Taxpayers Will Pay 8.6% More to Private Companies for Iowa Medicaid Management Services

DES MOINES, Iowa -- Iowa Governor Kim Reynolds' administration has agreed to an 8.6 percent overall increase (in total state and federal dollars) in the amount of money going to the two private companies under contract to manage Medicaid services to 575,000 low-income, poor and disabled residents. The increase follows an 8.4 percent increase the previous year. The department of human services announced the new contract details Wednesday.

Look at the details in the new contract here.

The top Democrat in the senate, Janet Petersen of Des Moines, sent out a release that said the new agreements show that the decision by previous Governor Terry Branstad to turn over management of Medicaid isn't delivering the savings he stated. "The big cheerleaders for privatized Medicaid – Governor Reynolds and Republican legislators –cannot back up their claims that privatizing would save money and make people healthier. That’s because it hasn’t happened," Petersen said in the statement.

Petersen's statement also pointed out that the built-in increases for private companies are higher than what those yearly increases were when the state managed the system. “Governor Reynolds has once again agreed to give the MCOs the largest dollar increases for Medicaid in the last decade. The publicly managed Medicaid system grew at an average of 5% each year over a 10-year period before privatization. Last year, the increase was 8.4%. The increase announced today is a whopping 8.6%!" Petersen's statement read.

Branstad had predicted that the switch to private companies would save taxpayers $232 million per year. But that has not happened. In 2018, Mary Mosiman, Republican state auditor at the time, found in an audit the state only realized about half of Branstad's promised savings. 

Reynolds was lieutenant governor when Branstad began implementing the switch in 2015. Now, as governor, she said that she is improving the situation that her predecessor left. "I'm not Governor Branstad," Reynolds told reporters, "I'm Governor Kim Reynolds. When I was sworn in to office, I said to the legislature and to Iowa...you know, we made some mistakes moving forward. We're addressing those. It's not going to happen overnight. We're working every day."

Reynolds couldn't say how much overall that the state is saving with the current privatized system versus what Medicaid delivery would have cost if the previous system under state management would have stayed in effect.

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