With Medicaid primed to expand because of the the federal health insurance legislation, private insurance companies are lobbying cash-strapped state governments like Illinois to outsource more of their health care programs into private "managed care" systems.
Too often, however, the risks of such policies are altogether ignored. In a must-read piece this morning, the Washington Post's Alex MacGillis describes the "steady stream of controversies" that private managed care has produced elsewhere in the country. For example, a May study (PDF) by the U.S. Department of Health and Human Services found that 2.7 million children on Medicaid in nine states, most of them states that outsource Medicaid, are not receiving required screenings and immunizations. And Wisconsin just canceled contracts with two provider networks who it alleges were "creating profits at the expense of patient care."
Illinois has had similar experiences in the past. Indeed, one particular managed care organization systematically avoided enrolling pregnant women and unhealthy patients between 2000 and 2004, despite receiving $234 million from both the state and federal government to do just that. Private insurers can also carry higher administrative costs, many of which are hidden by the providers.
When the state's public managed care programs are working as well as they are, why change course?