state has produced a definitive cost analysis on managed care that allows anyone to make that statement,” he said. “There’s no public evidence they’re really saving money.”
Former State Auditor Mary Mosiman, a Republican, released a report last fall estimating that privatization was saving about $126 million a year. The staff of the current state auditor, Rob Sand, a Democrat who defeated Mosiman in November’s election, is currently auditing the system.
Clark said he’s not opposed to private insurers in general. But he said state leaders should be concerned about the fact that two experienced, national health-insurers have pulled out of the project. “To me, that’s a real danger sign,” he said.
Randol told reporters the increased payments to Amerigroup and Iowa Total Care should not be referred to as raises, because they reflect the rising costs the companies face. They also reflect legislators’ decisions to increase Medicaid payments to nursing homes and rural hospitals and to expand the state’s mental health system, he said.
Amerigroup is the sole remaining insurer out of the three that began managing Iowa’s Medicaid system in 2016. Reports filed with the state Insurance Division show the company made about $4 million in profit here last year, and nearly $8 million in the first quarter of this year, after losing more than $200 million in the previous three years.
Those profits came before Amerigroup negotiated its latest pay increase with Randol’s agency. But Randol said outside experts determined the increase was needed to cover Amerigroup’s costs.
Amerigroup officials did not respond to a question Thursday about why it needed the pay increase after starting to turn a profit in Iowa.
Amerigroup is covering about 345,000 Iowans, up from about 200,000 before UnitedHealthcare quit the program. Iowa Total Care, which is owned by the national insurer Centene, is covering about 230,000.
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