Medicaid Privatization in Iowa and the Market State

By Lambert Strether of Corrente.

I hadn’t written on health care for awhile, but sadly, whenever I put on my yellow waders and dig in, I keep coming up with stuff that’s so nasty it’s hard to stop. This post was inspired a link that a reader from Iowa, incited by a previous post on ObamaCare’s crapification, threw over the transom (so please, readers, keep doing that). And I hear Iowa has a caucus of some sort coming up, plus Iowans like to meet and speak with their candidates personally, and the issues with Iowa’s for-profit privatization of Medicaid menagement involve a few billion and several hundred thousand lives, so it seems like this is the sort of issue that might be brought up, face-to-face, when a candidate is trapped in somebody’s living room, especially since the Feds have to give Iowa a waiver for the program to proceed. Mostly, I’m going to follow the money, instead of mere human suffering.

First, I’ll summarize Iowa’s plan to use for-profit contractors to manage Medicaid; then I’ll look at the signs of corruption in the contracting process, which as we shall see would give pause even if we were looking at Albany or (heaven forfend) Chicago, despite Iowa’s reputation for clean government; then I will show that the premises for Iowa’s privatization effort are false, since experience shows that their program will neither save money nor improve care, and there are not-for-profit alternatives available; and lastly, I’ll glance at the ideological underpinnings for these efforts (“the market state”).

Iowa’s Plan to Privatize Medicaid Management

Osceola Republican House member Joel Fry describes Iowa’s proposed plan in the Osceola Sentinel-Tribune:

On a managed care system, Iowa Medicaid Enterprise will contract with managed care organizations (MCOs) to pay for health care services. These MCOs will then contract with providers across the state to provide care to Medicaid recipients.

The goal of the program is to improve quality and access, have greater accountability for outcomes and create a more predictable and sustainable Medicaid budget for the state.

On Monday Aug. 17, the Department of Human Services issued a notice of intent to award contracts for the following four managed care companies: Amerigroup Iowa, AmeriHealth Caritas Iowa, UnitedHealthcare Plan of the River Valley and Wellcare of Iowa. These contracts will be finalized in September.

The Medicaid program currently serves nearly 600,000 Iowans each year, which is about 22 percent of Iowa’s population. Currently, Iowa Medicaid Enterprise is the state’s second largest health care payer. The amount of $4.2 billion is spent each year on Medicaid services. The managed care program is set to begin on Jan. 1, 2016.

So, ka-ching. Billions up for grabs! Importantly, Iowa will need a Federal waiver to go through with program (that’s why the delay until January). Since the Iowa caucuses will held in February, there’s ample opportuinity to pin the candidates down on where they stand on this issue, and even bring some pressure to bear back in Washington.

Signs of Corruption in Iowa’s Privatization Effort

As NC readers know, corruption isn’t only about the quid pro quo — although in Iowa there’s “pay to play” too! — but the “self-serving use of public power for private ends.” In this case, all these self-serving uses center on the contract selection process.

Secret Decision-making. Governor Terry Branstad kept his proposal under wraps, but potential contractors knew about it before the public did:

Governor Terry Branstad didn’t run for re-election last year on a plan to let private insurance companies manage health care for some 560,000 Iowans on Medicaid. He didn’t work with key state legislators to draw up his administration’s “Medicaid Modernization” plans. … [K]ey lawmakers like the chair of the Iowa Senate Health and Human Resources Appropriations subcommittee didn’t learn that four private companies would be selected to handle almost all Medicaid services until the Iowa Department of Human Services made its request for proposals public in February. Those news stories point to a conclusion that isn’t getting enough attention: various insurance companies and their paid representatives knew what was coming down the pike long before the Branstad administration disclosed its plans to privatize Medicaid.

And one can only wonder what those insurance companies did with that information asymmetry, eh? Of course, secrecy is not corruption per se, but it certainly enables corruption by sheilding the process from public view. (A programmer would call the presence of secrecy “code smell”; the exact function one is looking at may be OK, but the it’s written with styles or structures that mean bugs elsewhere are very likely to be found. (If you regard corruption as a bug, of course)). As we shall see.

Pay-to-Play. Here’s a listing of the bribes campaign contributions that the contractors threw around. From the Des Moines Register:

Some of Iowa’s top elected officials — most notably Gov. Terry Branstad — have accepted tens of thousands of dollars in campaign contributions from some of the companies that vied for lucrative contracts to manage Iowa’s annual $4.2 billion Medicaid program. Branstad, meanwhile, insists [of course, of course] his decision this year to hire private companies to manage the state’s Medicaid program had nothing to do with the $38,086 in campaign contributions he received from companies that sought the Medicaid contracts. Other top recipients include state Rep. Kraig Paulsen, R-Hiawatha, the outgoing House speaker, with $4,300; and state Sen. Michael Gronstal, D-Council Bluffs, the Senate majority leader, with $3,300.

Ka-ching. Note that legislators from both parties cashed in; corruption is a thoroughly bipartisan affair. Note also the fabulous return-on-investment available: A few tens-of-thousands to win a ten-billion contract!

A Flexian Infestation. As we know from computational anthropologist Janine Wedel’s work, a Flexian “is a creature peculiar to our moment in history: a mover and shaker who serves multiple, overlapping roles with smiling finesse—business consultant, think tank fellow, government adviser.” Needless to say, Flexians[1] are all about “the self-serving use of public power for private ends”; it’s questionable that they even accept such a distrinction. We’re accustomed to thinking of the Beltway as the Flexian’s native habitat, but clearly they exist at the state level, too. Here is an example of the Iowa species. Renee Schulte is a Cedar Rapids Republican who now works as a health care consultant. From the Des Moines Register:

The same month [Schulte] helped a Florida-based company land a lucrative state contract, an Iowa Department of Human Services consultant terminated her work with the state to join that company. Schulte’s consulting firm was paid almost $100,000 a year to assist DHS’s mental health division since January 2013, but terminated its contract Feb. 20, four days after Gov. Terry Branstad announced the state was seeking competitive bids to contract with private companies to manage Iowa’s Medicaid program.

And Schulte shared information with the bidders while the contractor selection process — the very fact of the process — was still secret.

[Schulte’s] role is casting doubt on the process used to select companies to manage Iowa Medicaid, with one losing vendor alleging she provided an unfair advantage to WellCare, a winning bidder, after working as a state contractor. A second losing bidder claims the ex-state representative, Renee Schulte, gave its lobbyists inside information that shows a key evaluator had made “derogatory comments’

That woudn’t pass the smell test if Cedar Rapids were putting some new curbing out to bid, so why is it OK with four billion and hundreds of thousands of lives at stake?

Questionable Legality. In fact, the entire award may not be legal, because all the stakeholders[2] officials who must, by statute, write the requirements weren’t involved:

Chairwoman: Is Iowa’s Medicaid privatization legal?

The chairwoman of a state program that provides health insurance to children of poor families is questioning whether Iowa has acted legally with efforts to privatize management of the system.

In an Aug. 21 email to Chuck Palmer, the director of the Iowa Department of Human Services, Hansen cited state law that says her board is responsible for developing the criteria on which any administrative contractor would be selected.

In response, the DHS announced a special meeting, which was scheduled for Sept. 2. That meeting was canceled on Aug. 28 by Robert Schulueter, a DHS bureau chief. Emails obtained by the Register stated the meeting had been scheduled prematurely.

DHS spokeswoman Amy Lorentzen McCoy didn’t directly answer a question about whether the agency had the legal authority to move forward with the privatization efforts for hawk-i without the board’s approval. However, she said in a written statement that the department regularly enters into contracts and makes changes for the program.

And if the award were, in fact, legal, you know what McCoy would have answered the question.

Criminal Contractors. The selected contractors are guilty of fraud:

Each of the four companies selected this week to manage Iowa’s $4.2 billion Medicaid services program has faced serious charges of fraud or mismanagement and some have resulted in hundreds of millions of dollars in fines, according to public records

(The link shows not just “charges,” but convictions and fines.) What could go wrong?

The Existing System Works, so There is No Need for Change. The Quad City Times editorializes:

Iowa Editorial: Feds should stop Medicaid privatization

About 550,000 low-income Iowans rely on Medicaid health insurance. The program, administered by the state, has low administrative costs. It has held down spending by reimbursing providers modestly, reducing fraud and giving seniors alternatives to expensive nursing homes. Medicaid in Iowa spends less per person than the majority of other states, while still providing comprehensive coverage.

So why are we changing it? From what you have just read above, probably for no good reason.

Iowa’s Privatization Effort is Based on False Premises

Privatization advocates justify their systems of rental extraction on grounds of lowered cost and improved quality. Neither is true.

Privatization Does Not Improve Quality or Reduce Costs. A National Institutes of Health paper by David Himmelstein and Steffi Wollhandler (2008) discusses the general case:

Privatization in a publicly funded health care system: the U.S. experience.

The United States has four decades of experience with the combination of public funding and private health care management and delivery, closely analogous to reforms recently enacted or proposed in many other nations. Extensive research, herein reviewed, shows that for-profit health institutions provide inferior care at inflated prices. The U.S. experience also demonstrates that market mechanisms nurture unscrupulous medical businesses [see above] and undermine medical institutions unable or unwilling to tailor care to profitability. The commercialization of care in the United States has driven up costs by diverting money to profits and by fueling a vast increase in management and financial bureaucracy, which now consumes 31 percent of total health spending. … The poor performance of U.S. health care is directly attributable to reliance on market mechanisms and for-profit firms, and should warn other nations from this path.

Medicaid Managed Care Is Unlikely to Improve Quality or Reduce Costs. And that’s what Iowa, for some reason, wants to do. From a Robert Wood Johnson study in 2012:

There is little evidence of national savings from Medicaid managed care, but a few states have had some success. The states that did realize cost savings were more likely to be states with relatively high reimbursement rates under fee-for-service.

Medicaid managed care has had mixed success in improving access to care. There is some evidence of increased likelihood of a usual source of care and reduced emergency department visits, but pregnant women were generally no better off under managed care then in fee-for-service.

Quality of care in Medicaid managed care has not been well studied, making it difficult to compare quality in fee-for-service to managed care. This is surprising given that states require performance measures for all managed care plans.

Here’s why:

  • Fee-for-service rates are already so low that it is hard to get additional pricediscounts.
  • States were using prior authorization and utilization review even before moving enrollees to managed care.
  • Co-payments for Medicaid beneficiaries are low, making it more difficult to incentivize care-seeking behavior.
  • Health plans have limited ability to change traditional delivery systems or address the social determinants of health, both of which play a large role in the fragmented care Medicaid enrollees receive.

(This process is playing out now in Florida, where is looks like the contractors lowballed the bid, and then came back with their hand out for a 14% rate hike.)

Fraud is a Given. First, do the math. United Healthcare was one of the contractors selected by Iowa:

The California Department of Insurance (DOI) Commissioner Dave Jones has issued an historic decision to impose penalties against United Healthcare of more than $173 million dollars for 900,000 violations of the insurance code from 2005 to 2008. This is the largest administrative penalty ever assessed against a California health insurer or plan.

The fine comes out to around two-hundred bucks a pop; in other words, a cost of doing business. And no executives went to jail. So does how fraud is handled under Medicaid remind you of anything? And I would dearly love to know what United Healthcare’s total and continuing take is, not just in California but across the country, but in most cases we can’t, because records are often sealed, and cases are scattered across jurisdictions, making them hard to track.

Second, your typical neo-liberal economist will, at this point, mumble something about reputational damage, but that’s obviously bogus; a $173 million fine in California didn’t prevent United Healthcare from winning a contract in Iowa.

In fact, even Iowa Governor Bransted accepts that fraud will always happen. Radio Iowa:

BRANSTED: If you look at the four companies, they’re all four very substantial companies that have had significant experience and I guess I’d challenge you to find any Medicaid provider of any magnitude that hasn’t had some issues in the past. That’s just kind of the nature of it.

“That’s just kind of the nature of it.” The mind reels. To be fair, Bransted is right; it’ s not just the four contractors Iowa selected that are corrupt; it’s all of them! The Des Moines Register:

each of the four companies selected to manage Iowa’s Medicaid program has faced serious sanctions or lawsuits. This is no coincidence. Almost all of the 11 companies that submitted bids for the managed care contract also faced similar sanctions and/or lawsuits.

So, TINA. We have no alternative but to enter into business relations with fraudsters to deliver services to citizens.

Profit-making Entities Have No Secret Sauce. Here’s an example of a successful Medicaid management system in North Carolina run by doctors, which (ka-ching naturally) the state legislator is trying to replace with one run by health insurance companies. From the Laurinburg Exchange:

A state audit released last month found that Community Care of North Carolina, whose network serves Scotland County, saved North Carolina Medicaid nearly $400 million per year over the past two years.

Community Care of North Carolina is a managed primary care program that oversees the delivery of healthcare services to 1.4 million people covered by Medicaid.

According to the CCNC, this was a direct result of the program’s emphasis on primary care services being managed through a medical home, and access to specialty care is coordinated through the primary care physician.

And from the Fayetteville Observer:

The audit measured results achieved by Community Care of North Carolina from 2003 through 2012. The physician-led program has won national acclaim for its effectiveness in running the health-insurance program for the poor and disabled.

According to the audit, Community Care succeeded in managing medical conditions and keeping patients out of the hospital. That resulted in savings of about $78 per user per quarter, which adds up to saving state and federal taxpayers something approaching half a billion dollars a year.

But that doesn’t mean the legisators won’t try to kill it:

Most lawmakers would likely agree that we’re talking real money there, yet the drive for privatization still has its hooks in the Senate, our legislative branch most driven by ideologues.

So let’s look at the ideology.

The Market State and Privatization Efforts

Even leaving aside ka-ching the material incentives — which, again and amazingly, amount to thousands of dollars with billions in play — there seems to a world-view (“that’s just kind of the nature of it”) in operation, shared by all players and both parties, about what the state should (and should not) do, that prevents alternatives from being considered or even named. In the past, I have dubbed this world-view, this ideology, as “the market state”:

[I]t’s not “privatization.” Or it is, but it’s also something larger: A change in the constitutional order…

1. Nation-state: The role of the state is to provide services for its citizens. [For example, through single payer].

2. Market state: The role of the state is to determine which provider shall collect rents for delivering a service to consumers. [As we have just seen in Iowa.]

I believe that the transition — the change in the constitutional order — from “nation-state” to “market state” began with the neo-liberal ascendancy in the mid-70s and is now in full flower (and, one hopes, ready to rot and die. Forty years is a long time in politics).

We can see how pervasive the ideology of the market state is when we look at the solutions to Iowa’s problems proposed even by people of good faith:

“This is a classic example of government contractors buying contracts from the state of Iowa,” [Craig Holman of Public Citizen] said. “When you allow companies to essentially buy these contracts through campaign contributions, the contracts are being awarded based on money and not on the ability of these companies to fulfill the contract or offer the best deal.”

So, even Public Citizen’s solution is simply to fix — somehow — the process of determining service providers. Heaven forfend that the providers be non-profit (as in North Carolina) or even that the State deliver services directly (which seems odd, given that profit-making entities have no secret sauces, and the State can be put under democratic control).


Again, why Iowa? Because I hope the Iowa caucuses will provide citizens with opportunities to raise these issues with candidates, and hopefully make a fuss in Washington. And while we’re at it, why not single payer? Why not cut out the Flexians, and the rental extraction, and the corruption altogether?


[1] Roy Poses, whose post appears today, uses the revolving door metaphor. I think Wedel’s “flex net” approach is far more powerful.

[2] “Stakeholders” is a horrible word because it falsely equates regulators (the state) with the putatively reguiated (industry, or rather, business). Watch out for it.

I’m leaving comments open so readers can share comments on Medicaid in their own states.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. GlennF

    Great post Lambert.

    You stated “I believe that the transition — the change in the constitutional order — from “nation-state” to “market state” began with the neo-liberal ascendancy in the mid-70s and is now in full flower (and, one hopes, ready to rot and die. Forty years is a long time in politics).” Unfortunately the neoliberal takeover is progressing nicely. Every aspect of government from the military, (Academi/Blackwater has a 20,000 man private army available to protect the elites) on down is currently being privatized. (Read this excellent rundown: . It won’t stop until there is a separate corporate run state, providing all the services of our current government, operating along side a shell-of-its-former-self public system – or we don’t take it anymore.

    1. Lambert Strether Post author

      Well, I think we need to think and plan past and through battle, campaign, and war into grand strategy. So this post is a feeble attempt to really define the enemy for that purpose.

    1. Carla

      Ohio Governor John Kasich is not spending much time in Iowa, but is making a major investment in the New Hampshire presidential primary. Since he is viewed with approval by many “moderates” as not only a presidential prospect but also a strong vice presidential candidate, everyone should know that he was in the ground floor of ALEC as well:

      “Kasich’s influence [in ALEC] is likely due to his unique history with the organization. In 1977, Ohio State Senator Donald ‘Buz’ Lukens took over the helm at ALEC and would go on to become its longest serving National Chairman. Lukens’ legislative aide at the time was John Kasich… Kasich may have spent substantial amounts of time staffing the organization in its formative years before he would go on to win his own legislative seat and join the organization as a member.

      Kasich’s involvement doesn’t end with his time in the legislature. Kasich was recently photographed attending an ALEC meeting on December 1, 2010,
      where he is seen talking to private sector members. Kasich has not only signed a number of ALEC influenced bills into law, he also introduced major initiatives
      in his 2011 State of the State address that were similar or identical to ALEC proposals taking root in other states. For example, weeks before Kasich announced his prison privatization proposal on March 15, 2011, Louisiana Gov. Bobby Jindal, ALEC’s 2011 “Thomas Jefferson” Freedom Award winner, introduced a very similar measure. As a result of Kasich’s measure, Ohio’s Lake Erie Correctional Institute was bought by Corrections Corporation of America (CCA), which had spent two decades sitting on ALEC’s Public Safety and Education Task Force, an ALEC body which approved numerous model bills to privatize prisons and increase sentences.”

      Some Ohioans expect Kasich’s presidential bid to implode when the national media exposes his corrupt dealings in for-profit charter schools and prison privatization.

      I am not aware of specific efforts to privatize Medicaid in Ohio–after all, such a bang-up job is already being done in the health care arena by Medicare Advantage Plans and Obamacare.

  2. Oldeguy

    Need I really say that this is a heaven sent PERFECT opportunity for Bernie to showcase Medicare for all in glaring contrast to the dying ineffective, inefficient, corrupt boondoggle the current system has become.
    Since Medicaid impacts state budgets, whereas Medicare does not, and the Medicaid covered population is composed of the poor and the powerless, it is the “unloved step-child” of state budgets.
    Illinois was so notoriously “low and slow” in its payments that many specialty practices simply refused to see Medicaid patients; those who did regarded it ( accurately ) as “charity work “.
    10 Points for this one Lambert !

  3. Left in Wisconsin

    Walker tried a similar ploy in Wisconsin this year but was mostly beaten back by well-organized opposition – original proposal died but amorphous language may still allow considerable mischief. Similar ploy = no mention during campaign, no consultation with affected parties or groups, former health care lobbyist serving as Walker’s chief of staff, no financial estimates of savings (because no actual savings to be achieved), etc.

    While the “market state” may be approaching early middle age, this is still early days and most of what has been privatized thus far is the low hanging fruit. The big market opportunities – esp health care and education – await.

  4. JTMcPhee

    …and don’t forget Governator Skeletor Sick Rott, down here in FL. Yah, lest we forget: That guy, and his cronies.

    This is personal for me. The nurse I used to work with, a single mom with a daughter who is profoundly impaired by cerebral palsy, got a nice note a couple of weeks ago. Seems SickRott dumped all the Medicaid Waiver gatekeeper middddddle-person rent collection skim-opportunity cruelty-enhancement-and-enforcement functions into one of his buddy’s laps, via a corporate sheell called Univita.

    My friend has loved and fiercely cared for her daughter for 25 years now, worked full time, sometimes several jobs, and can work only if she can get a nurse to provide home care for her daughter while my friend is at work. She pays her taxes, has managed to buy a house, is a good friend to her friends and cares for her parents’ needs too. An artist in glass, paint and all kinds of stuff involving yarn.

    So SickRott’s shill’s Surprise was a note from the “medical UNsurance provider” that was forced to use Univita to do all that money-IT-transfers-clearance-utilization-review-regulatory-compliance sh”t that the sickness-insuring UNsurers already had people on board (whoops! over the side you go!) do. Run like a business, but whoops! Run into Medicare review and enforcement, of all things, saying “Sorry, after you stopped paying the actual health care providers, racked up tens of thousands of complaints about people not getting paid for nursing and home care and wheelchairs and catheters and all the other sh”t that “medically needy” people already determined to qualify for, even under the miserable Pecksniffian Faginian tightwad regulations, we are terminating your Medicare agent position.” And then, of course, to avoid any accountability, run into bankruptcy. (Bear in mind that in many parts of FL and the rest of the country, the Medicaid payments for medical services are tiny and constantly being whittled down by the sh”ts that rule us, to the point that there are damn few doctors and other providers that will even “provide” to the ailing person whose”insurance,” that sine qua noon that must be presented to all the front-office medical gatekeepers before one even has a chance to “be seen.”) The Univita barstids could not be bothered to pay along the money that was supposed to go for “medical carehahahahahahaha,” but they seem to have paid themselves dang well what a surprise…

    Lots of links for detail, here:

    General stuff on MediFraud, here:

    What that meant for my friend is her daughter’s nurse, who looks after her during the day, five days a week, and was paid through a home care agency, was not getting paid and in fact was supposed to “down tools” and move along. That meant that my friend would have to stay home, full time, to care for her daughter’s medical and emotional needs, full time, so she would no longer be able to work, “full time.” Which meant dependence, food stamps, all the other F{{KED FL “programs” for our neediest fellow humans, rather than payroll income and taxpaying and “contributing to the f&&king ‘recovery.'” And Groaf, of course. Maybe lose the house? no question.

    And there’s more — after the SickRottians bought power in 2011, all kinds of fun for the lesser people. One scam was to try to force all the people like my friend’s daughter into “institutions,” which I and she know enough about to know it would be a death sentence for a child who can’t turn and position even, let alone toilet or ambulate or feed herself and has lots of other challenges and limitations but in spite of that has a wicked sense of humor, can paint, and knows what’s going on. But that “turnover” would have favored a SickRott buddy who had a nice corner on the “institutions,” apparently. In the name of cost-savings and efficiency, of course. This has been tried several times before just in FL, and many more elsewhere in the country. People who are safe and stable and well cared for and loved in their homes, shoveled into the Mouth of Moloch to ensure the prosperity of the Elite. Same outcome, health-wise and even cost-wise – it’s a lot more expensive to f””k over a person in a “nursing home” than to pay the bit that it costs to support care in the person’s actual home. Sort of a happy ending to that little episode, enough decent people got off their butts to even embarrass the Fokkkers who rule us into grudgingly continue funding home care AT HOME, sort of.

    Also a happy middling (the story is not over, of course, until the beneficiaries are dead, so no “ending,” yet, lots more opportunities for those who rule us to f))k them over more and worse too) for my friend and her daughter: another home care agency hired the nurse, so there was only a couple of days where the nurse, doing what nurses do, continued caring for her charge WITHOUT GETTING PAID. (Another footnote – the prior home care agency treated these nurses as independent contractors, no sick or vacation time, no benefits of any kind, “You are on your own, we’ll take over half of what Medicaid pays per your work hour as our vig, be damn sure you keep all your liecneses and certificates current and all the Medicare-mandated documentation.” )

    1. tegnost

      “but they seem to have paid themselves dang well what a surprise…”
      They always seem to manage this part well, if nothing else…
      Also, Uber nursing, who could have thought of it?

  5. Peter Pan

    Washington state uses insurance companies for it’s Medicaid program (Apple Health). I’ve been on Apple Health since 2013 without any problems so far. But I don’t know how the state has fared.

    I suspect the healthcare network providers are getting killed by these insurance companies. A recent visit to the local ER billed out at over $5,200 but the insurance company only paid them $370. Of course, I paid nothing. So I expect that the number of healthcare network providers will probably shrink in numbers that will accept Apple Health clients.

  6. greg kaiser

    thank you for this post and especially for pointing out that finance and management take 31 cents of every health care dollar. Only in America could putting unnecessary and onerously greedy mouths at the public and private troughs have been predicted to save money by increasing efficiency. But then, cynically speaking, our rulers are very efficient at robbing us blind.

    It’s like the Libertarian golden boy, Milton Friedman, said, “There’s no such thing as fraud.” That, of course, is only true for non cynics, those who refuse to acknowledge reality. – agk

  7. Eureka Springs

    Things are absurd all over. I really don’t follow the details anymore since there is seemingly nobody coming close to trying to establish universal health care without equivocation, apology, or outright two-faced back stabbing lying or hypocrisy.

    That said here’s what the blue dogish, claims to be yellow dogish Arkansas press says about Gov. Asa Hutchinson’s shenanigans in re medicaid and the bipartisan private option.

  8. PrairieRose

    Excellent article, Lambert,and thank you. But does anyone else find it deeply concerning that almost one-quarter of the population of the great state of Iowa is on Medicaid?

  9. Kris Alman MD

    In July 2012, CMS approved Oregon’s transformation for the Oregon Health Plan, Oregon’s Medicaid. 16 Coordinated Care Organizations (CCOs) were approved in regions (with little overlapping competition) effectively creating monopolies throughout most of the state. That includes Eugene-based (University of Nike, home of the mighty Ducks) Trillium Community Health Plan serving ~100,000 Lane County OHP patients.

    In July 2015, NC made note of Centene, a Fortune 500 company, that announced it was buying HealthNet for nearly $7 billion.

    Around that same time, Laura Cali, the Oregon Insurance Division Commissioner, also approved the sale of Trillium Community Health Plan to Centene Corp. for $80 million and up to an additional $50 million more to be paid to the 217 shareholders of Trillium’s parent company, Agate Resources for dividends.

    The Register-Guard noted: “Managing Medicaid services has become increasingly profitable for Trillium. Trillium reported a profit of $22 million last year, up from $3.9 million in 2013 and $1.15 million in 2012.” The Register-Guard also points out that 10 of the 16 CCOs are for-profit companies, and there are no limits placed on how much profit they can make. Trillium ranked last among the state’s 16 CCOs for providing patient-centered primary care in CCO performance measures.

    With $400 million in taxpayer money at play, the Register-Guard demanded disclosure of the names and ownership interest of Agate shareholders–many physicians in the community.

    The Insurance Division denied the request. But the newspaper appealed to the Oregon Department of Justice, which ordered the agency to disclose the records, saying that was in the public interest. Audaciously, Agate shareholders are seeking class action status to overturn that order, saying disclosure would invade their personal privacy and threaten their professional reputations without serving any public interest.

    1. paddlingwithoutboats

      “..invade their personal privacy and threaten their reputations…”? This is amusing, sort of, because I have been thinking of how we have now moved to a culture that so abhors feelings and especially culpability and guilt that this is the kind of response to situations when someone fears they will be forced to feel those. Feelings are off the table, but it seems like that must be part of the post modern, Milton Freidman, euphoric grandiosity and special narcissism. But it negates our social species system, the deep system that we evolved with and used, off and on, more or less to be sure, but still this is the enforced morality that is absent from our wiring. Of course the greedy need to have their reputations tarnished and their feelings about what they do changed. If they don’t feel shame they will continue the euphoria until the pitchforks approach or the guillotine returns or some other inescapable, two-by-four over the head cosmic reality message. Shame in our species is how we move forward, nix the myth of rabid individualism.

  10. LAS

    New York has Medicaid managed care through HealthFirst, EmblemHealth, Metroplus, etc. With it, costs per enrolled person have declined significantly over the past 12 years.

    Compared to many other states, New York State Medicaid services are considered relatively generous. In focus groups in NYC I attended a year ago, health consumers in the Medicaid managed care plans were more positive about their insurer than people getting commercial insurance through their employer. At least, those in Medicaid managed care plans said they were getting physical therapy and chronic disease management classes, while the consumers with commercial workplace insurance said their plans did not cover those benefits. I’ve also heard some outspoken Medicare recipients complaining that they don’t get all the benefits that their neighbors on Medicaid get though they have worked all their lives, etc.

    We also have a Department of Health that does more surveillance than other states and includes a bureau that works hard to improve disparities — which continue to exist among the poor.

    New York also began with very high fee for service rates.

    Truth be told, some of what I’m telling you about New York surprised me. The lesson may be that there is a lot of variability from state to state.

  11. paddlingwithoutboats

    Wow, all over again. Every time I read this stuff, or anything data driven, I want to share it with people.

    To this purpose, important books regarding medical delivery:
    Deadly Spin (lots of info, but former United Health Insurance CEO retired about 2005 with a billion payout package, also, scary applications of ERISA, I think in the appendix. Also, stats on percent of a dollar Medicare gets that goes to patient care=95% versus the precent of a dollar medical delivery insurance companies spend of patient care=70% to 80%. And generally important to know sound bits that originated with PR firms and now are considered mainstream.)

    I now work in the medical delivery system, so when I re-careered five years ago I did a lot of research and found a crazy interesting powerpoint presentation on the Web which included a small extract from the Nixon Whitehouse tapes discussing the, yes! 1970’s HMO act, with scion of Keiser Permanent; essentially has Nixon ask; the less you pay for the care of the patient, the more money you make, is that right?) Of course he’s got the gist of the bill, and gave it his support!

    Another important read, IMHO, Tom Baker’s Medical Malpractice Myth, data, data, data.

  12. Beans

    This is personal for me too – been at the anti fraud effort for a number of years and have found fraud impossible to stop. While this may come as a surprise, it makes sense when you follow the money.
    1. Healthcare generates jobs. Deterring fraud means fewer procedures performed, fewer healthcare related items sold, fewer healthcare analysts, coders, managers, salespeople, agency representatives and the like employed.
    2. State by state variations are important to maintain confusion and always point to a ‘successful program’ somewhere in order to enact changes in another state. New York’s ‘success’ with MCO’s (managed care organizations) will be cited to justify rolling Iowa Medicaid over to MCO’s, even though Iowa and New York are completely different – down to the starting reimbursement rate for each covered recipient, which determines the entire contract. Money and facts do not matter – privatization is the goal. Once privatized, contracts will be renegotiated based on annual expenditures going forward, enduring constant positive profits.
    3. Medicaid ultimately is about power and (other people’s) money. Those in the legislature (state and federal) talking about healthcare reform represent competing powerful interests – company A or company B – but reform is played out in the media as if reform is for the benefit of the people – either the taxpayers or the recipients. Hence bozo congressperson-R talks about protecting the taxpayers, but represent Company A looking to hone in on the Medicaid business presently being run by Company B, which is represented by bozo congressperson-D who goes running to the press to express worries about the Medicaid recipients who would be hurt by the reforms. Keeping in mind that but bozo congresspeople have an entire propaganda force behind them to fan the flames of the public debate and ensure that everyone’s attention be turned from the fact that Medicaid sucks, kids and people on Medicaid are harmed by crappy or non-existent care and the annual Medicaid expenditures are growing at a rapid clip and making the very wealthy even wealthier.

    Lambert, I truly appreciate the attention NC is paying to healthcare fraud. That said, my experience leads me to conclude that the horse is so far out of the barn, there is no going back. My advice is to find a caring provider that is in it for the craft and not the money (there are some out there), have a personal advocate for all healthcare visits outside of routine care and annual check ups, and do your best to stay healthy.

    1. Lambert Strether Post author

      Thanks, I think, for the “horse so far out of the barn” part. I thought, as long as I was on this health care kick, that I’d look at the VA’s privatization program (the “Choice Act,” nice) and so one of the things I find is that Alaska served as a precedent for the Act, but when the program was scaled up nationally service deteriorated. So I Google the name of the vendor plus “fraud,” and of course I get an immediate hit.

      * * *

      Yes, stay out of the health care system and enter only on your own terms if possible! And the same goes for the justice system, the finance system, the educational system, the food system…. This is ancien regime stuff.


    The so called affordable care act is Insurance not care, and obamacare is a re-branding twice over to cover the tracks of what it supplies. It is nothing like universal health care and it makes medical care entirely path dependent upon insurance economies of scale, where “scale” is minimalization and cost shifting that will institutionally ration medical services through the ascending declination process and the descending order of generic brand insurances that will ultimately be available to those who can “afford” nothing else.

    The revenue stream for medicaid and medicare are similar to subsidized housing. The mega-mergers appearing now with Aetna and United Health and the like will be too big to fail and too big to care in the very near future.

    Now that tribute is mandatory at tax time given to insurance pools, we can no longer say it is not an Insurance Revenue State, Note that the abbreviation for this is IRS, making them the Insurance Revenue Service for the government (and only time will tell how that power will be abused, misused and corrupted in stride.

    The entire process is one of CAPTURE and CONTROL FRAUD.
    Linda Peeno : The Care Foundation
    How Health Insurance Companies Make Money


    The entire process is one of CAPTURE and CONTROL FRAUD.
    The so called affordable care act is Insurance not care, and Obamacare is a re-branding twice over to cover the tracks of what it supplies. It is nothing like universal health care and it makes medical care entirely path dependent upon insurance economies of scale, where “scale” is minimization and cost shifting that will institutionally ration medical services through the ascending declination process and the descending order of generic brand insurances that will ultimately be available to those who can “afford” nothing else.

    The revenue stream for medicaid and medicare are similar to subsidized housing. The mega-mergers appearing now with Aetna and United Health and the like will be too big to fail and too big to care in the very near future.

    Now that tribute is mandatory at tax time given to insurance pools, we can no longer say it is not an Insurance Revenue State, Note that the abbreviation for this is IRS, making them the Insurance Revenue Service for the government (and only time will tell how that power will be abused, misused and corrupted in stride.
    Linda Peeno : The Care Foundation
    How Health Insurance Companies Make Money

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