Unions block Medicaid scrub that could’ve saved state $350M a year

Paul Kersey

Labor law expert, occasional smart-aleck, defender of the free society.

Paul Kersey
/ Labor
November 29, 2013

Unions block Medicaid scrub that could’ve saved state $350M a year

It wouldn’t be entirely fair to say that government unions exist solely to make government less effective and more expensive, but sometimes that’s just exactly what they do. One blatant example came a few weeks ago, when American Federation of State, County, and Municipal Employees Council 31 pushed the state into abandoning its contract with...

It wouldn’t be entirely fair to say that government unions exist solely to make government less effective and more expensive, but sometimes that’s just exactly what they do. One blatant example came a few weeks ago, when American Federation of State, County, and Municipal Employees Council 31 pushed the state into abandoning its contract with Maximus for the scrubbing of Medicaid eligibility rolls.

Maximus had been succeeding where the state workforce had failed in finding Medicaid enrollees who were ineligible for the program. But the union insisted that the work must be done in house, by its own members, and persuaded an arbitrator to rule in its favor. So now Maximus will be sidelined and state taxpayers will be burdened with a bloated health insurance program.

The state’s two-year agreement with Maximus was slated to cost $76 million, but there were hundreds of thousands of individuals in Illinois’ Medicaid program who shouldn’t have been there. The state initially estimated that this enhanced eligibility review would  save the state $350 million, but the audit was delayed for several months, reducing the savings that the state has been able to capture so far. But having an outside contractor review the Medicaid files meant that there was less for state employees – AFSCME’s members – to do, and the union objected. Based on a very fine parsing of an obscure provision in state law – the statute said the executive branch “may” turn the task of reviewing Medicaid eligibility over to a third party but was not required to – an arbitrator ruled that Maximus needed to be taken off the job.

Maximus had been keeping up its end of the bargain. So far,  Maximus has identified nearly 230,000 case files where it believes individuals were not eligible for Medicaid but were receiving benefits anyway. The state has processed a little over 60 percent of these recommendations, ultimately cancelling 115,000 cases.

Although the state appealed the arbitrator’s decision, it appears that it has now decided to give up. Healthcare and Family Services Deputy Director Michael Koetting announced at the end of October that the state plans to restructure its deal with Maximus: the company will allow the state access to its data and information system, but the process of checking eligibility will be done by state employees again.

Of course, state employees’ poor track record in maintaining program integrity is what caused the legislature to seek out Maximus in the first place. In many cases, state workers weren’t collecting paystubs or verifying key information, including Social Security numbers, citizenship status and residency. And the annual eligibility checks, when they were performed at all, were frequently late, with some delays for annual checks lasting more than five-years.

AFSCME had a direct financial stake in this, and it was the opposite of Illinois taxpayers: AFSCME receives dues for every state employee, and the union is not awarded for how efficiently those workers do their jobs. Quite the opposite: more employees means more dues to the union. So naturally they will insist on having as little work as possible outsourced.

Going forward, if the General Assembly wishes to have work done efficiently they need to leave union officials no room to protest.  If they want to outsource work, they should say so clearly. Better yet, the General Assembly could change the state labor law so that union officials cannot protest when work is given to outside contractors.

For Illinois taxpayers, the moral of the story is that government employee unions are not your friends. Union officials can be counted on to pursue their own interests, even if that means making government more expensive and less effective.

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