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Medicaid Privatization Gets Messy in Iowa

The latest state to subcontract care is running into snags.
Terry Branstad, governor of Iowa.

Terry Branstad, governor of Iowa.

Photographer: Daniel Acker/Bloomberg

In Iowa about 600,000 people get medical care through Medicaid, the public-health program for the poor and disabled. That includes more than a third of the state’s children. Doctors currently bill Iowa’s Medicaid program directly for their services, but starting next year, the state will move all of its Medicaid patients onto managed-care plans offered by four private insurers. Governor Terry Branstad, a Republican, estimates the switch will save Iowa $51 million in the first six months of 2016, about 1 percent of the state program’s $4.2 billion budget.

It’s been a complicated handoff. The change was originally planned to take effect Jan. 1. With two weeks to go, the federal Centers for Medicare & Medicaid Services, which oversees state programs, deemed Iowa “not yet ready” in a letter to the state on Dec. 17. By mid-December, many of the state’s hospitals and other medical providers—such as clinics, nursing homes, and home health-care services—still hadn’t signed contracts with the Medicaid insurers. That made it impossible for patients to know whether they could keep their existing doctors.