Iowa's Medicaid woes eroding patience of GOP legislators, lawmaker warns

Gov. Kim Reynolds acknowledged Thursday that Iowa's decision to hire private companies to manage the state's $5 billion Medicaid program has had a rocky start, but she insisted steps are underway to fix troubles that have generated widespread complaints from patients and health care providers.

The Republican governor also indicated that while input from the Iowa Legislature is welcome, she doesn’t necessarily believe the problems will require the passage of special bills targeted at the issue. However, Iowa House Speaker Linda Upmeyer, R-Clear Lake, bluntly warned that lawmakers’ patience is waning with Medicaid managed care, which serves 600,000 low-income and disabled Iowans.

“It has not improved enough, fast enough, that anyone is comfortable with it,” Upmeyer told a meeting of Iowa editors and reporters at a news briefing at the Iowa Capitol hosted by the Associated Press.

Upmeyer said she has heard “loud and clear” from House Republicans that they expect Medicaid to be fixed, adding, “and if it requires our attention, then it will.” But she is hoping Iowa can join other states that have good managed care systems that provide coordinated care for chronicallly ill people with better outcomes.

Her concerns were shared by Senate Minority Leader Janet Petersen, D-Des Moines, who remarked that “we have gotten emails by the dozens about the Medicaid mess.”

Reynolds and the legislative leaders spoke at separate times during Thursday’s briefing, which focused on issues expected to be debated in the Legislature’s 2018 session, which begins Monday. Former Iowa Gov. Terry Branstad implemented Medicaid managed care nearly two years ago, replacing traditional fee-for-service health care in an effort to contain soaring costs. But patients and providers are still voicing unhappiness and anger about coverage and payment problems.

Reynolds defended Medicaid managed care Thursday, saying the former state-managed program was unsustainable because costs had more than doubled over the past decade. Thirty-nine other states are offering versions of managed care and she described it as an effort to help coordinate and improve care for the most vulnerable Iowans.

“We have made mistakes. The rollout was not perfect, but is the right thing to do. But we have to recognize and admit the mistakes we made and we have to look at ways to move forward,” Reynolds said.

Reynolds said her effort to address the problems includes the appointment of Jerry Foxhoven as director of the Iowa Department of Human Services and the hiring of Michael Randol, the former director of the Kansas Medicaid program, to lead Iowa’s Medicaid program. She said these people offer a “fresh set of eyes” to ensure that Iowans have access to quality care, that providers are being paid and that managed care companies are being held accountable.

The governor said Foxhoven has told her that Medicaid managed care continues to be “the way that we should be going.” Furthermore, legislation is not necessarily needed to address Medicaid managed care issues, the governor suggested, although she promised to continue to talk with legislators and with Iowans throughout the state about their concerns.

Here are some other issues discussed at Thursday’s forum:

STATE AID TO LOCAL GOVERNMENTS: Reynolds said her budget proposal to the Legislature will include state funding to “backfill” cuts in local property taxes approved by lawmakers in 2013. The backfill affects cities, counties and school districts. The most recent payments have been $152 million annually. But Upmeyer cautioned that she has been suggesting to cities and counties for the past three years that they should begin to move away from the state funding, saying, “At some point it will become an issue.”

MINIMUM WAGE: Neither Reynolds nor legislative leaders expressed any indication that legislation will be approved to raise Iowa’s minimum wage, now set at $7.25 per hour. “What I hear is that employers are paying far above the minimum wage right now,” said Sen. Bill Dix, R-Shell Rock.

STATE BUDGET:  Lawmakers are facing a $37 million shortfall in a $7.2 billion general fund budget for the fiscal year ending June 30, which will require adjustments to balance state spending. However, state aid for K-12 schools is typically taken off the table when lawmakers are looking for spending cuts in such situations, Upmeyer said. State revenue estimates are expected to increase because of federal tax reform, which could ease the situation. But the speaker indicated that any “artificial windfall” because of the changes approved by Congress will be addressed the Iowa Legislature because Iowans could be required to pay more state taxes.

TAX REFORM: Both Reynolds and Republican legislative leaders are talking about reforming Iowa’s tax code. But  it’s not clear yet what they intend to propose. “We are working on those details right now,” Reynolds said, adding she wants to provide tax relief for “hard-working families.”

Upmeyer said she would like to have a discussion about “modernizing the sales tax,” referring to sales taxes for online purchases that often are not currently paid by Iowans. One of her concerns is fairness to Main Street merchants in Iowa who are required to charge sales taxes. But she noted that a U.S. Supreme Court decision in a South Dakota case is pending regarding online sales taxes. Meanwhile, Dix said Senate Republicans “are focused on reducing the rates and making Iowa more competitive.”

House Minority Leader Mark Smith, D-Marshalltown, said Democrats are “adamantly opposed” to increasing sales taxes, and he believes income taxes offer a more progressive form of taxation. Meanwhile, Petersen said lawmakers need to examine state tax credit programs provided to businesses to make sure Iowans get a good return on their investments. Some tax credits “maybe need to go away,” she suggested, adding the tax system should be fair and transparent and accurately show Iowa’s competitiveness with surrounding states so that businesses truly know what Iowa’s tax climate represents.