A Medicaid-related scandal is beginning to shake up Washington, D.C., but it's probably not the Medicaid program—or the side of D.C.—that you think.
Since city Mayor Vincent Gray took office in January 2011, he's been dogged by accusations of cronyism and campaign finance violations. But on Tuesday, federal prosecutors laid out serious corruption charges, suggesting that local multi-millionaire Jeffrey Thompson illegally put more than $650,000 toward a 2010 "shadow campaign" to replace sitting Mayor Adrian Fenty.
Here in Washington, that shadow campaign is dominating local news; many analysts and local officials are asking, essentially, what did Gray know and when did he know it?
But there's another relevant question: why did Thompson allegedly spend the money at all? As the Washington City Paper's Alan Suderman notes, it's because Thompson reportedly worried that "four more years of Fenty would be bad for business"—and that business was Medicaid managed care.
Thompson bought Chartered Health Plan in 2000 and, by 2011, it was receiving more than $300 million in annual Medicaid funds from the city; it's likely D.C.'s largest single contract today. But after years of massive growth, Chartered had come under scrutiny during the Fenty administration. In 2008, Fenty's attorney general sued the plan over billing improprieties, alleging that Chartered was doing business with lots of other Thompson-owned companies and negligently over-charging the city, too.
Chartered ultimately settled the charges for $12 million, but as the Washington Post's Mike DeBonis lays out, the settlement had a significant financial impact on both Chartered and Thompson, who apparently saw his income dwindle by several million dollars per year. And his challenges didn't end then; a Thompson associate reportedly told a federal grand jury that if Fenty had been re-elected, Thompson "would be in some serious contractual problems," the City Paper reports.
Since the shadow campaign news broke this week, Thompson has sold his stake in an accounting firm that he founded; he already was looking to offload Chartered Health Plan. Meanwhile, several D.C. Council members on Wednesday called for Gray to resign, and while the mayor's been defiant, National Journal says that strategists believe his days are numbered. And--coincidentally, congressmen say--the U.S. Senate on Thursday approved a law that would make it easier for D.C. to hold a special election to replace Gray, if it comes to that.
(As an aside: I've lived in the D.C. area for most of my life. The days when a mayor could be brought down for using illegal drugs seem quaint in comparison.)
In the past three years, there's been considerable focus on health care providers' national lobbying power, whether to help shape the Affordable Care Act or affect its implementation.
But the shadow campaign to get Gray into D.C.'s Wilson Building, which sits almost halfway between Capitol Hill and the White House, is a good reminder: All politics are local—and ultimately, so are health care dollars.
