The administration of Louisiana Governor Jeff Landry is moving forward with the termination of a multi-billion dollar Medicaid contract with UnitedHealthCare, a decision that will impact over 330,000 state residents. This move comes as the state simultaneously reversed its plan to also end its agreement with Aetna Better Health of Louisiana, which covers another 157,000 individuals.
The decision to end the UnitedHealthCare contract, valued at $4.2 billion for the 2026 calendar year, is connected to ongoing litigation between the state and the insurance provider over alleged prescription drug overcharges.
Key Takeaways
- Louisiana will terminate its $4.2 billion Medicaid contract with UnitedHealthCare at the end of the month.
- The decision affects approximately 330,700 Medicaid enrollees, who will be reassigned to other providers.
- The state reversed a previous decision to also cancel its contract with Aetna, which covers 157,000 residents.
- The termination is linked to an ongoing lawsuit filed by the state alleging UnitedHealthCare overcharged the Medicaid program.
An Abrupt Reversal in State Health Policy
The Louisiana Department of Health (LDH) announced a significant change in its approach to Medicaid managed care contracts. Initially, the state planned to reduce the number of private companies managing Medicaid benefits from six to four, signaling an end to its agreements with both UnitedHealthCare and Aetna.
However, in a recent development, the department confirmed it would renew its contract with Aetna. State Medicaid Director Seth Gold communicated the decision in a letter to Aetna's CEO, Bridget Galatas, ensuring continuity of care for the company's 157,000 members.
The same reprieve was not extended to UnitedHealthCare. The Landry administration is proceeding with the termination of its contract, which covers nearly a quarter of the 1.4 million Louisianans enrolled in private Medicaid plans. Health Secretary Bruce Greenstein confirmed that these members will be reassigned to one of the five remaining managed care organizations within the next two weeks.
By the Numbers
- 330,700: Number of Louisiana Medicaid enrollees covered by UnitedHealthCare.
- $4.2 Billion: The estimated value of UnitedHealthCare's contract for the 2026 calendar year.
- 157,000: Number of residents covered by Aetna, whose contract was renewed.
- 1.4 Million: Total number of Medicaid enrollees in Louisiana insured through private companies.
Litigation at the Heart of the Dispute
The decision to sever ties with UnitedHealthCare is closely tied to a legal battle initiated by then-Attorney General Jeff Landry in 2022. The lawsuit alleges that UnitedHealthCare and its pharmacy benefits manager, OptumRx, overcharged the state's Medicaid program for prescription drugs.
Current Attorney General Liz Murrill, who inherited the case, has been a vocal proponent of ending the state's agreement with the company. She alleges the company has not been cooperative in the legal proceedings.
"They are violating the contracts and have refused to provide us with [documents] we have requested," Murrill stated in a written message. "United has engaged in frivolous attacks on the AGs contracting authority as well."
This aggressive stance from the Attorney General's office followed a recent legal setback for the state. On November 21, the Louisiana First Circuit Court of Appeal overturned a lower court's ruling that had been favorable to the state's case. Just days after this decision, the administration moved to halt the contract extension for 2026.
UnitedHealthCare Responds
UnitedHealthCare has pushed back against the state's claims. A company spokesperson maintained that the insurer has operated within the bounds of its agreement and state law.
"UnitedHealthcare has always maintained compliance with Louisiana law and our Medicaid contract and have been consistently responsive to the State’s request for data records and documentation," said spokeswoman Christina Witz. She added, "We will continue to demonstrate our compliance with the State." The company also affirmed its commitment to working with the LDH through the transition period for its members.
A Surprise to Lawmakers
The administration's decision to terminate the contract came as a surprise to state legislators. On November 20, just one day before the appellate court's ruling, health officials had urged a legislative committee to approve the contract extensions, including the one for UnitedHealthCare.
Contradictory Signals from Health Officials
During a lengthy legislative hearing, Health Secretary Bruce Greenstein and other department officials defended the existing structure of six managed care organizations. At the time, Greenstein cautioned against reducing the number of providers, arguing it could cause unnecessary disruption for patients.
"Each of the plans brings a different way of envisioning how to engage patients with certain medical complexities," Greenstein told lawmakers during the hearing. He also noted that, "Patients don’t generally switch their health plan very often."
These statements now stand in stark contrast to the administration's actions. Lawmakers reported they were not given advance notice of the decision to cancel the contracts with either UnitedHealthCare or the initial plan for Aetna. The sudden policy shift has created uncertainty for hundreds of thousands of Medicaid recipients and raised questions about the stability and administration of the state's healthcare program for its most vulnerable residents.
