Private Power in Public Programs: Medicare, Medicaid, and the Structural Power of Private Insurance

Abstract In 2019, nearly 70 percent of Medicaid beneficiaries received their health insurance coverage through a private, managed care organization (MCO). Twenty-five years earlier, 9.5 percent of Medicaid beneficiaries were enrolled in MCOs. This dramatic growth in Medicaid managed care enrollment represents the delegation of significant power by federal and state governments over a critical social program to private actors and market forces. Medicare, too, experienced a similar pattern of transformation. Together, Medicaid and Medicare, two critical pillars of American social policy, paid more than half a trillion dollars to private insurance companies in 2019 to provide public health insurance to 75 million people. This manuscript examines the policy consequences of building private firms directly into the structure of American social policies. In contrast to existing work on “submerged” or “delegated” policies, this manuscript highlights the structural power that such policies bestow on the government's private partners and develops a new theory of structural power in which firms are able to constrain health policy reform through their threats to disrupt the delivery of public policies and social benefits to millions of people across the United States.