How Private Prison Health Care Rips Off Government (And Why Medicaid Works Better)

How Private Prison Health Care Rips Off Government (And Why Medicaid Works Better)

Corizon chairman James Hyman

“For the first time in the history of Jefferson County Sheriff’s [Office], we have coverage ‘round the clock, even on midnights. There [are] licensed RNs, LPNs, and PAs that are taking care of the incarcerated individuals. They are getting the proper care,” said Jefferson County, New York Sheriff Peter Barnett.

The Jefferson County Sheriff’s Office recently contracted with PrimeCare, a private Harrisburg, Pennsylvania-based company that provides healthcare to incarcerated populations.

Barnett described that contract as “the biggest thing that could have happened.”

“I consider this a huge accomplishment for the taxpayers, the incarcerated individuals, and the staff down at the correctional facility,” he continued. The contract with PrimeCare is the largest budget line item for the county in 2024 — $3 million.

“The liability for this medical coverage is huge right now. I look at it as a bigger umbrella for the taxpayers. Let’s face it, we’re either going to pay upfront with PrimeCare, or we’re definitely going to pay in the long run in lawsuits,” the sheriff said. Barnett’s excitement notwithstanding, however, Jefferson County is an example of how detainees’ medical care becomes subpar or gets denied outright.

It’s a cycle that starts with a local sheriff’s budget proving insufficient to meet the healthcare needs of an incarcerated population. Researchers at Western Carolina University found that two-thirds of jail detainees (as opposed to people incarcerated in prisons) meet the criteria for diagnosis with substance use disorder and nearly half present symptoms consistent with a mental illness -- with that illness often causing them harm or even ending their life (suicide is the leading cause of death in jails, according to the Vera Institute of Justice). Such incidents in turn lead to detainees and their families filing suit against the municipality.

The next step in the cycle is the contract. Because private correctional healthcare providers include indemnification clauses in their contracts — that is, they agree to accept liability and pay the sheriff’s legal bills if they become the chosen provider — their services become attractive for reasons other than provision of care.

In exchange for that indemnity, states and municipalities then enter into contracts with these companies. The“risk sharing” model of correctional healthcare — either flat fee contracts like the one in Jefferson County, New York, or capitated contracts where sheriffs pay these contractors a fixed per-person rate — ends up providing even worse care. The further substandard care sets off still another wave of litigation, this time against the healthcare provider and the municipality, as detainees suffer lifelong injuries and families grieve.

This cycle doesn’t benefit many people at all. And it highlights the unique potential of a special Justice Department Medicaid 1115 Waiver demonstration project to render private healthcare companies uncompetitive.

Private Correctional Healthcare Is No Bargain

Privatization of prison health care started in the 1970s. By 2009, approximately 40 percent of correctional health expenditures were paid to private companies. That year, then-Chairman and CEO of Valitas Health Services Richard Miles told the St. Louis Business Journal: “We think the idea of outsourcing this type of service will be an attractive option as states try to cut budgets.”

Budget cutting through risk-sharing models turned out to be less than ideal for detainees, counties, and companies.

The biggest correctional healthcare provider, once named Corizon Health Inc., is now split into two companies named YesCare Corporation and Tehum Care, Inc.. Corizon availed itself of a controversial Texas law that allows a “divisional merger” — sometimes called the “Texas Two-Step” bankruptcy law — to split into two and assign liabilities to one company that files for bankruptcy and keep assets in another that remains solvent. YesCare took off with all the assets and Tehum got saddled with the debts.

Corizon — by any other name it’s still Corizon — used to operate in 27 states, covering about 350,000 of the nation’s incarcerated population. The Southern Poverty Law Center pegged its profits at $1.4 billion in 2016. Corizon used a capitated system where the company was paid per head for an overall population.

To save money, Corizon tried strategies such as cutting medical staff and refusing to refer sick prisoners for outside medical care. These ploys went to extremes; in some facilities, there was no one available to provide care.

Then the substandard care provided by the company caused it to lose 25 contracts. New York City, Arlington, Virginia and Bernalillo County, New Mexico are just a few of the municipal entities that dumped Corizon because its care was either non-existent or so bad that their wards were dying. The company lost statewide contracts in Michigan, Kansas, Missouri, Tennessee, Idaho and Virginia. Now it operates in only 15 states, and has lost 60 percent of its revenue, about $900 million, but it's still the provider for 139 state prisons, local jails, and other facilities.

The number of complaints against the company has risen drastically. In general, these aren’t frivolous claims. Multimillion-dollar judgments aren’t uncommon; last year a man’s family won $6.4 million for Corizon’s failure to treat his delirium tremens as he withdrew from alcohol abuse. Corizon settled many other claims for seven figures.

At the end of 2021, Defendant Corizon Health, Inc. faced dire financial circumstances. Years of mounting costs, including litigation expenses relating to claims asserted by incarcerated individuals, threatened Corizon Health’s ability to continue as a going concern. Corizon Health was deeply insolvent…,” lawyers for the company argued.

More losses await. In federal courts alone, 326 lawsuits are pending against Corizon, 22 against Tehum, 34 against YesCare; and YesCare incorporated only last year.

Corizon is getting the most attention now because of its bankruptcy filing — and some salacious details like the judge’s romantic involvement with one of the lawyers, and allegations that Tehum’s owners are engaging in bankruptcy fraud.

But private prison healthcare providers in general have been losing business for a while. The State of Florida canceled a contract with Wexford Health Services in 2017. Florida-based Armor Health Management is liquidating its assets because it’s underwater.

Since their bids — and the subsequent human and financial losses that inevitably follow from contracting with them — make these companies less than competitive, they should have folded years ago. But fraud, bid-rigging, and a complete lack of due diligence have kept them afloat artificially.

Health care services provider Health Assurance, LLC paid bribes for years to Mississippi Department of Corrections Commissioner Mike Epps’; Epps and Health Assurance’s owner were both sentenced to federal prison for bribery. Last year the CEO of Wellpath, a Corizon competitor, pleaded guilty to bribing a Norfolk County, Virginia sheriff to get contracts. In a galling move, Corizon tried to indemnify Alabama’s last Commissioner of Corrections, Jefferson Dunn, as a former consultant on a $1.6 billion contract with the state; the indemnification suggests he was on both sides of the negotiation.

Corizon knows the entire process is dirty, so dirty that they’ve been victimized by the corruption themselves. Corizon sued the state of Tennessee when the company found that its financial officer was leaking data to a competitor. When Corizon lost a contract in Missouri, it sued the winning company, Centurion.

And the indemnification promises have been broken. Corizon left the City of St. Louis with a $515,000 tab when the family of 26-year-old DeJuan Brison, a man who hung himself in the city jail, won a judgment for wrongful death. Part of the contract with Corizon required the company to keep adequate insurance and defend and reimburse the city for any lawsuits. The city sued Corizon/YesCare this summer and said Corizon’s “refusal to indemnify the city in the lawsuit was baseless and in bad faith.”

The bad faith is not limited to the Gateway to the West. Corizon/YesCare also won’t indemnify three nurses in a case against itself and Kent County, Michigan, where a man named Wade Jones died of acute intoxication at the Kent County jail. The three nurses are appealing multi-million dollar judgments that were entered against them personally. If they lose that appeal, they will spend their lives paying off the judgments with no assistance from the company that made off with the profits.

At this point, other sheriffs don’t share Sheriff Barnett’s enthusiasm for outsourced care.

"The model doesn't work in Barnstable County," said Sheriff Donna Buckley said when she decided not to renew a contract with the provider Wellpath earlier this year. Instead, the Barnstable County, Massachusetts jail will hire clinicians directly for its facilities on Cape Cod.

"We can not be caught in a situation where we knowingly are unable to provide medical and mental health services and putting people who are sent to us in a worse position upon release," Buckley told Boston news station WBUR last summer. Buckley declined an interview request to explain more.

Sheriff's Support

Medicaid 1115 Waiver Demonstration projects — and ditching private healthcare contracts — have support from sheriffs, which is unusual. For the most part, sheriffs’ offices tend to support more punitive policies. Especially in jurisdictions that are Republican strongholds, such “tough-on-crime” policies tend to win elections. Many of these law enforcement officers are members of the Constitutional Sheriffs and Peace Officers Association, a group whose members believe that “county Sheriffs have the authority and duty to enforce the constitution and to protect their citizens from the overreach of an out-of-control federal government.”

Yet entitlement programs don’t spin the government out of control in these sheriffs’ eyes, mostly because allowing Medicaid to cover inmates’ healthcare will erase their budget woes. They support Medicaid expansion in general because if able-bodied adult males can enroll in the federal healthcare program, jails and prisons can at least try to set up appointments for them when they’re released. People who enroll in Medicaid prior to release from custody are more likely to make appointments, keep appointments, and secure needed medication than those who enroll after release.

As Collin County, Texas Sheriff Jim Skinner — also the chairman of the Government Affairs Committee of the National Sheriff’s Association — explained this to the Texas Legislature in 2018:

“There must be some overlap of benefits/services during periods of incarceration...The documents required for enrollment are frequently unavailable during incarceration and too cumbersome. The delays can also result in the defendant running out of medication before services can be initiated,” Skinner wrote in legislative testimony. But so far Texas has not expanded Medicaid nor has the state applied for a 1115 waiver to cover justice-involved populations.

States that haven’t expanded Medicaid are still allowed to apply for a Justice Involved 1115 Demonstration waiver so sheriffs in the 10 states that haven’t expanded Medicaid aren’t left out of the experiment. However, none of those 10 states have applied for the Medicaid 1115 waiver for their prisons and jails.

Mecklenburg County, North Carolina provides a great example of why sheriffs want Medicaid to be able to cover the healthcare of people in prisons and jails. The state recently expanded Medicaid, and Mecklenburg County has become a more blue area in the largely red state. After Trump was elected in 2016, the county turned leftward in response. The county has successfully worked to reduce incarceration and even implemented some progressive programs. In August 2019, the Mecklenburg County Detention Center became the first jail in North Carolina to have an inpatient psychiatric program.

But Mecklenburg County also reveals the reality of caring for detainees. As the jail population has decreased — the COVID-19 pandemic helped that reduction along — the county has spent more and more on healthcare. The annual cost of healthcare has almost doubled in the past ten years, rising from $4,277 to $7,478 per person in eight years.

“[T]he problem is that the joint federal-state financing of Medicaid and the eligibility standards combine to push a disproportionate share of the health-care costs for persons who are inmates of county jails to counties. Sheriffs have the supervisory burden but practically no funding authority,” wrote Sheriff Jim Skinner in a memo to the author.

Skinner knows: It’s not necessarily that there are more detainees needing care, but that the detainees who come in are sicker than before. From 2025 to 2018, Collin County contracted with Southwest Correctional Medical Group, Inc. (SCMG) to provide care for 1010 detainees at $4793 per detainee; if the jail population rose over 1010 people, Collin County agreed to pay more for each person.

At the time, Skinner faced significant challenges when it came to detainees with mental health conditions. In 2018, the jail had 24 medical beds, four of them designated as mental health beds. On one particular 2018 day, Skinner was housing 27 inmates who qualified for inpatient psychiatric care. The overflow forced Skinner to convert a segregation housing unit into a secondary infirmary. The contract with (SCMG) was fixed, on a per person basis. That the same population needed more care wasn’t something he could fix.

Opposition From Unlikely Places

If the sheriffs are for it, then who can be against a Justice Involved 1115 Demonstration waiver?

The answer to that question is: many people. While their opposition isn’t explicit, many social justice advocates are wary of the waivers. Sometimes this opposition springs from a disability rights perspective, and sometimes it comes from health equity and racial equity perspectives.

“Right now the states are on the hook for the health care costs, so they have a disincentive to take that homeless person who is naked in the public park. They have a disincentive to lock up that person long term because they're going to have to pay the health care costs so they have some incentive to keep that person in the community,” said Mira Edmonds, a Clinical Assistant Professor of Law at the University of Michigan Law School.

“Because the disability rights community and some health equity rights communities are so focused on keeping care in the community that they're very concerned about or opposed to the notion of breaking down the inmate exclusion,” Edmonds explained.

It’s not clear that such a financial calculation by government occurs at the time of arrest. However, evidence that healthcare needs aren’t met in carceral spaces is abundant.

This article was supported by a fellowship from the Commonwealth Fund through the Journalism and Women Symposium (JAWS).

Chandra Bozelko served more than six years in a maximum-security facility in Connecticut. While inside she became the first incarcerated person with a regular byline in a publication outside of the facility. Her “Prison Diaries" column ran in The New Haven Independent. Her work has earned several professional awards from the Society of Professional Journalists, the Los Angeles Press Club, The National Federation of Press Women and more.Her columns now appear regularly in The National Memo.


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