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The CHCF Blog

Medi-Cal's Positive Impact Must Not Be Overlooked

Stan Rosenstein, Health Care Consultant
Stan Rosenstein
Stan Rosenstein

Medi-Cal is a deeply misunderstood program. It spends a lot of money, but it's most certainly not out of control, and it is not a welfare program. The truth is that Medi-Cal is one of the state's most cost-effective programs, serving more than one-third of Californians and half of all California children, and it brings enormous benefit to the larger community. Medi-Cal improves public health and provides funds for facilities and programs that otherwise wouldn't exist, even though they are needed by all of us.

Most Californians are unaware that over the last half-century, Medi-Cal has quietly provided support for programs utilized by all residents at one time or another, from emergency-room services to school health programs to programs for veterans and the disabled. At the same time, Medi-Cal has helped millions of recipients stay healthy, remain on the job, complete school, and lead productive lives.

Medi-Cal, which celebrates its 50th anniversary on May 24, is rarely if ever given the praise it deserves for its many achievements, so this is a good time to take stock of how Medi-Cal makes life better in California — and not only for its 13 million enrollees. I come to this task after spending 31 of Medi-Cal's first 50 years on the inside — 20 of those years as an executive working under several governors.

Medi-Cal became the program it is today because many congresses, legislatures, and governors viewed it as a cost-effective way to address coverage or financing problems in the health care system, and because dedicated state staff, governors, lawmakers, and advocates used their creativity and Medi-Cal's financing engine to solve them. The issues that Medi-Cal had to solve were typically problems that neither Medicare nor commercial insurance could address. Medi-Cal provides massive amounts of federal funding for health care services in the state — nearly $59 billion this fiscal year. The Medicaid program is now the largest source of federal funds to states, surpassing education and transportation funding. Medi-Cal funding means jobs for many people in the state, enabling them to meaningfully contribute to California, spend money within the state, and pay their taxes.

Since Governor Pat Brown signed legislation establishing Medi-Cal in California in 1966, it has grown from a program with limited coverage to one that offered coverage for pregnant women, children, working parents, seniors, people with disabilities, working people with disabilities, people with breast or cervical cancer, and more children. With the Affordable Care Act (ACA), Medi-Cal now provides coverage to adults under 65 who do not have children or a disability.

With its partner the California Health and Disability Prevention Program (CHDP), Medi-Cal provides well-child health exams, immunizations and follow-up care to millions of children in California. With its partner the California Children Services Program (CCS), Medi-Cal provides care to many of the most chronically ill children in California.

Medi-Cal Supports Hospitals, Emergency Rooms, Trauma Centers

It is hard to look anywhere in health care where Medi-Cal does not provide significant funding: state and county behavioral health programs, services to the developmentally disabled, in-home support services for the disabled, school health care services and special education, local fire departments that operate ambulances, veterans services, the University of California's health systems, and local health departments, hospitals, and health care systems. Without Medi-Cal, the benefits that millions of people receive from these programs would be reduced or eliminated. Medi-Cal provides for widespread immunizations of children to protect them from dangerous, preventable diseases that might otherwise go with them to school. It supports family-planning services that have helped reduce teen pregnancy rates. It provides prenatal, delivery, and newborn health care in half of all California births.

Medi-Cal's support has kept hospital emergency rooms and trauma centers open and available to all. On long stretches of heavily traveled Interstate 5 in the Central Valley, accident victims are taken to Fresno to the only trauma center for miles around, one that Medi-Cal helped build. None of us knows when we'll need a trauma center, and need for one is not tied to economic status. In the 1990s, when California was facing a crisis in emergency-room closures, Medi-Cal stepped up, providing significant additional funding to hospitals with emergency rooms and trauma centers. Without billions of dollars in Medi-Cal funding, many California emergency rooms and trauma centers would be struggling or wouldn't exist at all. Imagine how the quality of life would suffer for everyone in communities without these services. Medi-Cal also provides significant funding to rebuild hospitals, which must meet new state seismic requirements.

The importance of Medi-Cal and its family-planning services, known as Family PACT (Planning, Access, Care, and Treatment), cannot be overstated. It has a short application process with instant access to office visits, lab testing, condoms, long-acting reversible contraceptives, and birth control pills. For a standard office visit and physical, women can be tested for sexually transmitted diseases and screened for cervical cancer and breast cancer. These programs enable multiple services that otherwise would not be available. The public health benefit to the larger community is profound.

Medi-Cal has been an innovator in providing a full, cost-effective range of benefits to its members. While there have been some cuts in benefits received by adults, California still provides more optional benefits than most states and far more than many states. According to the Kaiser Family Foundation, Medi-Cal's cost per enrollee in 2011 was the 28th lowest in the nation, slightly below the national average, 59% of what New York spends, and 55% of what Massachusetts spends.

A lot of people think Medi-Cal is a budget hole, with out-of-control spending. Yes, Medi-Cal spends a lot of money — currently 15% of the entire state general fund budget — but it's not out of control. On a per capita basis, it's very low cost and provides a tremendous benefit to state taxpayers.

Future Challenges

While Medi-Cal has grown dramatically under the ACA, federal funding levels will begin to decline over time, and more state funding will be required. When state revenue falls in recessions — sometimes quite dramatically — Medi-Cal has been a prime target for cuts. The demand for Medi-Cal grows as more people lose income (and health insurance). Medi-Cal has survived those "down times" in part because Congress increased the federal matching rate.

As enrollment expands, Medi-Cal faces significant access issues, especially for people who need care from numerous providers, including local physicians, dentists, and specialists. Sixty percent of physician services are provided through clinics that can offer a variety of services. But given the historically low reimbursement rates, access to private physicians — particularly specialists — is difficult. While eligibility has been hugely expanded, very little has been done to invest in a more robust provider network. Medi-Cal now pays physicians approximately 11% more (unadjusted for inflation) than it did in 1985. By contrast, the 1985 minimum wage of $3.35 has grown nearly 200%.

Perhaps most significant, Medi-Cal faces major challenges as the baby boom generation requires increasing health care services. Many of these seniors will enroll in Medi-Cal for long-term care assistance. There are very few options for other programs to pay for the cost of long-term care. The Alzheimer's Association projects a 50% increase in Californians with the disease by 2025, and many will be covered by Medi-Cal. The state will need to plan for this massive increase in demand, again examining state and federal alternatives to fund long-term care.

Medi-Cal — and health care generally — face enormous challenges in the coming years, and these will test as never before the creativity and innovation that characterized expansion of Medi-Cal.

In the last half-century, Medi-Cal has been an innovator in providing a full and cost-effective range of benefits to its members and to the general public. For five decades, talented state employees have worked quietly behind the scenes to address multiple challenges. Each step has been incremental and significant, serving as a solid basis for addressing future challenges.

About Stan

Stan Rosenstein, a Davis-based health care consultant, served as an analyst and administrator of the Medi-Cal program for 31 of its 50 years.

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