Health and Human Services

Health and Human Services

• Call centers
• Child welfare
• County health care/indigent care
• Eligibility screening
• Emergency medical services
• Hospitals and clinics
• Juvenile services
• Medicaid/Medicare administration
• Mental health services
• Nursing homes/homecare
• Social services
• Veterans services
• Welfare programs

Many children and adults rely on government-provided health and human services. The ability of these programs to deliver services efficiently and appropriately often is a matter of life and death. Numerous state and local governmental entities are finding that turning over these programs to private contractors not only fails to achieve projected cost savings but also decreases access to these important services, hurting many vulnerable families. In many cases, the service quality declines dramatically and many sick or at-risk people are left with substandard care.

Safety net services such as Medicaid, Temporary Assistance to Needy Families (TANF), Food Stamps, and the Children’s Health Insurance Program (CHIP) have become popular targets of privatization, as the Texas and Indiana public benefits cases illustrate. Additionally, private HMOs run many state Medicaid and CHIP programs. States have privatized their foster care, child support, mental health, and workforce development services, and many more are looking into the possibility of doing so.

Recent reports of interest:

Child Welfare Privatization and Child Welfare: Can the two be efficiently reconciled?
Roland Zullo

Public Benefits Privatization and Modernization: Recent Developments and Advocacy
National Center for Law and Economic Justice, 2008

Updating and Outsourcing Enrollment in Public Benefits: The Texas Experience
Center for Public Policy Priorities, 2006

For additional reports, please see the research section on the side bar or visit our research library.

Related Cases

In December 2006, Indiana signed a 10-year, $1.16 billion contract with an IBM-led consortium to provide eligibility review and claim processing for public assistance programs.  Immediately following the privatization, clients and applicants reported long waits, lost files, slow approvals, and incorrectly severed eligibility for food stamps and Medicaid.  Many families lost critical safety net services.  The state paid the contractor an additional $180 million to fix the problems, to no avail. In October 2009, Indiana announced the cancellation of the 10-year contract.


In January 2006, the state of Texas hired a private consortium headed by Accenture LLP to develop, operate, and staff Texas's eligibility and enrollment system for Medicaid, Children's Health Insurance Program (CHIP), Food Stamps, and Temporary Assistance for Needy Families (TANF).  Almost immediately, problems occurred such as high call center wait times, technical issues, insufficiently trained contractor staff, delays in application processing, and improper benefit denials.  Many families eligible for public benefits failed to receive the assistance they needed when they needed it.  In March 2007, the state cancelled the contract.  


In 2001, North Carolina's General Assembly called for sweeping changes to the state's mental health care system.  The state privatized the provision of local and regional mental health services by requiring that local jurisdictions contract out delivery of services.  As a result, the quality of care that North Carolinians with mental illness receive has declined while allegations of fraud and waste have increased.  North Carolina is trying to pick up the pieces of its shattered system, but the many negative effects associated with the privatized system are still felt across the state today.  


La. privatization requires "layer" of oversight

June 2010

A battle is shaping up in Louisiana that could provide a model for other states to bring public accountability to privatization decisions. On a lopsided 64-27 vote last month, the state House approved a bill that would enable lawmakers to review and veto privatization contracts.

Gov. Bobby Jindal is planning to lay off state workers and hire outside firms to run psychiatric hospitals and other healthcare facilities. Rep. John Bel Edwards said the legislature must be allowed to review long-term contracts to make sure they save money and don't reduce patient care.

Private foster care: Child welfare versus profit

April 2010

Nebraska's recently privatized child welfare system was in disarray in April, when two contracted companies dropped out because they found the work unprofitable.