With no insurance through his job, Jose Nuñez relied on Medicaid, the nation's public insurance program that assists 75 million low-income Americans.
Like most people on Medicaid, the Los Angeles trucker was assigned to a managed-care plan.
But in 2016, when Nuñez's retina became damaged from diabetes, the country's largest Medicaid insurer, Centene Corp., let him down, he said. After months of denials, delays and erroneous referrals, he claimed in a lawsuit, the 62-year-old was left nearly blind in one eye. As a result, he lost his driver's license and his livelihood.
“They betrayed my trust,” Nuñez said, sitting at his kitchen table with his thick forearms folded across his chest.
The current political debate over Medicaid centers on putting patients to work so they can earn their government benefits. Yet some experts say the country would be better served by asking this question instead: Are insurers—now receiving hundreds of billions in public money—earning their Medicaid checks?
More than two-thirds of Medicaid recipients are enrolled in such programs, a type of public-private arrangement that has grown rapidly since 2014, boosted by the influx of new beneficiaries under the Affordable Care Act.
States have eagerly tapped into the services of insurers as one way to cope with the expansion of Medicaid, which has added 12 million people to the rolls. This fall, voters in three more states may pass ballot measures backing expansion. Outsourcing this public program to insurers has become the preferred method for running Medicaid in 38 states.
Yet evidence is thin that these contractors improve patient care or save the government money. When auditors, lawmakers and regulators bother to look, many conclude that Medicaid insurers fail to account for the dollars spent, deliver necessary care or provide access to a sufficient number of doctors. Oversight is sorely lacking and lawmakers in a number of states have raised alarms even as they continue to shell out money.
“We haven't been holding plans to the level of scrutiny they need,” said Dr. Andrew Bindman, former director of the federal Agency for Healthcare Research and Quality and now a professor at the University of California at San Francisco. “This system is ripe for profit-taking, and there is virtually no penalty for performing badly.”
In return for their fixed fees, the private insurers dole out treatment within a limited network, in theory allowing for more judicious, cheaper care. States contract with health plans as a way to lock some predictability into their annual budgets.
More than 54 million Medicaid recipients are now covered by managed-care plans, up from fewer than 20 million people in 2000.
States funnel nearly $300 billion annually to Medicaid insurers. That's up from $60 billion a decade ago. Today's spending is approaching what the Pentagon awards annually to contractors.
Medicaid is good for business
The stock price of Nuñez's insurer, Centene, has soared 400% since the ACA expanded Medicaid eligibility. The company's CEO took in $25 million last year, the highest pay for any CEO in the health insurance industry. In California, the largest Medicaid managed-care market with nearly 11 million enrollees, Centene and other insurers made $5.4 billion in profit from 2014 to 2016, according to a Kaiser Health News analysis.
Plans get to keep what they don't spend. That means profits can flow from greater efficiency—or from skimping on care and taking in excess government payments.
“States are just giving insurers the keys to the car and a gas card,” said Dave Mosley, a managing director at Navigant Consulting and former finance director at the North Carolina Medicaid program. “Most states haven't pressed insurers for the information needed to determine if there's any return on their investment.”
Two of California's most profitable insurers, Centene and Anthem, ran some of California's worst-performing Medicaid plans, state quality scores and complaints in government records show. California officials have been clawing back billions of dollars from health plans after the fact.
For nearly two decades, federal officials have tried building a national Medicaid database that would track medical care and spending across states and insurers. It's still unfinished, hampered by differing state reporting methods and refusals by some health plans to turn over data they deem trade secrets.
In July, a federal inspector general's report accused Medicaid insurers of purposefully ignoring fraud and overpayments to doctors because inflated costs can lead to higher rates in the future.
In a report last month, the U.S. Government Accountability Office disclosed that California's Medicaid program is unable to electronically send records justifying billions of dollars in spending, forcing federal officials to sift through thousands of documents by hand. California said it can't share key files electronically because it uses 92 separate computer systems to run the program.
“You simply cannot run a program this large when you can't tell where the money is going and where it has been,” said Carolyn Yocom, a healthcare director at the GAO.
Industry officials insist that managed care saves money and improves care. Medicaid Health Plans of America, an industry trade group, points to a study showing that health plans nationally saved Medicaid $7.1 billion in 2016.
Health plans also say they can help modernize the program, created more than a half century ago, by upgrading technology and adopting fresh approaches to managing complex patients.
Getting it right has big implications for patients and taxpayers alike, but the results in many states aren't reassuring.
State lawmakers in Mississippi, both Republicans and Democrats, criticized their Medicaid program last year for ignoring the poor performance of two insurers, UnitedHealthcare and Centene, even as the state awarded the companies new billion-dollar contracts.
In Illinois, auditors said the state didn't properly monitor $7 billion paid to Medicaid plans in 2016, leaving the program unable to determine what percentage of money went to medical care as opposed to administrative costs or profit.
In April, Iowa's state ombudsman said Medicaid insurers there had denied or reduced services to disabled patients in a “stubborn and absurd” way. In one case, an insurer had cut a quadriplegic's in-home care by 71%. Without the help of an aide to assist him with bathing, dressing and changing out his catheter he had to move to a nursing home, according to the ombudsman, Kristie Hirschman.
“We are not talking about widgets here,” she said. “In some cases, we are talking about life-or-death situations.”
"As Billions In Tax Dollars Flow To Private Medicaid Plans, Who’s Minding The Store?" originally appeared in Kaiser Health News. Kaiser Health News, a nonprofit health newsroom whose stories appear in news outlets nationwide, is an editorially independent part of the Kaiser Family Foundation.