Federal health reform will add as many as two million more people to California’s seven million person Medi-Cal program. What will it take to guarantee this expansion exists not only on paper but results in meaningful access to quality health care for new enrollees?
The first thing to understand is that this may require a substantial commitment of state resources. The California Budget Project estimates that the cost of the expansion to California will be approximately $5 billion dollars over the next ten years. California has to pick up only a small share of the cost of those newly eligible for the program. But the state will continue to split evenly with the feds the cost of those people who were eligible before the law was passed but will be newly enrolled.
This is likely to be a very large number of people. Conservative politicians like to talk about individuals accessing benefits to which they are not entitled, but the opposite dynamic is much more common. In California, there are hundreds of thousands of people eligible for our state’s Medi-Cal program but not enrolled in it.
The California Budget Project estimates that there will be about 500,000 new enrollees in Medi-Cal who were eligible before the law was passed. This is a result, in part, of the law’s streamlining eligibility criteria and processes. The law also provides funds for significant outreach, in particular through the actions of the California Health Benefit Exchange, the new state agency that will be the portal to coverage.
The Urban Institute estimates that if those who are implementing federal health reform engage in effective outreach, it could cost the state as much as $6.5 billion from 2014-2019. In this “higher participation” scenario, fully $4.5 billion will come from covering previously eligible but newly enrolled beneficiaries. On the other hand, in Urban’s “lower participation” scenario, the total additional cost to the state for the Medi-Cal expansion during this time is only $2.9 billion.
The vast difference between these scenarios highlights the fact that state spending on health care can be controlled, in large part, by policies and actions that encourage or discourage enrollment. However, many of these practices are effectively ended by the “maintenance of effort” provisions of federal health care reform.
It is an important public goal to ensure that everyone who is entitled to and desires access to public programs is enrolled in them. On the other hand, state resources are limited for the foreseeable future. Every dollar spent on Medi-Cal expansion is one that cannot go, for example, to the UC and CSU system. An increase of $5 billion in state spending on health care represents only a 2% increase in the amount of money our state is expected to spend on health care over the next ten years. But any amount of money measured in billions deserves to be taken seriously, particularly until we have resolved the state’s ongoing structural budget deficit which is itself at least $10 billion per year.
Expanding access to the Medi-Cal, however, does not necessarily mean having to raise taxes to balance the budget. There are many strategies the state can pursue to increase efficiency without compromising quality. An extremely important step was taken toward getting better value for the state’s medical spending through the process of renegotiating the agreement, or “waiver,” with the federal government that governs Medi-Cal payments to hospitals and for uninsured care.
This effort resulted in a plan to move some of the state’s highest-cost beneficiaries – seniors and persons with disabilities – into integrated care systems. Innovations in chronic disease management, palliative care, and in the use of “medical homes” also show promise and will be encouraged by provision in the federal health reform law.
The state also may be able to use its health care spending – in particular effective interventions in mental and behavioral health early in people’s lives – to create savings in the two other main areas of state spending: education and prisons. However, California’s system of budgeting by formula sometimes makes it difficult to actually capture savings that are created through good governing practices.
In the end, though, you get what you pay for and, arguably, the state is already paying far too little for its Medi-Cal program. In particular, our provider reimbursement rates are among the lowest in the nation. This has helped contribute to a dynamic in which, according to the California Health Care Foundation, only 57% of physicians were accepting new Medi-Cal patients in 2008, and twenty percent of all practices were providing care to 80% of these patients.
Guaranteeing that the Medi-Cal expansion results in meaningful access to quality health care therefore also means taking a close look at our provider capacity. Is the existing network of doctors, nurses and other health professionals who provide services to Medi-Cal enrollees adequate? Can we increase our capacity quickly enough to handle the significant Medi-Cal expansion without decreasing the quality of care to those current enrolled? How can we use our existing providers more efficiently to provide higher quality care? Are their innovative new models for care provision that will benefit not only Medi-Cal enrollees but all patients throughout the state?
The incoming administration is going to have to be extraordinarily creative and open-minded about how to fulfill the promise of the Medi-Cal expansion. Federal healthcare reform made near-universal coverage possible, but it is going to be up to Californians to make it real. We’ve got a huge task ahead of us.
Micah Weinberg, PhD, is a senior research fellow in the Health Policy Program at the New America Foundation.