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What went wrong with Iowa's Medicaid expansion

State scraps Medicaid plan as only two participating carriers pull out

Iowa's plan to expand the state's Medicaid program has not gone smoothly. And now, state officials plan to scrap the program all together. 

When the state proposed its expansion plan, the Obama administration denied most of the requests for flexibility. The program, known as Marketplace Choice, also experienced double-digit rate hikes; state officials eventually announced in July that they planned to close the Medicaid expansion waiver, Forbes reports.

Driving the program's collapse were two major factors: The spike in premiums and the fact that it attracted just two carriers, Iowa's consumer operated and oriented plan (CO-OP), CoOportunity Health, and Aetna-owned Coventry Health.

CoOportunity Health enrolled more than 35,000 members during its first year of operation, surpassing its first-year target of 12,000 members.

Yet despite the early success, the CO-OP recorded a net operating loss of $163 million, and blamed the state's Medicaid program as a main factor in its downfall, notes Forbes. So in order to deal with the financial losses, CoOportunity Health ended up raising premiums by an average 21.2 percent.

And even though the Obama administration provided the CO-OP with a $32.7 million taxpayer-funded bailout, it wasn't enough; CoOportunity Health announced plans to pull out of the marketplace.

That left Coventry, which needed premium increases averaging 19.4 percent in 2015, and is now requesting to increase premiums by another 16 percent in 2016. The plan announced its troubles at the beginning of this year, and said it would no longer accept new applicants.

Now, as a result of both CoOportunity Health and Coventry's downfalls, just 5 percent of Iowa's Medicaid expansion enrollees are in Affordable Care Act exchange plans, notes Forbes. What's more, the Medicaid program's costs are a matter of concern. When policymakers were debating Medicaid expansion, state officials predicted the program would cost between $71 million and $115 million in fiscal year 2014. But that ended up not being the case, as actual expansion costs totaled more than $258 million.

So after 18 or so odd months, Iowa is shutting down its Medicaid expansion program. State officials have already moved new applicants and former CoOportunity Health enrollees into the traditional Medicaid program, and they most likely will close the Marketplace Choice waiver altogether--they'll transition the remaining enrollees into Medicaid managed care.  

For more:
- here's the Forbes article

Related Articles:
Iowa's CO-OP pulls out of marketplace despite first-year success
5 secrets to exchange enrollment success: CoOportunity Health
Iowa governor defends companies selected to manage Medicaid program
Iowa Medicaid privatization plan pits savings against services