Lee Grossman, Medicaid director for the state of Iowa, said something interesting during a meeting with lawmakers Jan. 29:
“We’re projecting saving $27.5 million in pharmacy without impacting what (benefits) we’re paying. And what we’re proposing here is to transition pharmacy benefits currently that are being provided within the managed care arrangement that we have with our three MCOs to administering that from the state agency. So, it’s a significant change in terms of how we administer the Medicaid program.”
So. You’re telling us that handling pharmacy for recipients of Medicaid, the federal-state health insurance program, in-house, instead of having private managed-care companies do it, could save the state budget $36 million annually (Grossman’s estimate was for nine months of the coming fiscal year)?
Who would have thought?
Perhaps everybody who has derided Iowa’s misbegotten managed-care system in theory since 2015 and in practice since April 1, 2016.
A decade of privatized Medicaid has brought Iowans woe
Grossman told legislators that the savings opportunity reflected some idiosyncrasies unique to pharmacy care, such as the state’s leverage to negotiate prices, and that several other states “that are very committed to a managed care model” had successfully adopted a similar approach. Fair enough. We wish him success; Iowa could use tens of millions of dollars in savings.
But this “innovation,” and the 10-year anniversary of privatized Medicaid in a few weeks, makes for a good moment to renew a plea to policymakers to ditch managed care completely and return to a system that was not broken before Gov. Terry Branstad forced through the switch.
Here is what the past decade has delivered to Iowans:
Many beneficiaries have not reported troubling experiences with privatized Medicaid. But that’s no argument for overlooking the well-documented difficulties.
If this pharmacy plan works, look closely at the rest of Medicaid
As for Medicaid’s hit to the state budget, COVID-19 muddied the overall picture. The number of recipients ballooned because of relaxed eligibility standards, and the federal government, for years, provided hundreds of millions of dollars of above-normal aid. Both distortions are fading, and state experts forecast funding shortfalls for Medicaid of tens of millions of dollars in Iowa. That’s part of the backdrop for Grossman and his staff proposing various efficiency efforts.
Ohio’s Medicaid department ditched pharmacy benefit managers in 2022 and set up a new system to pay for drugs. An actuarial firm found that Ohio then saved $140 million in two years even as pharmacies received more in fees.
If Iowa’s pharmacy switch works similarly and in line with Grossman’s estimates, Iowa lawmakers ― and whoever takes over as governor in January ― ought to start asking a lot of questions about whether that approach truly can’t be replicated or adapted for other aspects of Medicaid. From the beginning, it’s never been explained why it was OK to let managed care companies use over twice as large a portion of the Medicaid budget for administrative costs than state-run Medicaid programs do.
Maybe, just maybe, state employees charged with public service can do a better and more efficient job than for-profit Iowa Total Care, Molina Healthcare and Wellpoint.
Lucas Grundmeier, on behalf of the Register’s editorial board
This editorial is the opinion of the Des Moines Register’s editorial board: Rachel Stassen-Berger, executive editor; Lucas Grundmeier, opinion editor; and Richard Doak and Rox Laird, editorial board members.
This article originally appeared on Des Moines Register: Iowa finally agrees that it can do Medicaid better than MCOs | Opinion
Reporting by The Register’s editorial, Des Moines Register / Des Moines Register
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