Iowa’s projected 6-month savings for privatizing Medicaid drops

Iowa’s projected 6-month savings for privatizing Medicaid drops

State Human Services estimates fall by $4M

The Associated Press

DES MOINES — Iowa health officials on Wednesday lowered the state’s projected savings for switching its $4.2 billion Medicaid program to private care, saying its initial estimate was released a year ago.

Iowa Department of Human Services Director Chuck Palmer told lawmakers on the Fiscal Committee that the department now estimates it will save about $47 million in the first six months of 2016 with the move to privatization on Jan. 1. That’s a slight decrease from the $51 million that’s been publicly used for months. It’s also what the Legislature used to approve its current state budget.

“I don’t know that we’ll go lower unless there are other adjustments as we go forward,” he said, though he added that he didn’t expect them.

Department spokeswoman Amy Lorentzen McCoy said after Palmer’s presentation that the $47 million figure is an estimate, and the department could still save as much as $51 million. She said the latest number is based on a combination of costs associated with payment rates for health care providers and department reserves.

“Keep in mind that the $51 million projection was a year ago, and a lot changes in a year,” she said, noting that the initial number was based on a range of estimates provided by an actuary firm.

Sen. Joe Bolkcom, D-Iowa City, sits on the Fiscal Committee as well as a health oversight committee that has reviewed the privatization plans. He said the department has not provided enough information about its savings projections.

“I have not had great confidence in many of the numbers the department has provided to us,” he said after the meeting. “Over the last couple of weeks and months, they have not been able to detail how they came up with the $51 million in savings.”

McCoy dismissed that criticism, and said the department has repeatedly provided clear documentation to all interested parties. During Wednesday’s meeting, DHS said it had estimated a roughly $70 million shortfall for the fiscal year that began in July. Both McCoy and Bolkcom said such budget shortfalls are not unusual, and the money is expected to be plugged during the upcoming legislative session that begins in January.

The meeting comes about two weeks before the state is expected to hand over its Medicaid program to four private companies. Gov. Terry Branstad has said the move will save money and offer better care. Some Democratic lawmakers have criticized the timeline of the switch, arguing there are reports of confusion among program recipients and health care providers. The department has said it’s working with the four companies to address any concerns.

The Medicaid program provides health care to poor children, families and disabled people, as well as some low-income adults. It is funded with state and federal dollars.

By Barbara Rodriguez