Proposal to reform Medi-Cal gets little fanfare
Critics fear governor's plan restricts access

By Bill Ainsworth
UNION-TRIBUNE STAFF WRITER

January 19, 2005

SACRAMENTO – Gov. Arnold Schwarzenegger's call for an "era of reform" has focused attention on his proposals to revamp education, the budget process, public pension systems and how legislative districts are drawn.

The governor also has introduced a plan to dramatically change health care services for the poor that has received little attention.

He proposes overhauling the Medi-Cal program that serves 6.6 million low-income Californians by shifting many of them to managed care, introducing monthly premiums for the first time and limiting dental care to $1,000 a year for adults.

Critics say it could result in more than 100,000 people losing health care coverage.

The Medi-Cal plan may be getting less notice because it wasn't as Draconian as some public health advocates had feared. In addition, it was introduced by state Health and Human Services Secretary Kimberly Belshé as part of a budget briefing and not by the governor at his State of the State address.

Belshé said the aim is to improve health care and save money in the most expensive program in the state budget after education.

"Our goal is to move in a direction that will promote better access, better coordination of care and, over the long term, contain costs," she said.

Medi-Cal plan

Major elements of Gov. Arnold Schwarzenegger's plan to change Medi-Cal, the state-federal health care program for the poor:

Charge some beneficiaries monthly premiums

Shift many patients from fee-for-service plans to managed care programs

Limit dental care payments for adults to $1,000 a year

Cover more children by streamlining enrollment process to health plans

When fully implemented in five years, the plan expects to save the state $144 million a year, but will force the state to give up a similar amount in federal funding. Medi-Cal is funded jointly by the state and federal government. The state picks up about $13 billion of the cost.

Schwarzenegger's proposal also aims to make it easier for children to enroll in Medi-Cal by streamlining the enrollment process for Medi-Cal and Healthy Families, another state-federal program aimed at insuring children of the working poor.

The Medi-Cal overhaul, which the Schwarzenegger administration has been working on for the past year, would require a federal waiver and approval from a Democratic-controlled Legislature reluctant to cut benefits.

Democrats and health care advocates believe that Schwarzenegger's proposal might reduce access to specialists, primary doctors and dentists while adding to the problems of the uninsured.

The proposal that has sparked the most controversy would require monthly premiums for Medi-Cal patients whose income is above the poverty line, which is $1,306 a month for a family of three. There are no premiums now.

Patients would pay $4 a month for each child and $10 a month for adults with a family cap of $27 per month. The state estimates that the premiums, which would be charged starting in January 2007, would result in 110,000 patients leaving the program.

State Sen. Denise Ducheny, D-San Diego, called the plan a "good starting point," but said she was concerned about the premiums.

For one thing, she said, the administrative costs of collecting the premiums might be greater than the revenue the premiums generate.

"We may be spending $10 a month to collect $5," she said.

In addition, Ducheny said, it may cost more money to have people leave Medi-Cal and go without insurance. "If they go off the system, you could end up with people not getting regular care and then going to the emergency room."

Belshé said the premiums would keep Medi-Cal in line with Healthy Families, which requires payments for those whose income is above the federal poverty level. She said it would allow families to avoid the stigma of free health care.

Advocates for Medi-Cal recipients say the practical effect of these premiums would be to increase the numbers of Californians who have no health insurance. California is a high-cost state, they say, where many poor and disabled people hover on the edge of homelessness.

"If I'm a disabled person living in California on $1,000 a month and paying a lot for housing, $10 a month can be a lot," said Cheryl Bergan, a policy analyst for the California Foundation for Independent Living Centers.

Anthony Wright, executive director of Health Access, which promotes health care coverage, said the Schwarzenegger Medi-Cal proposal goes in the wrong direction: It seeks to restrict coverage when the numbers of the uninsured in California are growing beyond 6 million.

"We should be talking about how to expand these programs rather than how to restrict them," he said.

The plan would also shift about 816,000 Medi-Cal patients from fee-for-service to managed care plans over the next four years.

Now, 3.2 million of the 6.6 million Medi-Cal patients are in managed care, mostly women and children. The rest are in fee-for-service.

As part of that shift, the state will promote pilot projects being developed in San Diego, Contra Costa and Orange counties that seek to combine health and social service programs for Medi-Cal patients who are seniors or disabled.

In San Diego County, officials have been working for about four years on a way to integrate health and social services for the 95,000 people in the county on the Supplemental Social Security program.

"We believe that by spending money differently, we can save money," said Pam Smith, director of aging and independence services for San Diego County.

Under the San Diego County proposal, which still needs approval from the Board of Supervisors, managed care plans would provide a variety of services, ranging from hospital care to help with shopping and meals.

Belshé said she was confident that the state, by expanding these kinds of programs, could save money and help keep patients healthy.

Some health care advocates are skeptical about whether managed care plans will participate. Typically, these plans receive a payment each year for covering each patient. To make the system work, they balance healthy younger patients with the older patients who need more care. But the vast majority of the Medi-Cal patients who are to be switched to managed care – about 550,000 – are seniors and disabled people likely to need a higher level of care.

In addition, some doctors dislike managed care.

"Many of the traditional providers are deeply distrustful of managed care," said Dr. Robert Hertzka, president of the California Medical Association and a San Diego physician. "If the patient is forced into the program and the doctor doesn't want to go, that could disrupt the doctor-patient relationship."

Finding health care providers for Medi-Cal patients is already difficult, medical experts say, because the state pays some of the lowest reimbursement rates in the nation.

The governor's proposal envisions keeping those rates the same. Although doctors and dentists say rates need to be increased, they are at least relieved that rates aren't being targeted for cuts.

Health care advocates also worry about whether the plan would save money by limiting visits to specialists, which is the way some managed care plans operate.

Chronically ill, disabled or elderly people are among those who would be shifted into managed care, and these patients need frequent visits to specialists. Reducing access for them might save money in the short term, but end up costing more because it could lead to more expensive hospital or nursing-home stays, advocates say.

"We want to make sure that disabled people continue to have access to specialists," Bergan said.

The Medi-Cal plan also expects to save the state money by restricting dental services to $1,000 a year for adults, except in cases of emergency.

Belshé said the change would bring Medi-Cal benefits more into line with many employer-provided insurance plans that limit dental benefits. In addition, she said, California is one of eight states that provides full dental benefits.

Dentists don't like the limits, but they say it could have been worse. In past years, some governors have recommended eliminating dental benefits.

"We don't want the cap, but we appreciate their commitment to preserving a comprehensive program," said Dr. Harriet Seldin, a San Diego dentist and vice chair of the county's health services advisory board.