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California on the precipice of change in health-care financing and coverage

As summer wanes, our country and the State of California face two years of rapid transition and transformation. With the implementation of the Affordable Care Act (ACA) less than 18 months away, we are standing on the precipice of near-radical change in health care financing and coverage.  

The ACA initiates the first steps to comprehensive health care reform that will provide more consumer protections, higher quality, and better coordinated health care to more Americans than our current fragmented system.

With health care reform on the horizon, it begs the question – where is the government placing its bets for success? How will the private sector react? 

In the 1990s, managed care was frequently mocked and usually derided.  It was most often associated with HMOs, huge health organizations that were rumored to keep people waiting and wanting for better care. 

Call it what you will, but managed care today has continued to evolve and still offers the best opportunity to rein in the growth of health care costs while holding providers and insurers responsible for the quality of care in a measurable and systemized way.  Today, both business and government are putting their money on the most maligned and misunderstood form of health services delivery – managed care.

The federal government has moved much of Medicare into managed care already (certainly here in California, where 57 percent of Medicare enrollees are in managed care). In 1973, under Governor Pat Brown, California saw its first enrollment of Medicaid (Medi-Cal) beneficiaries into managed care.  Since then, California has continually transitioned more and more of the Medi-Cal program to public and private managed care to the extent that today, there is almost no fee for service left.

California has led and continues to lead the way for the rest of the country – 59 percent of the private commercial market is in health plans and a vast majority of the Medi-Cal and Medicare beneficiaries in Los Angeles are in managed care plans. L.A. Care Health Plan alone has more than 1.1 million members in Los Angeles County. 

There are nearly 50 million uninsured Americans, and California has the largest uninsured population, nearly 1 in 4, or 24 percent. By the time the ACA is fully implemented, 9 out of 10 non-elderly Californians will be insured. Studies show that around 1.5 million additional Californians will enroll in Medi-Cal and about 2 million Californians will enroll in subsidized coverage in the California Health Benefit Exchange.

While this is all positive movement in the right direction, there are ways that the system can be made stronger, and in the future, provide coverage and the best health care for all Californians.

Compared to other states, California is much further along – the Health Benefit Exchange has been formed and there is bi-partisan support for health care reform that will provide incentives to move away from paying by volume to paying for value.

However, more must be done to get us where we need to be. All programs face implementation challenges, but the health of our State depends on the ACA, the Exchange and how we sustain the future of these and other systems. Even with the successful implementation of the ACA, we will still need to address effective cost control, just as Massachusetts is doing today.  Further, Legislation must someday include coverage for all Californians, including immigrants and while primary care physicians will receive increases in Medi-Cal payment rates, it is only guaranteed for two years. We need creative solutions that will help alleviate the shortage of doctors, and utilize all types of health care providers to extend care to all those who need it.

Now is the time for managed care to fulfill its promise: to truly address the needs of individuals and communities from an objective, evidence-based perspective. Then and only then, can California and the rest of the country realize the fruits of meaningful health care reform.

Ed’s Note: Howard A. Kahn is the CEO of L.A. Care Health Plan, the nation’s largest public health plan.


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