On a frozen January evening in 2016, then-Kansas Gov. Sam Brownback bragged to a packed state capital building that his administration was providing “economic opportunity instead of government dependency.” He wasn’t referring to his notorious tax cuts, which had by that time blown a $170 million hole in the state budget. He spoke at length instead about his Medicaid reforms, including privatization under KanCare, which he called “innovation and modernization.”
We now know that, like many privatized state Medicaid programs, KanCare is far from innovative and modern. Independent auditors say there’s no way to know whether it’s effective because data on patient outcomes is so hard to come by. The Kansas Department of Health and Environment is currently threatening to drop one of the program’s three contracted health insurers over ongoing billing issues. Application delays were once so long that the state had to submit to federal monitoring.
But Brownback’s State of the State address that night in Topeka made his governing ideology crystal clear: Cutting taxes and starving public services went hand-in-hand with privatization.
That’s why Gov. Laura Kelly’s plan to hire hundreds of public workers to handle the most complicated Medicaid applications is a step in the right direction. It’s a modest but necessary reversal of Brownback-onomics, which more than doubled the number of no-bid state contracts over the past five years, totaling $428 million. But if she really wants roll back what she’s called a “fair amount of what I consider corruption” and avoid a “U-turn back to disaster,” her administration should completely sever ties with Maximus, the multinational corporation hired to staff the KanCare Clearinghouse.
Kansas should cancel the Maximus contract and bring the rest of the Clearinghouse’s call center jobs and support staff back under public control. As is often the case, and contrary to Brownback’s anti-government ideology, insourcing could save taxpayers money while improving service quality. Just one example: When the federal Department of Homeland Security insourced 200 previously contracted technology jobs in 2012, the agency was able to save $27 million that year alone.
The Maximus contract has the telltale signs of the damage that can be wrought by privatizing critical public services.
There’s the cutting of corners. From the start, Maximus understaffed the Clearinghouse, resulting in a backlog of unprocessed Medicaid applications, serious delays in nursing home admittance for seniors, frustrations over poor service, delays in health care providers receiving payments, and other problems. Two years in, the corporation was achieving only 40% accuracy on financial payments, less than half the 98% called for in the contract.
This is par for the course for the $3 billion corporation headquartered in Northern Virginia. Maximus has long profited from privatization of the social safety net, holding contracts nationwide for everything from job training to child support enforcement. In Wisconsin in the 1990s, it was caught spending money intended for the poor on marketing materials and workfare programs in other states. Its work on Illinois’s Medicaid program was so poor that state officials withheld payments for the first four months. Pennsylvania withheld payments to Maximus in 2016 because of understaffing, unprocessed paperwork and seniors seeking home care having to be admitted to nursing homes because of delays.
In 2007, Maximus agreed to a $30.5 million federal settlement to resolve a fraud investigation of its foster care contract with the District of Columbia government. A series of investigations by the federal government between 2010 and 2013 found that three states improperly claimed federal Medicaid reimbursements they had each submitted with Maximus’ help.
Then, there’s the race to the bottom when it comes to jobs. Workers report that Maximus pays Clearinghouse workers as little as $10.50 an hour. According to contract documents, Maximus has planned to outsource some of the Clearinghouse work to its employees in Colorado — and may have already done so — while paying lower wages to its Kansas employees doing the same work.
Maximus has a long history of labor and employment law violations, including wage theft and violations of anti-discrimination statutes. In fact, the U.S. Department of Labor is currently investigating systemic wage theft at the corporation’s Center for Medicare and Medicaid Services call centers, including one in Lawrence, where wages have been stagnant for years.
Public service jobs rely on local hiring and provide important pillars of economic security for communities, including decent family-supporting wages, affordable benefits, sick time off and secure retirement. Fully insourcing the Clearinghouse staff would ensure that Kansas tax dollars are supporting good jobs — for Kansans.
Finally, there’s Maximus’ drive to increase profits, which puts their bottom line over the public interest. Executives with the publicly traded corporation have told investors that “when unemployment rates are higher, volumes are better, we’re doing better,” have referred to Medicaid work requirements as “a nice opportunity for growth,” and once called the recent refugee crisis in Australia, where it also has contracts, an “exciting situation” and “a meaningful growth opportunity.”
Corporate executives far away in Virginia don’t know what’s best for the hundreds of thousands of Kansas children, elderly, disabled people, and pregnant women who rely on Medicaid for care and survival. Only Kansans do. That’s why it’s time to end the contract and bring these critical services back under public control.
Jeremy Mohler is communications director of 501(c)(3) nonprofit In the Public Interest.