Think Tank

What Does The Future Hold For Medi-Cal?

As Medicaid marks its 50th anniversary, two new developments in California help frame a fundamental forward-looking question:

What will Medi-Cal look like 50 years from now?

In its first 50 years, the partnership between federal and state governments to provide health coverage for low-income people grew differently in each state. In many ways, California embraced subsidized care, establishing programs and processes that were eventually emulated by other states.

Two relatively new evolutionary shifts may herald more change in California:

  • Medi-Cal has grown substantially under the Affordable Care Act and now provides coverage for 12.7 million people, about one-third of the state’s population; and
  • Federal officials approved a new five-year, $6.2 billion waiver plan to allow California to re-mold Medi-Cal in the post-reform era.

Medi-Cal’s growth and new programs will steer its course over the next decade or two. There will certainly be twists and turns in the road — such as the shift toward managed care and coordinated care for Californians dually eligible for Medi-Cal and Medicare. And there will be bumps, as well, such as the $1.1 billion hole left in this year’s budget with the expiration of the managed care organization tax.

We asked state officials, policy experts and consumer advocates what they predict for Medi-Cal over the next half century. We got responses from:

Medi-Cal at Heart of Transforming Health Care

This March marks Medi-Cal’s 50th anniversary. At this time 50 years ago, I wonder if the state and federal leaders who implemented the Medicaid program could have envisioned how their actions now are serving millions of Californians every day.

Our newly approved 1115 waiver, Medi-Cal 2020, appropriately sets out a vision for where the program and its providers are heading. The new waiver includes $6.2 billion of federal funding to support the Medi-Cal program and builds upon the successes of the state’s Bridge to Reform waiver in 2010, a critical piece of the state’s implementation of the Affordable Care Act. More than 4.2 million current Medi-Cal members have enrolled since California implemented the ACA in January 2014.

The Medi-Cal 2020 waiver will establish innovative changes in the way we and our providers deliver services to our beneficiaries, all with the goal of improving efficiency, access and quality of care. Medi-Cal 2020 also continues our initiatives for the Medi-Cal managed care program, Community-Based Adult Services, Coordinated Care Initiative (including Cal MediConnect), and our pioneering new model in substance use treatment, the Drug Medi-Cal Organized Delivery System.

The common thread among all these elements is a shift in thinking, from seeing care as a visit to a doctor when you’re feeling ill to building efficient, coordinated systems that meet people’s care needs, from prenatal care to the end of life.

The state is in the midst of transforming the health care delivery system in ways that were unheard of 50 years ago. It began in earnest in 2010 with the Bridge to Reform waiver, continued in 2014 with the implementation of the ACA, and continues today and in future years with Medi-Cal 2020 and our continued work to provide beneficiaries with quality, accessible care. We will likely continue to operate the fee-for-service delivery system for a small population of our beneficiaries, but managed care will be the primary vehicle by which millions of beneficiaries will receive their care.

We have successfully moved Medi-Cal from a paper-based, face-to-face system to an electronic, health plan-centric system in which members receive coordinated and specialized care in an organized delivery system. We will definitely see a change in how our members are able to manage their care electronically, utilizing applications and other programs to find a doctor, make appointments, see test results and rate their care.

Our work over the next five years will be to improve Medi-Cal and meet the challenges and opportunities that come with serving one-third of the state’s population, as well as ensure its success for the next 50 years.

Medi-Cal May Be Gone by 2065

As we celebrate the 50th anniversary of Medicaid and Medicare, it’s an appropriate time to speculate on what Medicaid will look like on its 100th anniversary in 2065. It is both my hope and belief that Medi-Cal, at least as we know it, will no longer exist.

I am reluctant to call Medicare a true single-payer system today because Medicare Part C involves a single payer contracting with multiple private insurers. In the future, we need to eliminate the payment differentials that persist in health care markets that make privately insured patients more desirable because their insurance pays more than Medicare or Medi-Cal. In 50 years, I think we will finally eliminate price discrimination from health care markets, and the perverse incentives that favor some patients over others because of their insurance status.

The costs of bringing Medi-Cal, Medicare, and private insurance into parity will certainly test the limits of future taxpayers’ willingness to pay for Medi-Cal. But this issue illustrates why we in California and the nation need a better financing mechanism that delivers access for all and equity in provider payments. And, because one of the lessons of the last 100 years is that fundamental change is difficult to achieve in health care financing, I hope the next major step we take in California, and the nation, is to expand hospital insurance for all through Medicare, i.e., Medicare Part A for All. This step would protect everyone from one of the most-expensive components of health care, and should be financed through broad-based dedicated taxes, including payroll, sales, and (yes, even) value-added taxes. Hospital finances would be more predictable, because hospitals would be paid based on patient diagnoses, rather than the myriad of payment arrangements currently negotiated. Private insurance premiums, and Medi-Cal costs, would be substantially reduced by “carving out” hospital inpatient expenses into Medicare Part A for All.

This is a step that we could take in the near future, and could be part of a state waiver to demonstrate how expanding Medicare Part A for All could work for the rest of the nation.

Optimism for Medi-Cal, Addressing Poverty in California

Soon 13 million Californians will have Medi-Cal — a poignant measure that too many Californians live in poverty. My first prediction is a hopeful one: The percentage of the population in Medi-Cal will decrease over time when we address the epidemic of poverty in California by raising the minimum wage, helping parents get the skills and supportive services to get jobs that support their families, and providing the safe, affordable housing people need to get back on their feet.

Having so many people enrolled in Medi-Cal and most people with some form of health insurance provides a remarkable opportunity to make an impact on Californians’ health. We will finish the job of covering all people, regardless of immigration status, by including adults and children in Health4All. Managed care plans will continue as the delivery system for most Medi-Cal members, but the state will develop ways to incent improved health outcomes rather than pay based on services provided. We will integrate behavioral health services with physical health services, and telehealth will become a more common service delivery method.

Medi-Cal will help build a health care system based on improving health — instead of the current piecemeal approach. With people covered and receiving needed health care services, in 50 years we will see the beneficial societal effects. Health outcomes will improve, the result of lower rates of diabetes, obesity and heart disease. People will use preventive services and live healthier lives. Much of this we can do in the next 10 years and keep improving from there.

Time for Celebration and Action

The 50th anniversary of Medi-Cal should be an opportunity not just for celebration but for action, building on the recent transformations in the last few years, such as the shift to managed care and the Obamacare expansions. We must work to further improve Medi-Cal, which now covers 13 million Californians, over one-third of the state, and is a central pillar in the financing and delivery of the health system on which we all rely.

These changes would complete Medi-Cal’s transformation under the ACA, from a collection of categorical programs for specific long-term low-income populations to a broad-based safety-net for all Californians — even those where the loss of income may be temporary.

With this new constituency comes new expectations (and political support) for Medi-Cal, and we hope that drives improvement in the access to and quality of care it provides. With more people covered, it’s past time to restore the recession-era budget cuts, to Medi-Cal benefits, and to low provider rates, which lowers doctor participation and increases barriers to access. We also need more accountability on the managed care plans in Medi-Cal (and throughout the system) to actually provide the access to care that they promise and are paid for.

Beyond expanded eligibility, the shift to managed care plans has been the other big change in Medi-Cal, but the unfinished work is for DHCS to foster the needed oversight to drive improvements in access, quality and equity. With one-third of the state, Medi-Cal should have the bargaining power that can help spur reforms, throughout the entire system of health plans and providers, with efforts to promote value-based care and reducing health disparities.

Integration with other human services, like the whole-person care pilot projects in the new waiver, can help Medi-Cal not just provide some basic security for people trying to lift themselves out of poverty, but to be a key part of a more robust safety-net and economic development strategy to help spur prosperity for whole communities.

The implementation of the newly approved Medi-Cal 2020 waiver can be a start — but these improvements shouldn’t take another five years, much less 50. If we continue the leadership California has already exhibited on health reform, Medi-Cal should in short order be a central platform in the ongoing work toward a fully universal, cost-effective and affordable, system that provides quality health care for all Californians — and a stronger social contract as well.

Sustain Safety Net With New Focus on Quality

The Affordable Care Act expanded Medi-Cal eligibility and benefits in 2014, swelling the rolls of California beneficiaries from 7.5 million in 2010 to 12.4 million by early 2015 and driving new focus on quality, performance and system integration. Complementary policy initiatives, through the Bridge to Reform 1115 Medicaid Waiver in California, have expanded mandatory Medi-Cal managed care enrollment to additional populations and geographies resulting in new relationships, opportunities and pressures for Medi-Cal managed care plans and safety net clinics.

Looking ahead, it will be critical to sustain the safety-net system while also driving a new focus on quality, performance and system integration.

  • Medi-Cal’s reliance on public and not-for-profit safety-net clinics has grown significantly. Safety-net clinics require continuing and increasing levels of investment to expand capacity and improve care.
  • Historically, there has been tremendous variation between public and commercial plans’ investments in safety-net clinics. At the same time, the public plans’ quality scores are consistently higher than those of the commercial plans. The interdependence between public plans and safety-net clinics could be a mechanism to strengthen systems of care for Medi-Cal beneficiaries. These investments in capacity and care improvements will result in stronger systems of care for Medi-Cal beneficiaries.
  • Regulatory oversight, practice reform imperatives and rate reductions may reduce local investment in the safety net, which is the backbone of the Medi-Cal program. With few other sources of investment and capital, such changes would threaten safety-net viability at a time of significant need for the expanded Medi-Cal population.

Significant growth of Medi-Cal enrollment in the public plans and safety-net clinics has been coupled with significant financial investments by public plans to drive practice transformation in their safety-net clinic partners as a platform for the future. The alignment of public plans and safety-net clinics coupled with policies to protect and strengthen the safety net has successfully led to investments to prepare for and respond to the significant increase in insurance coverage among low income Californians.