Rocky Transition: Medicaid to Private HMOs

Eight-year-old Mikeriya Ainsley of Georgia said she gets teased at school because of the way she looks and talks.

"They say I don't fit in," Ainsley said.

Ainsley was born with a brain disorder and developmental delays, which means she struggles with basic tasks such as buttoning her shirt.

All her life, Georgia's Medicaid system paid for Ainsley to receive weekly physical, occupational and speech therapy, along with several other low-income children, at a facility in Monroe, Ga.

Then last year, Georgia turned its state-run Medicaid system over to insurance companies as part of a switch to health maintenance organizations, known as HMOs. Payment for Ainsley's therapy -- and the therapy for other children at the Georgia clinic -- was denied by the new HMOs.

"It's hard enough for them, you know, to make it in this world. And then a service that's supposed to be available to them [is] taken away from them just because somebody wants to make money," said Ainsley's therapist, Ellen Roberts.

Roberts blames the switch from state-run Medicaid to a managed care system for a decline in the medical benefits and services that Ainsley, and other children she treats, receives.

"It is heartbreaking because we've seen children under the old Medicaid program make tremendous progress, and we're not going to see it with these kids," she said.

Cutting Red Tape, Causing New Problems

According to data provided by the Centers for Medicare and Medicaid Services, 32 states have turned their Medicaid systems over to HMOs in hopes of cutting through red tape, providing better care to needy patients and saving taxpayers money.

But critics now say that the insurance companies tasked with running the new system and improving patient care are actually denying services to those who need them most.

"The effect on patients has been having a harder time getting access to the care they need, waiting longer for doctor's visits and in some cases, services being cut altogether," said Jerry Flanagan, the health care policy director at the Foundation for Taxpayer and Consumer Rights.

The insurance industry disputes these claims and points to independent studies that it says show that the quality of care provided to Medicaid recipients improves under managed care systems.

"Whether you look at infant mortality, low birth weight babies, immunizations," said industry spokeswoman Susan Pisano, "all of those things have been improved when Medicaid has moved to managed care systems."

Pisano represents America's Health Insurance Plans, the largest trade group for insurance companies.

Critics, like Flanagan, question whether for-profit companies can provide quality care at the same time they try to meet or exceed shareholder expectations.

"Wall Street wants to see big surpluses and big dividends," Flanagan said. "What Wall Street demands from these for-profit companies is that they retain more of the states' dollars for their own profits. And that's very good for the business of HMO health care, but it's very bad for patients who are enrolled in the programs."

Pisano disputed that characterization and said that Medicaid HMOs are "a fairly low-profit business."

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