Bermuda Triangle


A few months ago, strange faxes began arriving at a warehouse in Seattle. The documents were pay stubs, tax statements, medical forms—all sent by Texans applying for state benefit programs like Medicaid, food stamps, and the Children’s Health Insurance Program (CHIP). The folks in Seattle were understandably baffled. Poor people in Texas, meanwhile, couldn’t figure out why the state hadn’t processed their applications for government aid. It turned out that a private contractor—recently hired by the state to process applications for social service programs—listed two fax numbers; one was incorrect. When poor and elderly applicants used that number, their documents would disappear into what state officials began referring to as the “black hole.” The delicious details of this story were reported in early June by Polly Ross Hughes in the Houston Chronicle. The error was a small one, affecting at most a few hundred people in a system that serves millions. But it’s a handy example of everything that’s wrong with Texas’ attempt to privatize its delivery of social services.

The centerpiece of this privatization effort is a five-year, $899 million deal—the largest such government contract in Texas history—that the state awarded last year to a coalition led by the Bermuda-based consulting firm Accenture. The contract grew out of legislation passed in 2003 by Republican lawmakers. It would revolutionize the way the state screens and enrolls millions of poor and elderly Texans in benefit programs such as Medicaid, CHIP, and food stamps. Under the plan, the current system in which thousands of state workers at hundreds of local offices around the state screen and enroll needy Texans would be replaced by a private system of call centers and Internet-screening. Thankfully, the change-over was scheduled to be done piecemeal. At this point, Accenture has taken over a handful of tasks: enrollment for CHIP and Children’s Medicaid statewide, and for all benefit programs in a few pilot areas of the state. But already it’s a mess. Documents are getting lost (if not sent to Seattle), wait times at call centers are too long, eligible kids are denied benefits, people are losing coverage for no reason. Heckuva job, guys.

The impact of these gaffes is evident in the CHIP and Medicaid rolls. As we’ve written before, CHIP enrollment has plummeted every month since September 2003, when GOP budget cuts and administrative barriers went into effect. The number of kids on CHIP dropped from about 500,000 in 2003 to 330,000 last summer, when the decline began to level off. Then, last December, Accenture took over enrollment for CHIP and children’s Medicaid (for convenience, the two health insurance programs use the same application). Since then, CHIP enrollment has nose dived by about 10 percent to 295,000 kids. In Medicaid, 79,000 children have lost coverage since December. Social service advocates blame these rapid declines on bungled privatization. As proof, they point to the percentage of families renewing CHIP or children’s Medicaid coverage. Prior to December, the CHIP renewal rate was about 80 percent each month. After Accenture took over in December, the rate dropped to 50 percent and hasn’t risen much since. Children’s Medicaid, which covers 1.1 million kids and shrinking, has experienced a similar trend. Those numbers show a privatized system that simply isn’t enrolling poor children who are eligible for much-needed government-sponsored health insurance. Remember that kids with health insurance lead much healthier lives.

State officials have pledged to rectify the problems in their clumsy stab at privatization. We hope it’s fixable. Right now they’re making FEMA look like a model of efficiency.