The idea is that the private companies would save the state money, but it has been a rocky transition in Iowa, especially for people like Neal Siegel.

Siegel is one of six disabled Iowans  alleging that Medicaid managed care, as it is known, deprives thousands of Iowans with disabilities the right to live safely in their homes.

Medicaid serves people with disabilities, low-income people and people in nursing homes. A combination of federal and state funds pays for it. It covers 74 million people across the country these days, about half of whom are in .

Siegel, a former financial consultant, was in a hit-and-run bicycle crash four years ago that left him with a severe brain injury. He uses a wheelchair and can barely speak.

“The system is too stressed right now with the way it’s being managed, and it’s not healthy for individuals with chronic or serious disabilities,” said Miller.

According to the lawsuit, the company claimed that spending on Siegel’s case was cut because it had exceeded a limit set in state policy. A spokesman for AmeriHealth Caritas said the company could not comment on ongoing litigation. The state has asked for the lawsuit to be dropped.

In addition to the suit, complaints about Medicaid from hospitals, doctors and patients have  in Iowa.

Iowa’s Department of Human Services Director Jerry Foxhoven defended moving the entire Medicaid population to managed care. He said more taxpayer dollars will be saved under private management.

But he said his agency is willing to make changes, especially for people like Neal with serious disabilities.

“Everything’s always on the table. We’re always looking at everything to say, ‘How do we best serve the people we’re trying to serve and be the best stewards of taxpayer dollars?'” Foxhoven said.

For their part, the three companies with contracts in Iowa said in statements that the first 18 months of Medicaid managed care have been successful. But they also have said to state officials that reimbursement rates were  provided to them before the project began.

They are now negotiating to get millions of dollars more in state funding.

So where’s the savings? So far, no state has actually done a comprehensive review of whether private companies actually save Medicaid dollars, said , an associate professor with Georgetown University who studies managed care.

“You’d really need to be able to see, are you saving money overall or not, and if you are spending less money, are you suppressing services that are needed? Or are you really finding efficiencies and only delivering care that families really need?” said Whitener.

For the moment, those questions don’t have definitive answers.

Meanwhile, Iowa has to balance its books. Republican Gov. Kim Reynolds had to tap more than $260 million of the state’s reserve fund this year, and officials expect next year’s budget will be even tougher to negotiate. Medicaid funding is likely to continue to be a large part of the discussion.

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Everywhere in the Hummel household, there are signs of just how much care Andrea needs. Her bedroom, for instance, looks like a typical kid’s room — stuffed animals, a frog light that shines images on the ceiling, and a butterfly mobile. But the bed stands out – the head of the bed goes up and down so Andrea can have her head elevated when she sleeps.

“When she was throwing up all the time when she was in a regular bed, I hardly got any sleep,” Hummel explains, “because if I heard her coughing, I knew she was choking.”

Andrea has this bed thanks to Medicaid — as well as her wheelchair and nurses, like Nate Lair who’s been with the family for years. When Hummel gets home from work, Lair says, Andrea’s personality changes.

Amy McCoy, who is with Iowa’s , says patients will continue to receive the same care under the new system, and the changes will save money and streamline the services.

“Some people might have five doctors,” McCoy says. “Through this care-coordination effort, they can make sure everybody’s on the same page with their treatment.”

McCoy says having private insurers manage Medicaid is nothing new.

“Thirty-nine states are using some kind of managed care,” she says. “So other people have done this. We have models to look after, and we have companies who have experience.”

But a lot of states, including and , have not done so well, says , president of the Iowa Senate and a Democrat.

“You know, when I was a kid growing up my mother would say, ‘If everybody jumps off the bridge, are you going to, too?’ ” Jochum says. “Of course not! The point is that just because everyone else is doing it doesn’t make it better.”

Families like Brenda Hummel’s have a natural ally in Jochum; she, too, has a daughter with special needs who has been on Medicaid all of her life. Still, even with Jochum’s opposition to the changes in Medicaid, the process in Iowa is moving forward. Gov. Branstad did not need legislative approval when he announced the switch to managed care in January.

In response, some lawmakers, including Jochum, insisted on a committee to oversee the transition and to make sure that consumers are treated fairly.

“There is no way,” Jochum says, “you can put that many people into a system all at once, with various degrees of disabilities and need, and think anyone can manage that and manage it well.”

Eleven companies have submitted bids to manage most of the $4 billion program, and Iowa plans to announce later this month which insurers will win the bid.

studies health policy at the University of Iowa. He says a lot of states have experimented with this idea, but on a smaller scale.

“They’ve not … done what Iowa is proposing to do — or at least most have not done this — which is to put everyone into it,” Wright says.

The only hurdle that stands in the way of approval, he says, is an OK from the federal government.

“If that happens,” Wright says, “starting in January, it’s full steam ahead.”

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“Clara was listening to the news on Iowa Public Radio and that’s how we found out,” Fairchild says. They went to their health plan’s website that night. “No information. We still haven’t gotten a letter about it from them.”

The two are the sole employees of a cleaning service and work nights. Fairchild has chronic leukemia but treats it with expensive medicine. Last year they saved hundreds of dollars switching from the insurer Wellmark to a plan run by CoOportunity Health. For the first time in a long time, Fairchild says, they felt like they had room to breathe.

“Basically it covered our office visits; covered exams,” he says. “It covered all but $40 of the medicine every four weeks. It was just marvelous. It probably was too good to be true.”

It was for them. CoOportunity Health . The Affordable Care Act for health care co-ops, to enable the organizations to compete in places where there aren’t many insurers. CoOportunity Health was the co-op in the country in terms of membership, and one of the largest in terms of the g it received.

But then CoOportunity hit a kind of perfect storm, says , director of the University of Iowa’s public policy center. First, the co-op had to pay a lot more medical bills than those in charge expected.

“CoOportunity Health’s pool of people was larger than expected, was sicker than expected,” Damiano says. “So their risk became much greater than the funds that were available,”

The reason the co-op’s customers were sicker has a lot to do with what the insurance market looked like in Iowa before Obamacare. The largest insurer by far in the state was and still is Wellmark. But Wellmark decided not to offer any plans on Iowa’s health exchange, leaving just CoOportunity and one other insurer — Coventry — offering plans on the exchange throughout the state.

On top of that, when the Obama administration in late 2013 allowed people to keep the insurance plan they already had, many customers happy with Wellmark stayed put. Damiano says this meant many of the customers who flocked to CoOportunity tended to be like Fairchild — people with expensive health problems who’d had trouble paying for insurance before, in the market Wellmark dominated.

“It was always going to be a challenging market to try to reach,” says Damiano, “and on top of that, the whole idea of co-ops was relatively new and experimental. But it was to try to create competition, on that private sector approach,” says Damiano.

Also, Gerhart says, the co-op thought it was going to get more federal money.

“On December 16 around 4 o’clock we were informed they weren’t going to get any further funding,” he says. “Nothing was pulled — it just wasn’t extended further.”

Gerhart is now essentially the CEO of the co-op because the state has taken it over. He likens the situation to a small business suddenly having its credit shut off by the bank. Even though CoOportunity is not officially dead yet, Gerhart is telling its customers to switch insurers.

He says it’s too early to make predictions about the fate for all co-ops.

“Ours was the second largest in the country, so you’ve got to look at it that way.” Gerhart says. “If the second largest can’t make it, how viable are the other ones? I don’t know. But at the end of the day they didn’t have enough capital to support 120,000 members.”

In a , Dr. Martin Hickey, chairman of the board of the National Alliance of State Health Co-Ops, said, “The news about CoOportunity Health is not a statement on the health insurance co-op program or the co-op concept. It’s a reflection on the fact that all insurers — not just co-ops — are operating in unique markets with unique business plans and varying state regulations. The circumstances for CoOportunity Health in Iowa are not the same as those in the 23 other states in which co-ops are currently operating.”

But the co-op’s failure in Iowa has left David Fairchild and Clara Peterson scratching their heads.

“I mean the whole Affordable Care Act is [about] competition between insurance companies, and now we’re back down to what?” says Peterson.

For them, only one option: Coventry. They’ve already applied through healthcare.gov and now they’re now waiting for approval for a plan that will cover a lot less of Fairchild’s medicine expenses.

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“If you do not have insurance and you want to enroll and you have an e-mail address where you know the password,” she said, “come to the computer lab we will guide you through the application.”

Jerry Gross enthusiastically darted to the front of the line. This tall 56-year-old carries just a duffle bag and his winter coat. He arrived in Des Moines in early December.

He says when he can’t find a job in one town, he hitchhikes until he can find work. But he’s uninsured, and taking care of his health is always tough.

“I take three different water pills for hypertension. I’ve got like 10 more days of that left, and after that what do you do?” he says.

When the federal Affordable Care Act called for states to expand Medicaid programs to cover people like Gross, Iowa Republican Gov. Terry Branstad refused. He said he feared the federal government wouldn’t come through on its promise to fund the expansion to include childless adults. Iowa was one of many states that initially refused all or part of the federal funds offered.

“We’re not just one of those states that said, ‘Oh yeah, we’ll take the federal money.’ No. We said ‘no,’ ” Branstad said during a recent news conference.

Eventually Branstad said “yes,” but only if Iowa could take the money on its own terms. The state legislature, which is evenly split between Republicans and Democrats, came up with an alternative: Federal expansion dollars would pay for managed care policies that poor people would select on the HealthCare.gov site.

Iowa’s plan also provides incentives for people on Medicaid to monitor their health. Branstad calls it having “skin in the game.”

Iowa is one of a that negotiated or are negotiating with the federal government to customize their Medicaid expansion and still get federal funding. Branstad notes that “other states, like Tennessee and Pennsylvania, are looking at our plan.”

The federal Department of Health and Human Services’ decision to a waiver to try this idea is not surprising, says , executive director at the Georgetown University’s Center for Children and Families, a policy research center. She says that the Obama administration “is willing to bend over backwards to get to ‘yes,’ ” to show Republican governors how much flexibility they have in experimenting with Medicaid expansion in their states.

But “there are some lines they can’t and will not cross,” Alker says. While Iowa beneficiaries have to pay something for premiums and non-emergency care, recipients “can’t be disenrolled if they’re unable to pay those premiums,” she says. “That’s important, because we already have plenty of evidence to suggest that charging premiums to people below [the] poverty [line] will mean that they can’t afford them and they’re likely to lose their coverage.”

Alker worries that the Iowa plan’s for non-emergency medical transportation, which is included in coverage in other states, could have repercussions.

“They’re covered for emergency transportation. They’re going to get that ambulance to get to the hospital. But we want to make sure folks are able to get their preventative and primary care appointments,” Alker says. “When you’re talking about people who literally could have limited or no income, that becomes a real barrier.”

People are already signing up, so that they’ll be enrolled in Medicaid in Iowa beginning Jan. 1.

This story is part of a reporting partnership between NPR and Kaiser Health News.

ºÚÁϳԹÏÍø News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about .

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