Florida’s Medicaid privatization raises costs, not quality

Like many other states, Florida has shifted the administration of its Medicaid into a managed care program administered by the private insurance industry.

The companies are paid by state government, and their profit depends on spending as little as possible on Medicaid patients.

It’s hard to imagine any greater disconnect between public good and private profit: the interest of private health insurance companies lies not in the obvious social good of delivering quality health care to patients but in having as few as possible treated as cheaply as possible. No better example exists of a private capitalist enterprise that feeds on the misery of man.

You might think that we learned the lesson of discredited managed care in the 1990s. The term “managed care” is confusing to many, but really amounts to managed reimbursement rather than managed care. A set prospective annual payment is made by federal/state governments, as in the case of Florida Medicaid managed care, to cover whatever services patients will receive over the coming year. There is therefore a built-in incentive for managed care organizations to skimp on care and pocket more profits.

The same problem is back in Florida in the form of privatized Medicaid managed care, facilitated further by the Affordable Care Act. More than one-half of Medicaid beneficiaries are now in privatized plans, which have been catching on in Florida and many states based on the unproven theory that private plans can enable access to better coordinated care and still save money.

That theory is not just unproven, it is patently wrong as the state forecasters are now discovering. Medicaid will eat up 45.9 percent of growth in general revenue over the next three years, ballooned by approval of a 7.7 percent increase in payment to private managed care plans.

Privatized programs have high administrative costs, built-in profits, and do not save money or improve care. Their route to financial success is by finding more ways to limit care and deny services.

Without evidence or disclosure by the private Medicaid plans business/profit interests, private HMOs claim this saves Florida millions annually. Shockingly, we let the Scott administration get away with this illusion by forgetting that adding a “profiteering middleman” to manage health care delivery always adds cost, and does not lower them.

Scott and fellow Republicans lobbied hard for Medicaid managed care. Scott’s scare tactics claimed that more than 3 million recipients would receive better care and also save the state money, sternly warning the roughly $23 billion a year Medicaid bill was consuming the state budget.

Today, private insurance companies now demand a $400 million raise and a 7.7 percent increase for rates from Florida. “We are losing a significant amount of money” in the Medicaid managed care program, Molina’s President David Pollack told the Florida hospital commission at a meeting in Miami. Molina was spending about 81 percent on services before the state privatized the program last year, but Pollack said its now spending 97 percent, leaving a razor thin margin for profit “that is not sustainable” for his stockholders, board of directors and himself as CEO.

Dr. John P. Geyman, former chair of the University of Washington Department of Family Medicine and one of the most published family physicians in the U.S., asks, “Why do we still worship at the altar of privatization in U.S. health care, especially for the poor and most vulnerable among us?”

“Four answers stand out:

(1) There is a lot of money to be made by insurers operating health programs subsidized by the Florida and other state governments.

(2) Exploitive privatized programs are perpetuated by well-funded “free market” think tanks, their followers in Big Business, and compliant politicians responding to industry lobbyists.

(3) Regulations are inadequate to prevent gaming by insurers at patients’ expense.

(4) As a society, we still don’t seem to care when people have bad health outcomes and die because of failed health care policies.”

Florida citizens should demand that private corporate HMOs be removed and banned from the administration of our public programs in Florida. Privatization of Florida’s Medicaid has increased costs, without any corresponding increase in quality or access to care.

Private insurers maximize profits by mainly limiting benefits or by not covering people with health problems. The greed of casual inhumanity is built in the business model and the common good of Florida citizens is ignored. Excluding Florida’s poor, aged, disabled and mentally ill is sound business policy, since it maximizes profit.

As long as health care remains so lucrative for private insurers, patients’ needs and the public interest don’t carry much weight. We need Florida state government to finance a not-for-profit, one-tier system of universal coverage, based on medical need, not ability to pay.

F. Douglas Stephenson is a former president of the Florida Society for Clinical Social Work. He lives in Inglis.

Photo by Images_of_Money


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