Families oppose bill locking in Iowa Medicaid privatization

DES MOINES — Though tears, Kay Marcel recounted the years of uncertainty she says her family has faced trying to secure services for her son through Iowa's privately managed Medicaid system.

Speaking Tuesday, March 10, to Iowa House lawmakers, the 73-year-old Urbandale mother described the anxiety that comes each time her 47-year-old son Joel — who has an intellectual developmental disability and multiple chronic health conditions — must have his care plan approved.

"We have had in the last three years two denials of services," Marcel told members of a House Health and Human Services subcommittee. "Thankfully, before an administrative law judge, those appeals were successful and the services were restored. But I just wait for the next time when we submit a plan of care to go through that again."

"Is he going to get the services?" she asked. "It's very stressful."

Marcel was among several parents and advocates who testified in opposition to Senate File 2422, legislation that would place Iowa's private Medicaid management system into state law. The proposal would require the Iowa Department of Health and Human Services to deliver Medicaid benefits primarily through managed care organizations — the private insurers that administer most Medicaid services in the state.

Critics told lawmakers the provision would effectively lock Iowa into the privatized system created by then-Gov. Terry Branstad in 2015 through an executive order. Because the system was created administratively, a future governor could theoretically reverse it. Enshrining it in law, opponents say, would make that far more difficult.

"Do not lock this state into a system that, frankly, from my opinion and our experience, has been pretty much a disaster from the beginning," Marcel said.

The bill also contains provisions requiring the state to verify the citizenship of Iowans who receive public assistance. It is part of a broader set of "welfare reform" measures introduced in the 2026 session aimed at tightening eligibility requirements for state-funded programs.

Families describe denials, delays

Iowa has operated its Medicaid program primarily through managed care since 2016, when the state contracted with private insurers to manage services for most Medicaid members.

The Iowa Department of Health and Human Services currently contracts with three managed care organizations to provide services. A smaller number of members remain in a traditional fee-forservice system, where providers are paid directly by the state.

Parents who testified Tuesday said the managed care structure has led to denials, delays and reduced access to providers.

Stacey Ring of Council Bluffs said her 20-year-old son Alex, who is non-verbal and receives services through an intellectual disability waiver, saw his services cut roughly in half after a managed care review.

"We waited a month for our son's service plan to be reviewed," Ring said. "Only to have them make a decision to reduce his services by about 50% when his needs had not changed."

The notice arrived too late for the family to request continuation of benefits during an appeal, she said.

"Managed care has made meeting basic needs less predictable, and care is definitely not streamlined," Ring said.

She urged lawmakers not to make it harder for future leaders to reverse the privatized system.

"My primary message to you today is that I strongly oppose any legislation that makes rescinding the managed care system more difficult," Ring said. "We need an exit strategy for what is rapidly becoming a failed experiment."

Medicaid cuts threaten services that help disabled people live at home

A Christmas Eve fight for medication

Wendy Andersen, of Treynor, told lawmakers about the struggle she and her husband faced getting lifesaving medication approved for their 17-year-old son Dexter, who has tuberous sclerosis, epilepsy and developmental disabilities.

During Christmas week in 2023, the couple spent 49 hours on the phone trying to get approval for a chemotherapy medication their son had taken for six years to prevent tumor growth in his brain. The managed care organization denied the medication, she said, deciding Dexter no longer needed it.

"After multiple peer reviews with his physicians, the medication was finally approved, only for the prescription to be blocked again by another prior authorization requirement," Andersen said. "For 49 hours during Christmas week we waited for someone to click the 'approve' button" for her son to receive the medication.

"At 7 p.m. on Christmas Eve, the button was finally pushed," she said. "On Christmas morning, the best present we received was a courier delivering our son's medication."

For families managing complex medical conditions, Andersen said the bureaucratic hurdles are overwhelming.

"Families raising children with disabilities already live with enormous amount of stress," she said. "When systems designed to help us create barriers, delays and denials, it becomes almost unbearable. I strongly encourage you to not lock Iowa further into Medicaid managed care systems that is already failing so many of our families that rely on it every day."

Other parents said the managed care system has worsened provider shortages.

Kimberly Smith of Council Bluffs said her son Sam, 19, was born prematurely with a severe heart defect and relies on services through the health and disability waiver. Because many providers no longer accept Iowa Medicaid, Smith said her family pays out-of-pocket for therapy services in Omaha.

"Today there are no pediatric occupational therapists, physical therapists or speech therapy providers in southwest Iowa," she said. "The closest services are in Omaha."

Smith said she is concerned about the future when Medicaid becomes her son's primary insurance. "I worry about how he will access basic services like dental care," she said.

Advocates: Bill could limit future reforms

Advocates warned the legislation could restrict future policymakers' ability to change how Medicaid operates.

MaryNelle Trefz, representing Iowa Aces 360, noted that state officials have already announced plans to bring Medicaid pharmacy benefits back under state administration to save an estimated $17 million.

"Section five would limit the ability of future legislators to realize similar flexibilities," Trefz said.

She also raised concerns about another section of the bill that would restrict retroactive Medicaid eligibility for most adults, potentially leaving families responsible for medical bills incurred before enrollment.

Under the proposal, the Health and Human Services would be required to adopt administrative rules and seek a federal waiver allowing up to two months of retroactive Medicaid coverage for pregnant women, children and residents of certain nursing facilities who apply for the program.

At the same time, the legislation would prohibit the department from pursuing federal approval to extend retroactive eligibility to other adults applying for Medicaid or the Iowa Health and Wellness Plan, the state's Medicaid expansion program.

Federal law currently allows states to provide up to three months of retroactive Medicaid coverage for eligible individuals who incurred medical costs before enrolling in the program. However, the federal One Big Beautiful Bill Act — enacted in 2025 — reduces that period beginning Jan. 1, 2027, to two months for traditional Medicaid and one month for Medicaid expansion programs like Iowa's Health and Wellness Plan.

Under current Iowa policy, pregnant women, infants and certain nursing facility residents may qualify for retroactive coverage, while traditional Medicaid members can receive up to three months of retroactive eligibility and Iowa Health and Wellness Plan members may receive up to one month.

Other provisions in the bill

In addition to the managed care requirement, SF 2422 includes several other policy changes.

The legislation would require the state to verify the citizenship or immigration status of applicants for public assistance programs — including Medicaid and the Supplemental Nutrition Assistance Program, known as food stamps — through the federal Systematic Alien Verification for Entitlements database.

Supporters say the provision is intended to ensure immigrants who lack legal status to be in the country do not receive taxpayer-funded benefits and to align Iowa policy with federal eligibility rules.

Another section of the bill requires Health and Human Services to consider the income and financial resources of all household members when calculating a household's eligibility and benefit levels for the food assistance program. SNAP is a federally administered program designed to help low-income families afford groceries.

The provision reflects changes made in the federal One Big Beautiful Bill Act that revised eligibility standards for SNAP. Under federal law, the program is limited to individuals residing in the United States who are citizens or lawful permanent residents, certain lawfully admitted immigrants — including Cuban or Haitian entrants — and individuals legally in the country from Micronesia, the Marshall Islands and Palau.

The bill has passed the Iowa Senate on a 30–17 party-line vote, with Republicans supporting the measure and Democrats opposing it.

Lawmakers: Bill still needs work

During Tuesday's hearing, Democratic Rep. Beth Wessel-Kroeschell of Ames said lawmakers have heard years of complaints about the privatized Medicaid system.

"There are a lot of problems with our current Medicaid program, and there have been since we privatized Medicaid," she said.

Research suggests Iowa could save $200 million to $300 million by returning to a fee-for-service system, she said.

"I think it is not responsible for us to lock ourselves into the system where we can be making changes."

Republican members of the subcommittee acknowledged concerns but said the bill will continue to be discussed.

Rep. Ann Meyer, R-Fort Dodge, encouraged families to continue contacting lawmakers about specific issues.

"This bill needs more work," Meyer said.

Rep. Austin Harris, R-Moulton, said he still has "a lot of questions" about several provisions but recommended advancing the bill to continue the conversation.

"There is a lot of work to do to the bill," Harris said.

The Republican members of the subcommittee voted to advance the proposal to the full House Health and Human Services Committee for further consideration.

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