How Rick Perry's Attempt to Privatize Medicaid Wasted Millions While Enriching Lobbyists and Hedge Funds
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Both as governor of Texas and as the leading Republican presidential candidate, Rick Perry has established himself as a harsh critic of federal programs -- and, in particular, as a "state's rights" advocate who accuses Washington of gross ineptitude and waste in providing services such as health care for the poor and elderly.
In his 2010 book "Fed Up" and in his campaign speeches, Perry has often asserted that the states, simply left to do the job without federal interference, could perform far better. The theme is highly popular, like Perry himself, in tea party circles.
"It is through states that the American people get the job done every day," he wrote in his book, "often in spite of a deeply flawed bureaucratic federal government." Late last year, when he proposed that Texas drop out of Medicaid altogether, he said: "We know how to deliver healthcare to more people in a less expensive way than what the federal government does. I need more states to stand up and say we don't want your strings attached. We don't want you down here telling us how to run our business."
If only Texas could operate wholly independently of federal rules, he insisted, "you will see more people in the state of Texas who will have more coverage and frankly we'll save money at the end of the day, as will the federal government."
Although Perry was forced to abandon that scheme when a state report showed that leaving Medicaid would cost Texas billions (and leave even more Texans uninsured), he still claims that the federal government should stop trying to make sure that more Americans have health care, and that programs run solely by the states would be more efficient.
But lately the facts about Perry's own record as governor have begun to emerge -- and they don't support his argument. Over the past several weeks, a Dallas TV station has exposed the "golden teeth" Medicaid scandal in Texas, now under investigation by the inspector general of the Department of Health and Human Services. The Perry appointees who run Medicaid have allowed hundreds of millions of dollars to be misspent on orthodontic braces for children who don't need them -- with huge profits for private dental clinics owned by Wall Street hedge funds.
Nor is that the only aspect of Perry's record that belies his boasting. One of the most embarrassing episodes during his first two terms as governor involved a plan to let private firms run Medicaid, replacing state employees. The privatization plan was an "innovation" that was supposed to save money. What it accomplished instead was to earn enormous sums for contractors like Deloitte Touche and Accenture (along with their Texas lobbyists), while costing taxpayers still more hundreds of millions of dollars -- and all without achieving its most basic objectives.
Four years after the plan was implemented in 2003, the Austin American-Statesman published a thorough report on its results, and what the newspaper found was a project "in shambles." The state had been forced to cancel its contract with the Accenture group and continue to use state employees to perform necessary work on an outdated computer system, exactly the same as before Perry's privatization scheme began. How much had this great innovation cost the state? Approximately $500 million, not including the amount spent using the old system, at roughly $1 million a month.
Unfortunately this fiasco wasted more than money and time, as paperwork vanished and patients suffered. As the Statesman reported, it may well have cost a 14-year-old boy named Devante Johnson his life. Left without health insurance for several months because of the Texas Medicaid enrollment bureaucracy, the Houston boy could not get treatment in time to save him from the kidney cancer that eventually killed him in March 2007.