The Impact of California's Fiscal Crisis on Medi-Cal Health Plans
Mercer Government Human Services Consulting
September 2003
How long will health plans participating in Medi-Cal managed care be able to remain fiscally viable following recently enacted Medi-Cal rate cuts? This report assesses the financial condition of Medi-Cal health plans in 2003 and projects the financial viability of these health plans for the next four years.
Understanding the financial viability of health plans participating in Medi-Cal is crucial because more than half of Medi-Cal's membership is enrolled with, and receiving health care services through, 22 contracted health plans.
Produced by Mercer Government Human Services Consulting, The Impact of California's Fiscal Crisis on Medi-Cal Health Plans found that overall, the financial performance of the 22 health plans participating in Medi-Cal improved between 1998 and 2002. They remained profitable as a group, which allowed them to build equity, and most health plans also appear to be financially sound on an individual basis.
As good as this sounds, unfortunately, not all plans appear to be financially strong. Moreover, the picture could change dramatically if Medi-Cal capitation rates do not keep pace with medical expense trends, even for plans in good financial health.