HomeHealth Care NewsDemocrats Silent Over “Private, For-Profit” Companies Managing Medicaid

Democrats Silent Over “Private, For-Profit” Companies Managing Medicaid

The Democratic Party appears to have no complaints with outsourcing the management of Medicaid to managed care companies that are private, and “for-profit.”

The party’s stance on Medicaid stands in direct opposition to its stance on public education, which features disdain of “public” money funding “private, for-profit” companies to run charter schools.

Democrats have pledged to end funding for charter schools run by private companies. “Education is a public good and should not be saddled with a private profit motive,” the party’s 2020 platform states.

According to the Kaiser Family Foundation (KFF), 69 percent of Medicaid beneficiaries are enrolled in a managed care plan. Forty states, including all blue states, have contracts with private, “for-profit” companies to manage their Medicaid programs.

KFF lists six companies as receiving the lion’s share of the managed care business: Aetna, Anthem, Centene, Molina, United Health Group, and WellCare. All but WellCare are Fortune 500 companies. The Democratic platform makes no mention of the use of “for-profit” private companies in managing public health programs.

Quality in Question

The quality of care by Medicaid “managed care” has come under fire during the pandemic. In a blog post on April 2 in Health Affairs, entitled “Low-Income COVID-19 Patients Died Needlessly Because They are Stuck in the Wrong Hospitals – While the Right Hospitals Too Often Shut Them Out,” writers Caroline Kelly, William Parter, and Harold Pollack describe how directing patients to the wrong hospitals may have cost them their lives.

“Marquee hospitals face real financial incentive to decline COVID-19 transfers (patients disproportionately covered by Medicaid or uninsured) to maintain capacity for more-lucrative procedures performed on the well-insured,” the authors write. “While staff and bed capacity sat idle at some of the nation’s most proficient hospitals, the pandemic overwhelmed community hospitals such as MLK Hospital that predominantly serve the poor and people of color. Many COVID-19 patients have needlessly died because they were treated in the wrong hospitals.”

Alternative: Pay Enrollees Directly

Managed care was derided decades ago as health maintenance organizations grew in popularity. Enrollees were limited to narrow networks and needed approval for specialty care. Managed care in Medicaid is run in a similar fashion. Companies receive a flat fee to provide primary care and hospitalization.

The authors of the American Health Care Plan, a reform proposal introduced by The Heartland Institute, which co-publishes Health Care News, write that amount is on average $8,800 per person.

“If we were to provide each of these people, or their legal guardians, access to a Health Ownership Account that is funded with, say, $6,000 per year, they would have more than enough money to purchase a direct primary agreement and pay for a lower-cost health insurance plan. Families of four would have access to $28,000 per year under this plan,” write Justin Haskins and S.T. Karnick, the authors of the proposal.


AnneMarie Schieber (amschieber@icloud.com) is the managing editor of Health Care News.


Internet info:

Justin Haskins, S.T. Karnick, “The American Health Care Plan,” The Heartland Institute, April 12, 2021: https://www.heartland.org/publications-resources/publications/the-american-health-care-plan-2




AnneMarie Schieber
AnneMarie Schieber
AnneMarie Schieber is a research fellow at The Heartland Institute and managing editor of Health Care News, Heartland's monthly newspaper for health care reform.


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