La. cuts two Medicaid contracts, care options for 488,500 in limbo

Gov. Jeff Landry's administration is abruptly ending contracts with two of the six companies that provide Medicaid insurance in Louisiana, a move that could leave 488,500 residents uncertain of what health care they will have starting Jan. 1.

Seth Gold, Louisiana's Medicaid director, sent short letters last week to the CEOs of Aetna Better Health of Louisiana and United-HealthCare of Louisiana announcing their contract extensions with the state had been dropped for 2026. The Illuminator obtained copies of the letters Monday from the Louisiana Department of Health.

"LDH will begin the transition process of moving your Medicaid members to other contracted Medicaid Managed Care Plans for a Jan. 1 effective date," Gold wrote in the letters to the companies dated Dec. 2.

The news came as a surprise to state lawmakers, who voted less than two weeks ago to extend the state's agreements with both companies at the urging of the Landry administration.

Attorney General Liz Murrill and other state officials said litigation over pharmacy benefit managers affiliated with Aetna and United-HealthCare were factors in stepping away from agreements with the companies.

Spokespeople for the companies did not respond to requests for comment Monday evening.

Aetna and United-HealthCare provide Medicaid insurance for 157,800 and 330,700 Louisiana residents, respectively, covering onethird of its 1.53 million enrollees.

Aetna's contract for the fiscal years 2026 and 2027 – a time period which started July 1 and ends June 30, 2027 – is $2.59 billion. The UnitedHealthCare contract for the same time period is $2.06 billion, according to documents posted publicly in November.

In an interview Monday night, Louisiana Health Secretary Bruce Greenstein said his department plans to move the enrollees with Aetna and UniteHealthCare coverage to new health plans before the end of the year. He's confident the four other companies offering Medicaid plans will be able to handle the influx of new patients.

AmeriHealth Caritas, Elevance Health, Humana and Louisiana Healthcare Connections are the other private companies who provide Medicaid plans in the state.

The health department is going to use an algorithm to help pick a plan for each person who needs to switch from Aetna or United-HealthCare, according to Greenstein. It will prioritize keeping families together with the same health care company and making sure the doctors and other medical professionals a person sees most frequently take their new insurance.

"This will take place over the next two weeks, so it will take place over Christmas," Greenstein said. "I feel confident that we will be able to execute on this."

If a Medicaid recipient is unhappy with their new health care coverage, they will have 90 days starting Jan. 1 to switch into another plan, Greenstein said.

The state's ongoing litigation with Aetna and UnitedHealth-Care over their pharmacy benefit managers pushed the state to end their contracts with the companies, Greenstein and Murrill confirmed.

In a text message Monday afternoon, Murrill said the companies "are not compliant with [state law] and until they are, they are ineligible for contract extensions."

Pharmacy benefit managers are middlemen who negotiate prescription drug plans with insurers and drug manufacturers. Murrill and Landry have repeatedly criticized these entities, which are often owned by large health care corporations, of unfair business practices that undercut locally owned pharmacies.

The attorney general was in Rome Monday preparing for a conference at the Vatican on human trafficking and said she was unavailable for a phone interview. In her text message responses, she did not identify which laws Aetna and UnitedHealthCare are allegedly breaking.

"They are violating the contracts and have refused to provide us with [documents] we have requested," the attorney general wrote. "United has engaged in frivolous attacks on the AGs contracting authority as well."

"They cannot expect to have a discretionary renewal when they are currently non-compliant," Murrill said.

She indicated the state is at more of an impasse with United-HealthCare than Aetna. Her office is in settlement discussions with CVS, which is Aetna's parent company, she added.

In June, Murrill filed three lawsuits against CVS claiming its pharmacy benefit manager, CVS Caremark, operates in ways that discourage competition, particularly from the state's independent pharmacists.

She also alleged CVS inappropriately used customer information to launch a text message campaign to defeat state legislation that would have made it difficult for CVS Caremark to work in Louisiana. Landry, who is close to Murrill, was an enthusiastic supporter of the bill, which failed to pass.

As attorney general in 2022, Landry launched a separate lawsuit against pharmacy benefit manager OptumRx and United-HealthCare, which are owned by the same parent company. He alleged they overcharged the state's Medicaid plan for prescription drugs.

In that case, which Murrill has since been taken over, the Louisiana First Circuit Court of Appeal recently sided with UnitedHealthCare over the state.

The court's ruling for UnitedHealthCare was released Nov. 21, the day after lawmakers signed off the company's 2026 contract extension. A little over a week later, the health department appeared to reverse course and sent out a notice indicating they weren't renewing the UnitedHealth agreement.

The day before the court's decision came out, the Landry administration had recommended to lawmakers that they allow the Aetna and UnitedHealth-Care contractsto go forward.

During a nearly three-hour hearing, Greenstein and health department undersecretary Drew Maranto, both Landry appointees, answered dozens of questions from legislators and never expressed reservations about continuing to work with Aetna or UnitedHealthCare.

Greenstein even pushed back when legislators suggested the state cut its number of Medicaid managed care contracts with private companies. Lawmakers believe working with fewer businesses could lower the administrative costs in the Medicaid program. But Greenstein cast doubt on whether those benefits would be worth the upheaval in the program.

"Each of the plans brings a different way of envisioning how to engage patients with certain medical complexities," Greenstein told legislators. "Patients don't generally switch their health plan very often."

His remarks are likely why several lawmakers, reached Monday, said they were blindsided when they discovered the health department had canceled the contract extensions.

The governor and the health department didn't give the legislators advance notice before they reversed course with Aetna and UnitedHealthCare.