AmeriHealth Caritas Iowa filed a Worker Adjustment and Retraining Notification (WARN) notice announcing 400 layoffs. The private health insurer said it is ending its contract with the Iowa government to manage Medicaid patients. The move will leave hundreds out of work by the end of the year.
AmeriHealth Caritas Contract with Iowa Ends November 30
AmeriHealth Caritas is one of three private companies that managed healthcare for Iowans enrolled in Medicaid. The company’s Medicaid contract ends with the State of Iowa on November 30. That means the tens of thousands of Iowans who had their medical care managed by AmeriHealth over the last year and a half will be assigned to one of the other two private insurers managing Medicaid patient care.
The two other private health insurers, UnitedHealthcare Inc and Amerigroup Corporation, have signed contracts to provide Medicaid services.
In late 2016, AmeriHealth, UnitedHealthcare, and Amerigroup complained that the privately run Medicaid program is “drastically underfunded” and has been a “catastrophic experience.” They said that, without major changes, the program would be unsustainable.
AmeriHealth was in the worst position of the three, as it ended up enrolling the most seriously disabled Iowans who rely on Medicaid. AmeriHealth had the largest number of Medicaid enrollees, at more than 213,000. Of that number, AmeriHealth had the largest number of the state’s special-needs population, with more than 23,300 receiving long-term care support and services.
Amerigroup has 187,000 Medicaid enrollees, of which 7,700 are designated as special needs patients. UnitedHealthcare has 167,000 enrollees, of which 6,500 have special needs.
Huge Financial Losses at AmeriHealth Caritas
Because its care tends to be the most expensive, AmeriHealth has been saddled with huge financial losses. Actually, all three private insurers have sustained huge losses; collectively, more than $500.0 million during their first year operating in Iowa.
AmeriHealth reported the biggest losses—at nearly $300.0 million, followed by Amerigroup Iowa—at $133.0 million, and UnitedHealthcare of the River Valley—at more than $100.0 million.
While AmeriHealth announced a number of cost-cutting measures, it hasn’t been enough. In June 2017, the company recorded another loss of $65.0 million.
The state switched to private Medicaid management under former Governor Terry Branstad. The fiscally conscious Republican assured voters that it would be more efficient, leading to hundreds of millions of dollars in savings for the Hawkeye State.
That clearly hasn’t materialized.
“Iowa WARN Log,” Iowa Workforce Development, last accessed November 3, 2017.
“AmeriHealth departure means 400 Iowa layoffs,” Quad-City Times, November 2, 2017.
“Iowa Medicaid payment shortages are ‘catastrophic,’ private managers tell state,” Des Moines Register, December 21, 2016.