Branstad's Iowa Medicaid privatization more extensive than most other states

Here's a closer look at the plan's comparisons

Gov. Terry Branstad answers questions during a town hall meeting on Medicaid at the Historic Park Inn Hotel in Mason City. (Chris Zoeller, Mason City Globe Gazette)
Gov. Terry Branstad answers questions during a town hall meeting on Medicaid at the Historic Park Inn Hotel in Mason City. (Chris Zoeller, Mason City Globe Gazette)

DES MOINES — When defending his plan to shift management of the state’s $5 billion Medicaid program to private companies, Gov. Terry Branstad often says 39 other states have taken similar action.

Only a handful of states, however, have moved as many Medicaid patients to private management as Iowa has planned.

Iowa has been among those 39 states that deliver at least some Medicaid services through private companies, also called managed-care organizations, or MCOs, according to the Kaiser Family Foundation, a not-for-profit, nonpartisan organization that researches and studies national health issues and U.S. health policy.

If Iowa’s Medicaid managed-care plan is implemented March 1, however, it will join a much smaller group of states with the vast majority of its Medicaid patients served by private companies.

Roughly 630,000 Iowa residents receive Medicaid services, and all but 50,000 would be covered by managed-care organizations under the governor’s plan, according to the state Department of Human Services.

That means about 92 percent of Iowa’s Medicaid population would be covered by the out-of-state companies under the governor’s plan. Only five other states have 92 percent or more of their Medicaid patients covered by managed-care organizations, according to Kaiser.

Tennessee and Hawaii have their entire Medicaid population served by managed-care organizations, Kansas has 95 percent and New Jersey and Oregon 93 percent each.


Three more states have at least 90 percent of their Medicaid patients covered by managed-care organizations — Kentucky, Delaware and New Hampshire.

The most common rates of Medicaid patients under private management are between 60 percent and 80 percent of the population. Of states with managed-care organizations, 25 of the 39 states fall in that range.

In response to a question about why the governor compares Iowa’s transition to all 39 states with managed Medicaid, his office referred to a December 2015 letter from the federal Centers for Medicare and Medicaid Services to Iowa’s Medicaid director. In the letter, CMS said it has worked with 39 states and the District of Columbia “to transition some or all of their Medicaid beneficiaries into managed care.”

It also noted that more than 60 percent of the national Medicaid population is enrolled in managed care.

Democratic state lawmakers who oppose Branstad’s plan want to halt its implementation and go back to a fee-for-service model. That also would keep Iowa on the proportional fringes nationally: The state now has the fourth-highest rate — 51 percent — of Medicaid population in fee-for-service, Kaiser reported.

The only states with a higher rate are those with 100 percent of their Medicaid population in fee-for-service are Alaska, Connecticut and Wyoming.

Branstad in January 2015 announced his plan to shift management of the state’s Medicaid program to private health care companies. Three companies were chosen, and the program was to launch Jan. 1.

Federal officials delayed implementation, concluding after a review that the state was not adequately prepared. The program is set to launch March 1, pending final federal approval.


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Branstad and supporters said the transition to private Medicaid management will create cost efficiencies and ultimately yield more robust services and better health outcomes.

Critics have countered that the plan was rushed and implementation has been poor, and that Medicaid management by for-profit companies may lead to reduced services.

Medicaid, funded jointly by the state and federal governments, provides health care services to low-income children and seniors, and some adults and individuals with disabilities.



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