Privatizing D.C.’s Medicaid system makes zero sense—not even to save money

The nation’s capital recently announced it plans to fully privatize its Medicaid program—which is chilling news.

Yes, most of D.C.’s Medicaid recipients already have their health care managed by private insurance companies. But over the course of five years, the most vulnerable recipients, people suffering with disabilities, behavioral health issues, or chronic illnesses like HIV, will be moved from what’s known as “fee-for-service” to so-called “managed care.”

The question is: why?

Evidence is mixed at best that privatization saves the public money or leads to better patient outcomes than traditional, publicly managed Medicaid.

In Iowa, patients have sued the governor alleging the private insurance companies the state hired in 2016 refused to pay for life-saving services. Meanwhile, those insurers have asked for more and more money—$334 million extra in 2018 and $386 million this year. One insurer still owes medical providers $1.4 million after pulling out of the program nearly two years ago.

In Kansas—as I recently wrote in the Kansas City Star—independent auditors say there’s no way to evaluate the state’s privatized Medicaid program because patient outcome data is so hard to come by. Application delays were once so long that the program had to submit to federal monitoring.

So, what’s this about? One has to assume ideology is at least partially to blame. 

Decades of tax cuts for corporations and the wealthy have taken their toll on public budgets nationwide. Last year, for the first time on record, the 400 wealthiest Americans paid a lower total tax rate—spanning federal, state, and local taxes—than any other income group.

While D.C. has a relatively progressive tax system, the city government continues to waste millions of dollars on tax breaks for corporations that aren’t contributing to economic growth. For example, tax incentives for tech companies are currently costing the District $40 million annually in foregone revenue.

At the same time, ideological attacks on government have manufactured a common sense that corporations—even health insurance companies, one of the most hated industries in America—are inherently more efficient and innovative than the public sector. The private sector just does things cheaper, faster, and better, many assume.

Per usual in American politics, racism is at play. Dog whistles like “welfare queens” and “illegals” have helped associate poverty with people of color, eroding mass support for social programs. Nearly 80 percent of D.C.’s Medicaid recipients are either black or Latinx, while those groups only account for 58 percent of the District’s total population.

Why else would D.C. be handing over the responsibility of taking care of its most vulnerable to corporations with track records of poor service and higher costs?

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