Governor Approves $33 Million in Extra Payments for For-Profit Medicaid Providers

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

DES MOINES, Iowa -- Taxpayers are saving more than expected. Prescriptions cost more than anticipated. So providers should get more money than promised. That's essentially the argument Governor Terry Branstad laid out to reporters Monday during his weekly news conference at the Iowa Statehouse.

Word had already spread in state government that the governor would approve an additional $33 million for the three companies providing services under the program to privatize Medicaid services to the state's 560,000 lower-income and disabled recipients. The non-partisan Legislative Services Agency circulated the numbers on Friday about the change.

The governor said the state is actually realizing about $30 million more in savings that analysts originally expected. But the three providers claim they are suffering more than $100 million in losses so far since taking over the program earlier this year.

Some of that is attributed to rising costs for prescription drugs. Outrage has spread nationwide over some of those increases, including for the makers of EpiPen, the emergency drug used to treat severe allergies. 

And, coincidentally, on the same day Branstad announced he would give more money to the providers, a former Democratic presidential candidate tweeted about the high cost of drugs.

Branstad maintains that the additional payments to providers won't impact the project's bottom line. He had originally promised taxpayers $110 million in savings this year. He said he still anticipates that level of savings -- even after the additional $33 million payments -- because he said the providers have found other ways to save on overall costs.

"This is something that's just done in the normal course of business," Branstad said of the extra money that will now go to providers, on top of the existing required contractual payments for implementation of the $1.5 billion health services program.

Senate Democrats released a statement about Branstad's decision:

“Republican legislators made a terrible mistake by refusing to join Democrats in our opposition to Governor Branstad’s Medicaid mess,” said Senator Liz Mathis of Robins, a member of the Health Care Policy Oversight Committee.  “I’m concerned this new $33 million increase will be followed by demands for more money from the Wall Street firms now managing the health care of one in six Iowans.”