A storm of controversy over privatizing state services

By EDITORIAL BOARD, Austin American-Statesman
Monday, May 22, 2006

In theory, there's nothing wrong with the state hiring an outside contractor to handle applications and enrollment systems for several major state social service programs, including Medicaid and food stamps - if the contractor can operate effectively and save taxpayers' money. Such a change also should make it easier for thousands of Texans who qualify to use such service programs, even if several thousand state employees lose their jobs.
In practice, though, the state's five-year, $899 million contract with an overseas consulting firm, Accenture LLP, is off to a terrible start. So terrible, in fact, that the Health and Human Services commissioner, Albert Hawkins, has been forced to ask about 1,000 state employees who were to be laid off by the end of the year to please don't go - and offered them $1,800 bonuses to stay. The offer came a month after the commissioner postponed any statewide rollout of the eligibility program because of problems.
The problems included too many clients left on hold for way too long, too many employees making too many mistakes in determining eligibility and errors such as dropping 6,000 kids from the children's health insurance program - their parents had not been told of a new enrollment fee. The children were reinstated.
Some legislators are angry and are rightly demanding that state Comptroller Carole Keeton Strayhorn review the program, which was touted as a way to save the state $646 million over five years. Strayhorn, a Republican running for governor as an independent, welcomed the invitation to take shots at a program launched under the incumbent, Gov. Rick Perry.
She's already called the program "a perfect storm of wasted dollars, reduced access to services and profiteering at the expense of Texas taxpayers." Strayhorn's description might be correct, though saying so before the review, not after, could undermine the credibility of her staff's audit. One issue to be determined, for example, is whether the program's problems are the result of profiteering, honest misjudgments or simple incompetence.
The program is one result of House Bill 2292, by former state Rep. Arlene Wohlgemuth, R-Burleson, which in 2003 ordered a massive reorganization of the state's health and human services departments and agencies. The bill included a provision to examine possible cost savings if the state outsourced the process of applying for and maintaining the eligibility rolls of Medicaid, the Children's Health Insurance Program, food stamps and the Temporary Assistance for Needy Families program. And it directed the state to consider possible savings from enabling applicants to use call centers and Internet connections.
Eventually, a contract was awarded to Texas Access Alliance, a consortium anchored by Accenture, an American consulting company officially headquartered in Bermuda. (Locating in Bermuda can help a company reduce the income tax it owes to the federal government, but apparently does nothing to lessen the company's willingness to make money off other American taxpayers.)
Strayhorn is right to take a good, hard look at this program. But she should not let her electoral ambitions interfere with her staff examining the contract performance with objectivity.