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Democratic U.S. Rep. Dave Loebsack, Iowa, is calling the impending exit of UnitedHealthcare from Iowa’s Medicaid program “a disaster,” saying the issue highlights deeper problems of a model in which private companies manage health care for the poor and disabled. 

UnitedHealthcare handles roughly 425,000 of the state’s Medicaid recipients, the largest of three companies that participate in the program. The company’s departure was announced Friday by Republican Gov. Kim Reynolds’ office, which has blamed UnitedHealthcare for the breakup.

Loebsack said Monday the situation stands as an example of why Iowa Medicaid “never should’ve been privatized in the first place.” The congressman said he’d like to see the program go back into the state’s hands but doubts the Reynolds administration would want that.

“This is a disaster in many ways,” said Loebsack, whose congressional district covers southeast Iowa. “I mean, we’re talking two-thirds of the people who are on Medicaid. It’s a very bad situation for those folks.”

The congressman also said it'll be up to the Reynolds administration to ensure those Medicaid patients are able to transition to new providers.

Last year, UnitedHealthcare received about $2 billion in state and federal dollars to participate in the program. In a statement Friday, Reynolds said the company had made “unreasonable and unsustainable” terms for its renewal contract, forcing her to end talks. Meanwhile, UnitedHealthcare officials have pointed fingers at the state, saying the program has long been underfunded.

UnitedHealthcare is the second insurance company to leave Iowa Medicaid since the state switched to a private management model about three years ago. Democrats and Republicans have mostly assembled on opposite sides of the issue, with Democrats calling the switch expensive and potentially dangerous while Republicans say the public program would have bankrupted the state.

Area hospital Genesis Health System is also concerned over what’s to come as UnitedHealthcare backs out.

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Henry Marquard, Genesis' government and community relations officer, said the hospital was as surprised as anyone when they got the news about United Healthcare.

While in theory there wouldn’t be an immediate impact on patients, Marquard said the real question is what happens in July after United’s contract with the state runs out.

“One of the big problems that we have with managed care is the inconsistencies of it, and trying to navigate through different carriers, different systems and different methods and having to battle every time we do something,” he said. “Now we’re going to have a new one with a whole bunch of lives, and those are going to be people that aren’t trained.

“It’s just a massive headache and a huge cost to providers to try and figure that out,” he added.

From a provider’s standpoint, Marquard said, any time you gain or lose a carrier there is disruption.

When AmeriHealth Caritas Iowa left the Medicaid program in November, causing roughly 215,000 Iowans to be moved to UnitedHealthcare, some patients were transferred multiple times, Marquard said.

“Patients that had real high complexity of their cases or their health situations would often be transferred from Americare to somebody else, then over to the state, because the state was, for quite a while, housing the 100,000 or so Medicaid members that were the most complex patients,”  he said. “Literally, we were having some patients re-enrolled or transferred three to five times."

Cedar Rapids Gazette reporter Michela Ramm contributed to this story.

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