Who Benefits from the War on Texas Medicaid Providers?

America is about to experience a deluge of Medicaid money. At the same time, privatization is coming hot on the heels of Medicaid expansion. Here in the Lone Star State, the proposed Texas Solution from the TPPF is built around block grants, the idea being that the State will disburse that money to “free market” private insurers. It’s tough to speculate on what that might look like, so we’ll stick to the facts of what Texas’ Medicaid program looks like today, because, through HMO management, it’s largely privatized already.

It’s generally agreed that — despite a major lawsuit — Medicaid patients in Texas don’t get served to the extent they do in other states. Be that as it may, the program still consumes an enormous chunk of the state budget. A perusal of specifics supplied by Texas’ HHSC gives us a rough picture of where that money goes on its way to eligible kids (although it seems to have a tough time getting there).

One of the main corporations through whom Texas’ Medicaid billions passes is Centene Corp; they were in the news very recently as they topped earnings estimates on the “expansion of contracts in Texas” and other states. Another is Amerigroup; they made big financial news last year when they were bought out by Blue Cross / Blue Shield behemoth Wellpoint. Amerigroup has had some trouble with Medicaid in the past, but apparently corporate Medicaid fraud doesn’t carry any potential jail time with it.

Managed care presents a perplexing problem to a program like Medicaid. Because, under Medicaid, patients have a statutory right to care – but HMOs have a deserved reputation for being somewhat tight-fisted when it comes to delivering services. It’s built right into the business model, in which the HMO collects money per patient (“capitation”), but pays out per service – the less services they cover per patient, the more money they make.

It’s very interesting to note that the company highlighted in the aforementioned LA Times article is a major player in the Texas Medicaid managed care space — one that whined about trouble in Texas Medicaid as its stock plunged last year (it’s since recovered nicely). The main problem was unexpected costs in El Paso and the Rio Grande Valley — areas that we here at TDMR are keenly aware of as prime target regions for overzealous regulators.

We’re not trying to imply that the State is taking orders from their corporate partners. But it is our experience that political events generally move due to a convergence of agendas. In addition to the obvious profit motive for HMOs and insurers in a general restriction of Medicaid services, there’s a clear political agenda in the Governor’s stance on Medicaid expansion. Other politicos can make noise about their stance on Medicaid fraud, smoothing the way towards expansion with a constituency markedly hostile to it. All of which is politics as usual — except that innocent people are being really badly hurt.

We’ll continue this discussion shortly by looking carefully at the political influence wielded here in Texas by corporations like Amerigroup and Centene, and the intersections of the many agendas driving Medicaid policy. Stay tuned…

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