State officials have agreed on a 7.5 percent boost in the state and federal governments’ payments to the private companies managing Iowa’s Medicaid system.

More than 680,000 poor, disabled and elderly Iowans are enrolled in Medicaid. Governor Reynolds’ administration has been in lengthy negotiations with the two companies managing care for those Iowa Medicaid patients. The new contracts call for more than $100 million in additional state spending.

Fred Hubbell, the Democratic Party’s nominee for governor, says Iowa taxpayers are paying hundreds of millions more than promised when the state switched to private management of Medicaid. Hubbell says on day one as governor, he’ll “reverse the Medicaid nightmare” that has forced providers to close because of payment delays and patients to be denied “much needed care.”

A key Republican lawmaker on a committee that oversees the Medicaid program says he’s pleased the new contracts include the accountability measures legislators endorsed this spring, but Representative Joel Fry’s statement did not address the increased spending in the Medicaid program.

Democrats in the legislature say the extra money for the private companies managing Medicaid patients’ care is a “gut punch” to Iowa taxpayers and the extra spending puts the state budget “in a dangerous place.”

On April 1, 2016, the state switched to private management of Medicaid patient care and payments claims. Then-Governor Terry Branstad said it would save the state millions. Governor Reynolds has acknowledged there have been problems with the transition, but she supports continuing with private management of Medicaid.

“The old system wasn’t sustainable. As governor, I have to be able to tell parents this program will be there not just today, but tomorrow and in the future,” Reynolds said in a written statement issued this afternoon. “The increased funding for Medicaid fits within the state’s expected revenue.”