Controlling statewide costs in prisons was the rationale for privatizing the correctional healthcare delivery system across the nation, but there have been consequences.  The increased incarceration levels and shift from governmental to private criminal justice system medical care has resulted in an additional burden of care placed on hospitals and public health centers for inmates following their release. The Eighth Amendment (barring cruel and unusual punishment) has been cited to mandate the adequate delivery of healthcare to incarcerated individuals.

Historical Perspective on Prison Healthcare:

Since the mid-1980s, the prison population in the United States has tripled.1 The increase from 750,000 incarcerated adults in 1985 to over 1.7 million in 19952 and 2.2 million in 20123 placed an increased cost-burden on the publicly-funded prison healthcare system. From 15,524 federal prisoners (and 75,291 state prisoners) in 2002 in private jails and prisons, the population rose to 40,446 federal prisoners (and 105,674 state prisoners) in 2012.4  In turn, the rising number of privatized correctional facilities corresponded with a rise in administration of prison healthcare services by for-profit companies.

It is widely recognized that mental health and substance abuse treatment is extremely limited in prisons. The housing of mentally ill inmates in long-term solitary confinement has increased in the past decade.5 Additionally, the prevalence in prisoners of sexually-transmitted and communicable diseases requiring long-term management is disproportionately high.6 According to the American Journal of Public Health, the prevalence of HIV among incarcerated individuals is four times higher than in the general population (and the rate of hepatitis C in prisoners is 15-25 percent of the incarcerated population).7

Current Factors Driving Increased Healthcare Costs:

As of 2012, 20 states had shifted to privatized prison healthcare8 – and this is now a $5 billion industry9. Currently, privately-run prisons now “house” 20 percent of all federal prisoners and 7 percent of all state prisoners.10 The following are the five main factors associated with the continued increase in correctional system healthcare costs:

  1. Increased prisoner population with communicable and chronic diseases;
  2. Increased prisoner population with diagnosed mental illness;
  3. Increase in elderly prisoner population;
  4. Increased prisoner population with substance abuse and treatment; and
  5. Increased prescription drug costs.11

Prison inmates are known to have difficulty accessing early medical intervention to deal with their medical, mental health, and substance abuse problems. Factors impeding their attainment of appropriate services include the following access to medical examinations; access to pharmacotherapy; access to prescription medication; access to lab tests, and adequacy of acute care.12 Meanwhile, decreased wages, benefits, and the elimination of pensions in privatized facilities are reducing the levels of experienced and skilled prison healthcare providers—which is also having a negative impact on overall inmate healthcare and thereby driving up costs.

Demographic variables contributing to increased healthcare costs are that the U.S. prisoner population is skewing older and sicker.13 The popular “three strikes” laws that mandated lengthy sentences has filled prisons with inmates who are now entering their senior years. From diabetes to HIV/AIDS, the severity of patient complications linked to chronic diseases tends to increase over time. In particular, seniors who are HIV-positive are more susceptible to infections and premature aging. The expense necessitated by treating the complications of the most frequent chronic diseases diagnosed in inmates is high. Furthermore, poorly-controlled chronic diseases can result in individuals requiring high levels of medical care after their release.

Federal and State Government Costs: 

Labor costs in prisons were anticipated to be lower under a privatization model than a public (governmental) model, and this has provided the main reason for its implementation. In turn, the cost containment was initiated through a reduction in the number of staff, wages, and fringe benefits. The greater flexibility of private companies in the procurement process was also expected to aid in curbing governmental costs. Economic researchers have proposed that contracted prison services are estimated to produce a cost-savings of 12-58 percent.14

Privatization of prisons through outsourcing has occurred not only in the provision of medical and mental health services, but also in educational, administrative, maintenance, and food services.10

One recent cost-analysis study suggested that governmental decisions related to privatizing prisons could benefit from careful consideration of the following:16

  • Greater awareness of the complexity involved in comparing private versus governmental operative costs for prison services;
  • Increased analysis of overhead costs;
  • Development of a uniform method for comparing publicly and privately-operated prisons on the basis of audits;
  • Incorporation of quantitative measures of prison performance (e., serious misconduct and drug use) in any cost analysis; and
  • Concurrent cost and quality comparisons in analytical cost-benefit analyses.

Unexpected Costs to Government Due to Privatization:

Prison privatization has resulted in keeping prisoners incarcerated for a 5-7 percent longer time period than before this transition occurred.16  One reason is that the manner by which government reimbursements to these private companies is based—which is generally on the number of prisoners within the correctional facility at any given time. Therefore, the government is actually incurring a higher “per prisoner” financial cost than in the past. In addition, the cost to government for monitoring and auditing contract performance was unknown when cost-analyses were calculated prior to the actual privatization of prisons. Consequently, the costs associated with prisons (and the inmates within them) have continued to grow rather than shrink.

It is important to note that the private sector does have advantages over the public sector, most notably in the location and construction of new prisons.  Private firms are often able to get prisons built and operating faster, less expensively than the government.

Further Thoughts on Implications:

Outside the world of prisons and jails, there is a wealth of expertise in the purchasing and delivery of healthcare.  Strong capabilities, expertise, and a track-record of serving complex, difficult-to-serve populations can be found within for-profit and non-profit organizations, including high-performing health systems and innovative health plans – as well as within government from state Medicaid agencies.

But players in the corrections field – whether state corrections departments, county jails, or private corrections companies – are not in the healthcare business.  It should come as no surprise if they are unable to manage healthcare costs, provide chronic care management and behavioral healthcare, or promote population health within the unique environment of correctional facilities.  It is not among their core – or remote – competencies and they rarely, if ever, seek out help or advice from, say, their colleagues in the Medicaid agency or other experts in healthcare purchasing and delivery.  Even when a state corrections department or county contract out healthcare to separate companies, the public corrections officials and staff likely lack the necessary expertise in healthcare purchasing, including monitoring and assessing performance.

Corrections officials drawing upon the expertise of Medicaid agencies is even more important in states that expanded Medicaid eligibility under the Affordable Care Act or section 1115 eligibility expansion waivers.  In those states, the vast majority of prison inmates are now eligible for Medicaid when they leave prison as well as when receiving inpatient hospital care.

References to Learn More:

  1. Shalev N. (2009). From Public to Private Care: The Historical Trajectory of Medical Services in a New York City Jail. American Journal of Public Health 99(6): 988–995. Webpage:
  2. Austin J, and Coventry G. (February 2001). Emerging Issues on Privatized Prisons. Monograph of the National Council on Crime and Delinquency. US Dept. of Justice, Bureau of Justice Assistance: Washington, DC. [Pub. No. NCJ 181249] Webpage:
  3. The Sentencing Project (Research and Advocacy for Reform). Incarceration. Webpage:
  4. Galik L, Gilroy L, and Volokh A. (Reason Foundation). (June 2014). Annual Privatization Report, 2014: Criminal Justice and Corrections. Webpage:
  5. Metzner JL, and Felner J. (2010). Solitary Confinement and Mental Illness in U.S. Prisons: A Challengefor Medical Ethics. J Am Acad Psychiatry Law 38(1): 104-108. Webpage:
  6. U.S. Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment. (2005). Substance Abuse Treatment for Adults in the Criminal Justice System. Treatment Improvement Protocol (TIP) Series, No. 44.) 9 Treatment Issues Specific to Prisons. Webpage:
  7. Shalev N. (2009). From Public to Private Care: The Historical Trajectory of Medical Services in a New York City Jail. American Journal of Public Health 99(6): 988–995. Webpage:
  8. Leonard, Kimberly. (July 21, 2012). Health and Science – Privatized prison health care scrutinized. The Washington Post Webpage:
  9. Canon, Gabrielle. (June 17, 2015). Here’s the Latest Evidence of How Private Prisons Are Exploiting Inmates for Profit. Mother Jones Webpage:
  10. CI – Follow the Money: Private Prison Industry Funds Skewed Research. Webpage:
  11. Kinsella, Chad (The Council of State Governments) (January 2004). Corrections Health Care Costs. Trends Alert Webpage:
  12. Wilper AP, Woolhandler S, Boyd JW, et al. (2009). The Health and Health Care of US Prisoners: Results of a Nationwide Survey. American Journal of Public Health 99(4): 666–672. Webpage:
  13. Reimer G. (2008). The Graying of the U.S. Prisoner Population. Journal of Correctional Health Care 14(3): 202-208. Webpage:
  14. Canon, Gabrielle. (June 17, 2015). Here’s the Latest Evidence of How Private Prisons Are Exploiting Inmates for Profit. Mother Jones Webpage:
  15. Austin J, and Coventry G. (February 2001). Emerging Issues on Privatized Prisons. Monograph of the National Council on Crime and Delinquency. US Dept. of Justice, Bureau of Justice Assistance: Washington, DC. [Pub. No. NCJ 181249] Webpage:
  16. U.S. Office of Justice Programs, National Institute of Justice. Cost, Performance Studies Look at Prison Privatization. Webpage:
  17. (June 19, 2015). Privately-Run Prisons Hold Inmates Longer, Study Finds. Time Magazine Webpage: