How Iowa’s candidates for governor see the future of Medicaid

DES MOINES — The future of private management of Iowa's $7 billion Medicaid program hinges on which candidate voters choose to become the state's next governor this fall.

Zach Lahn, the Republican candidate, says he would maintain the system of private management that was established a decade ago.

Rob Sand, the Democratic candidate, says he would begin undoing private management on his first day in office.

More than 700,000 Iowans rely in some form on Medicaid, the government health program for individuals who have a disability or low income. The program is jointly funded by the state and federal governments, and is operated by the state under federal regulations.

In 2015, then-Gov. Terry Branstad, a Republican, issued an executive order that contracted the management of Iowa's Medicaid program to private companies that are known as Managed Care Organizations, or MCOs. Branstad's successor, current Gov. Kim Reynolds, maintained the private management system.

Currently, three MCOs operate Iowa's Medicaid program: Iowa Total Care, Molina Healthcare and WellPoint.

Proponents of managed care say the private companies are better equipped to manage the state's Medicaid program, which they say creates efficiencies, leading to lower overall costs without sacrificing services.

Critics of managed care say it creates a system by which private companies make decisions based on what is most cost-effective rather than what is best for the patients.

Medicaid managed care has become the dominant approach across U.S. states: Iowa is among 33 states that use an MCO model of managed care, while another nine states have a system of MCOs and primary care case management, or PCCMs, according to data compiled by the nonprofit health care reporting and advocacy organization KFF.

Reynolds, who has held the office since 2017, is not seeking re-election to another four-year term. Sand, the state auditor who lives in Des Moines and is originally from Decorah, and Lahn, a venture firm business owner from Belle Plaine, are campaigning to be the state's next governor.

Three prominent national elections forecasters — Cook Political Report, Inside Elections and Sabato's Crystal Ball — all view Iowa's open-seat gubernatorial election as "leans" or "tilts" toward the Democratic candidate, Sand.

Rob Sand: End private management

Sand says if elected governor he would start undoing private Medicaid management on Day 1.

Sand says he would reverse private Medicaid management the same way it was started: by a governor's executive order.

In the policy section of Sand's campaign website, he calls private Medicaid management "one of the most disastrous decisions in Iowa over the last decade." The Sand campaign says private management "prioritized profits over the health of Iowa families, reduced access to care for tens of thousands of Iowans, and has been an administrative nightmare."

As state auditor, Sand in 2021 issued a report that purported to show a spike in illegal denials of care requests after the state's shift to private Medicaid management. The Iowa Department of Health and Human Services and other managed care supporters said the methodology used in Sand's report was faulty.

During campaign events, Sand regularly mentions his proposal to undo private Medicaid management. He addressed the topic again last week when asked by a reporter about his batch of policy proposals designed to lower everyday costs for Iowans.

"Healthcare is a big piece of this. Iowans have seen their costs go up, and their taxes go up, and the access to care go down because of privatization of Medicaid. We should end that. I think it's been a disaster," Sand said. "It's been a disaster because of how it's been done in Iowa specifically. It was privatized faster than anywhere else, more completely than anywhere else, and that was done after the state had already implemented cost-saving measures on the state side prior to privatization."

Sand continued, saying he envisions a program where nonprofits manage the state's Medicaid program.

"My guess is that the direction to move forward is into nonprofit-based managed care," Sand said. "We certainly want to keep managed care because the state is able to pull in a tremendous amount of federal money a year, over a billion dollars, if you have managed care. So we want to maintain that.

"But I think the main question is making sure that it's being done by people who are mission-focused, and their mission is actually providing healthcare as opposed to making a profit."

Zach Lahn: Keep private management

Lahn has said he believes that using MCOs "is the right idea," noting 42 U.S. states use MCOs for Medicaid management.

Lahn discussed the topic when asked by a reporter after he participated in an event hosted by the American Cancer Society's advocacy arm.

"I think that on our Medicaid program, I personally believe that using MCOs is the right idea," Lahn said. "I know 42 states use MCOs. I know they operate in different ways, and those are very, very blue states and very, very red states.

"Ultimately, my goal is to make sure that with Medicaid that we're getting good service, prompt payment; we're not using AI in the decision-making of claims at all; and also that we are not having vertical integration to make sure that the price is affordable, and we're not having perverse incentives of an insurance provider also owning a pharmacy or also owning a care provider."

Sand's campaign has criticized Lahn's previous advocacy work in Montana for the political advocacy organization Americans for Prosperity to oppose Medicaid expansion.

Lahn addressed that earlier this year while appearing on "Iowa Press."

"I was an interim state director (in Montana) for about a year, and one of the issues that was coming up at the time was the Medicaid expansion under Obamacare," Lahn said on the July 7 edition the Iowa PBS show "And there were some real issues with that that multiple states were seeing: the potential for unfunded mandates, the idea that able-bodied adults that weren't trying to find work should be able to be eligible for Medicaid.

"And I will tell you with some of the federal changes, those things have been solved," Lahn continued. "My hope and goal for Medicaid is to make sure we have a good delivery system, good care, prompt payment for providers, and that we can provide Iowans with healthcare that they can count on. But the issues that we were really fighting against there had those loopholes, so to speak. Those worries have largely been addressed."

MCOs almost became law

Some Republican lawmakers earlier this year proposed making it a state law that the state contract with private companies for Medicaid management. Such a law would have taken that decision out of the hands of the next governor by placing private management in state law.

Had the proposal been passed into law, private Medicaid management's future in Iowa would have been locked in place — forcing another change in state law to undo it.

Since the provision that would have codified private Medicaid management did not earn sufficient support in the Republican-majority Iowa Legislature, the state's next governor will make that decision.

The general election is Nov. 3.

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