Indiana panel OKs bill to end welfare privatization

An Indiana House panel endorsed a bill Monday that would end the state’s privatization of food stamps, Medicaid and other welfare benefits.

The House Ways and Means Committee voted 14-10 along party lines in favor of the bill after hearing five hours of testimony. The bill, sponsored by state Rep. Gail Riecken, D-Evansville, now heads to the Democratic-controlled Indiana House for consideration.

Monday’s vote came hours after the Family and Social Services Administration announced details of its new "hybrid" system for welfare intake. The pilot system, which relies on private contractors, will begin next month in 10 southwestern counties around Evansville.

FSSA Secretary Anne Murphy told the panel she’s confident the hybrid system will alleviate problems that developed under the state’s recently canceled 10-year, $1.3 billion contract with IBM Corp. to take over Indiana’s welfare intake system.

The problems included lost documents, lengthy hold times for its call centers and too many errors in processing of food stamps and Medicaid.

During a testy exchange, state Rep. Ed Delaney, D-Indianapolis, asked Murphy how much money the state had lost when it canceled the IBM contract.

Murphy said Indiana had paid IBM about $418 million before the contract was ended but said it would be hard to calculate how much the state lost when it ended IBM’s contract.

"My testimony is that we’re moving forward to fix it and I have not looked back to figure out what the loss is," she told DeLaney. "I don’t think we’ve wasted money."

Gov. Mitch Daniels fired Armonk, N.Y.-based IBM as the lead contractor on the welfare-automation project in October after a hail of criticism from clients, lawmakers and federal officials. IBM’s contract expired Monday.

Murphy told the committee the contract "wasn’t a total failure" because Indiana gained improved technologies for processing welfare benefits.

Affiliated Computer Services Inc., one of IBM’s subcontractors, is working with FSSA on the new hybrid welfare-intake system. The federal government has approved the hybrid system.

But under Riecken’s bill, the state would be barred from contracting out the services for administering or processing the eligibility intake programs for Medicaid, food stamps and a program that provides temporary assistance for needy families.

Murphy told the committee Riecken’s bill would threaten numerous FSSA contracts and would cost the agency an estimated $65.8 million in order to bring those services in-house — an assertion the panel’s Democrats questioned.

Riecken, a Democrat who has been a vocal critic of Indiana’s welfare privatization under its Republican governor, said her bill has nothing to do with politics.

She said she doesn’t oppose all government privatization efforts, but said Indiana’s decision to put private companies in charge of processing welfare eligibility had failed. Riecken said Indiana needs to return to a welfare system run entirely by state employees.

"A ban to privatization in these services is necessary because the efforts to date have hurt people," she said.

Nanceen Alexander, a 52-year-old Evansville resident, told the panel her husband, Ronald, died of heart ailments in October more than a year after he was denied Medicaid benefits.

Alexander said her husband was denied assistance after repeatedly mailing in requested information and spent hours in frustrating conversations with people at a state call centers.

"It’s not right. Take a walk in his shoes and see what he went through and what I went through, watching him die in hospice," she said, holding up her late husband’s photo. "He did his part and now it’s time for the system to do its part."

FSSA had introduced the privatized, automated system to 59 of Indiana’s 92 counties before Murphy halted the rollout when she became FSSA’s secretary in January. The remaining 33 counties, which include the cities of Indianapolis, Gary and South Bend, still operate under the old welfare intake system of face-to-face casework.

About 1.2 million people receive Medicaid, food stamps and other benefits through the state’s welfare program.