Monthly Archive: August 2014

Lingering recession fallout: Medicaid grows to cover nearly one third of Californians

Enrollment in California’s Medicaid program, Medi-Cal, is projected to grow in the new fiscal year that began July 1 to cover about 30 percent of the state’s population, with total enrollment expected to rise from 7.9 million before implementation of the Patient Protection and Affordable Care Act to 11.5 million in fiscal 2014-15, according to a summary of the budget.

The growing importance of Medi-Cal was highlighted in the release today of results of a California Field Poll of registered voters showing respondents assigning growing importance to Medi-Cal. Twenty-nine percent of voters surveyed rated the program as “very important” in a 2011 Field Poll; that number rose to 40 percent this year. “This is a safety net program (for the poor) that has now reached the masses,” noted Mark DiCamillo, senior vice president of the Field Research Corporation, calling the increase “very significant.”

The high percentage of Californians covered by Medicaid appears to coincide with the 2007-09 recession. As the downturn began to bite, data compiled by Kaiser Family Foundation show California having about the same percentage of its population in Medi-Cal in 2010 – 31 percent that year – and among the highest proportion of its population in Medicaid compared to other states. Only Maine and Vermont equaled California’s 31 percent in 2010 and those three states were exceeded only by the District of Columbia at 35 percent, according to the Kaiser Family Foundation. (Comparative year to year data are not available)

The growth in Medi-Cal spending all but wiped out an unanticipated surge in state tax revenues, the Ventura Star quoted Gov. Jerry Brown as saying. Consequently, Brown’s revised $107.8 billion general fund budget proposal contains little new spending beyond covering the additional costs of providing health care to 307,000 more low-income residents than anticipated when the 2014-15 budget was released in January, the newspaper reported. Another account appearing in The Sacramento Bee quoted Brown as saying California faces $1.2 billion in unanticipated costs in expanded Medi-Cal enrollment in the new fiscal year.

As Medi-Cal grew to cover 1 in 3 Californians in 2010 as tax revenues declined in the recession, the administration of then-Gov. Arnold Schwarzenegger bluntly declared the state could no longer afford to fund the program as it sought cost relief though program reductions and federal rule waivers. The heavy fiscal burden of program clearly continues to vex the current Brown administration. “As we are paying for this that will be at the expense of other government priorities,” said Health and Human Service Secretary Diana Dooley at today’s Sacramento briefing on the Field Poll results.

A final takeaway worth pondering: With more people being covered by Medicaid, might California and eventually the United States as a whole be moving toward the German “Kaiser system” where the government provides a safety net of basic health coverage for all?


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

California’s continuing Medicaid woes

Five years ago as California stared down a severe budget gap as the economy cratered, the state drew up plans to cut $1.2 billion from its Medicaid program, Medi-Cal, through program reductions and federal rule waivers.

At the time, then-California Health & Human Services Agency Secretary Kim Belshé warned that even with a $10 billion infusion of supplemental federal cost share funding provided by the American Recovery and Reinvestment Act of 2009, “California cannot afford the Medicaid program as currently structured and governed by federal rules and requirements.”

Now with the budget crisis in the past amid an uneven economic recovery, the Golden State faces renewed concerns that it can fund a sustainable Medicaid program given its acceptance of expanded family status and income eligibility guidelines under the Patient Protection and Affordable Care Act. As a result of the expansion, a staggering 3 in 10 California residents are expected to obtain health coverage though the program. In addition to budgetary concerns, there is also the practical matter of whether Medi-Cal beneficiaries will have adequate access to providers given the state’s low reimbursement rates.

Kaiser Health News provides an analysis of the situation here.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Health plan issuers concerned individual mandate being weakened

The Patient Protection and Affordable Care Act aimed to remedy market failure in the individual health insurance market segment by effectively forcing sellers and buyers to get together. On the sell side by requiring health insurers to accept all applicants for coverage regardless of their medical condition or history and providing premium subsidies to make coverage more affordable. And on the buy side by mandating all U.S. citizens obtain individual coverage if they are not covered by a private or public health plan under pain of a tax penalty.

However, individual health plan issuers worry that the mandate is being weakened by a growing list of exemptions, according to this Wall Street Journal item. In particular, they are concerned that too many younger individuals who tend to use fewer medical services and cost less to cover will be exempted from the mandate, undermining the actuarial viability of the market.

“To make these new reforms work, there needs to be broad participation in the system,” Karen Ignagni, president and CEO of America’s Health Insurance Plans, told the newspaper.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

If Halbig becomes law of the land, flight to bronze and cat plans could result

One potential outcome should the federal courts ultimately determine that advance income tax credit premium subsidies are available only to eligible households purchasing individual coverage in state-based health benefit exchanges and not in states that have opted to have the federal government run their exchanges is a flight to bronze. Bronze as in the metallic value of qualified health plans that have around a 60 percent actuarial value (AV), meaning they cover on average 60 percent of expected costs in a plan year. (Click here for more background the Halbig ruling)

Individuals may find the only way to comply with the requirement they have some form of health coverage or pay a tax penalty is to buy a bronze-rated plan since these plans offer the lowest premiums compared to richer plans with silver (70 percent AV), gold (80 percent AV) and platinum plans (90 percent AV). For many individuals and families not covered by employer-sponsored or government health plans, bronze plans may be the only ones they can afford without the offsetting effect of the premium subsidies — particularly older people in the top one third of the age rating bands who pay the highest premiums.

In addition to bronze plans, there could also be a growth market in catastrophic plans that are rated below 60 percent AV. These plans are available to those aged 30 and under and households that would have to spend more than eight percent of their income to buy the lowest cost bronze plan offered. The Patient Protection and Affordable Care Act also provides an exemption from the tax penalty for these households, which could result in some requesting the exemption and going without coverage, undermining the law’s policy goal to reduce the number of medically uninsured Americans.

A flight to bronze plans could also give a boost to direct primary care (DPC) where patients pay advance monthly or annual fees for primary care since bronze and catastrophic plans aren’t designed for those who are frequent users of primary care services.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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