Hawaii Medicaid, UnitedHealth, and the Election

With the elections over, some interesting coincidences have arisen involving unregulated donations to Republicans successfully running against Democratic incumbents,  and states that have turned over parts or all of their publicly funded programs (i.e., Medicaid and Medicare) to profit-making corporations such as UnitedHealth and Wellcare.

On November 3, Public Citizen published a report of the congressional races where unregulated third-party contributions played a role.  They found that in 58 of the 74 congressional elections where power changed hands, outside spending from unregulated sources ranged as high as $8.7 million for the new Republican senator from Illinois.

The report reminded me of something I read earlier this summer.  On July 26, The Center for Public Integrity reported that the five top profit making insurance companies were talking about forming a non-profit.  The purpose was to funnel about $20 million towards candidates who would protect their interests when the time comes to write the actual regulations for health care reform.  According to the article, one of the new association's biggest targets was going to be health reform's insistence that the companies actually spend eighty percent of the premiums collected on medical care and services.

Insurers are concerned about the new regulations because the new law mandates consumer refunds if the companies’ administrative costs are excessive.

Health Care for America Now, a coalition of consumer groups that backs the new law, last week issued a study which indicated that if the six biggest for-profit insurers were required to meet the new legal standards in 2009, they would have been obligated to pay a total refund of $1.9 billion.

CPI identifies 71 candidates in 34 states where winning Republicans who received unregulated campaign contributions overturned incumbent Democrats.

Coincidentally, Medicaid and/or Medicare services in 33 of those states are administered by for profit health companies.  UnitedHealth alone operates Medicaid or Medicare programs in 31 of the 34 states.  The other two companies are Wellcare and Wellpoint.

Thirty of the 71 candidates were concentrated in the ten states (of 34 total) where both UnitedHealth and Wellcare operate Medicaid and Medicare programs.  These are the same two companies that have been in charge of Hawaii's Medicaid programs since February 2009.

Twenty-nine of them were in eleven states where federal Medicaid, DOJ or Civil Rights authorities have intervened since February 2009 to prevent civil rights violations stemming from Medicaid budget cuts.


UnitedHealth operates a Medicaid or Medicare program in thirteen of the total of fifteen states where federal regulators have intervened to stop civil rights violations against people with disabilities.

Hawaii's Medicaid debacle could be a view into the future if for-profit health insurance companies are allowed to continue taking over Medicaid and Medicare.

In the first year after UnitedHealth and Wellcare took over the state's $1.2 billion annual Medicaid budget to help the elderly and people with disabilities stay in their homes, the death rate in that group rose 36%.

UnitedHealth and Wellcare report fairly consistently to the SEC that their Medical Benefits Ratio (the percent spent on actual services out of the monthly premium) is in the 80-85% range.  With Hawaii's annual budget ranging from $1.2 billion to $1.3 billion, that means the two companies are whisking somewhere between $15 million and $25 million a month away to their out of state corporate headquarters.

That's why services are being cut.  Not because the state is running out of money, or the economy is terrible.  But because profit-making health insurance companies have to keep their profit lines going just like the banks do, regardless of the human cost.

Ironically, UnitedHealth has just released a study trying to prove the US will save $3.5 trillion in the next twenty-five years if only every state would turn it's Medicaid and Medicare programs over to them (or companies like them).  What they don't tell you is that is after they take their fifteen-twenty percent cut off the top of what they project will be a $63 trillion business over the next 25 years.

Do the math.  Does the country save more money by turning Medicaid over to these profit-making companies or by using the almost $10 trillion they'd take in profit to restore services to our elderly and disabled citizens, along with all the jobs that sector creates.