Many individuals and families who must pay the full premium amount for their health insurance in California have been shocked at the rate increases over the last couple of year. A review of Medi-Cal Affordable Care Act expansion capitation rates shows those rates dropping. So why are the rates for adults in Medi-Cal dropping while health insurance in the private market keeps increasing?
Medi-Cal is a huge umbrella for many different health care programs for children, adults, seniors, pregnant women, and people with disabilities. It is near impossible to accurately compare rates that the government covers for expanded adult Medi-Cal health plans to that of private insurance. However, there is no denying that the cost of Medi-Cal for adults enrolled through the ACA Medicaid expansion have mostly decreased from fiscal years 2015-16 and 2016-17. At the same time, rates for individuals and families, purchased either through Covered California or directly from the health insurance companies have increased.
Expanded Medi-Cal Capitation Rates Lower For 2016 – 2017
All of the Medi-Cal HMO managed care plans I reviewed had rate decreases from 2% to 26% between fiscal years 2015-16 and 2016-17. The rates decreased for both the county organized health plans like Alameda Alliance For Health and the private carriers offering a Medi-Cal plan in the same county such as Anthem Blue Cross Partnership Plan.
Rate Change From 2015-16 to 2016-17
- Alameda Alliance For Health -12%
- Anthem Blue Cross Partnership Plan Alameda County -14%
- Contra Costa Health Plan -16%
- Anthem Blue Cross Partnership Plan Contra Costa County – 26%
- L. A. Care Health Plan – 9%
- Health Net of California Los Angeles County – 9%
- Molina Healthcare Sacramento County – 9%
- Kaiser Foundation Sacramento County -3%
- Care1st Health Plan San Diego County – 13%
- Community Health Group San Diego County – 11%
Spreadsheet of monthly capitation rates for optional expanded adult Medi-Cal for fiscal years 2015 – 2016 and 2016 – 2017 comparisons for data available from the Department of Health Care Services.
ACA Expanded Low Income Adult Medi-Cal
In California, Medi-Cal eligibility and enrollment is administered at the county level. When an adult (ages 19 – 64) is determined eligible for what is known as Affordable Care Act Optional Expansion – based solely on the household’s income being below 138% of the federal poverty level – that person is enrolled in a county level Medi-Cal HMO managed care health plan.
Because California counties are so diverse, Medi-Cal has five different types of county models. This means that some counties may offer only one plan while another county may be able offer four different plans to adults eligible for expanded Medi-Cal. The Medi-Cal HMO plans operate just like private insurance. They cover all the same benefits of an ACA individual and family plan but the enrolled member pays no cost for the health plan, medical services, or prescription drugs. Each plan has a network of providers and the plan member must select a primary care physician.
The state contracts with the approved plans and pays a monthly capitation amount for the basic HMO plan. The capitation rate is not age dependent. This means the HMO plan is paid the same amount whether the enrolled member is 25 or 55 years old.
Sampling of Capitation Midpoints 2016-17
- Los Angeles County: L.A. Care Health Plan $312.86
- Orange County: CalOptima $454.63
- San Mateo County: Health Plan of San Mateo $421.03
- San Francisco County: San Francisco Health Plan $345.00
- Santa Clara County: Santa Clara Family Health Plan $309.83
These capitation rates are lower than the 2014 figures I first reported on back in 2016, which means the rates have continued to drop with the expansion of Medi-Cal to low income adults.
A Medi-Cal HMO plan for an adult who qualifies is better than a Covered California Platinum plan. There are no monthly premiums, deductibles, copays, coinsurance or maximum-out-of-pocket amounts. For a 50 year old person earning $50,000 annually, which means they do not qualify for any Covered California subsidy, the cost of the least expensive Platinum health plan is much higher than the Medi-Cal HMO plans.
Rates per month for 2018 least expensive Platinum plan
- Los Angeles Region 15: L.A. Care $575
- Orange County: Kaiser $694
- San Mateo County: Kaiser $821
- San Francisco County: Kaiser $821
- Santa Clara County: Valley Health Plan $738
While the rate for the Medi-Cal HMO may have risen for the 2017-18 fiscal year (those rates have not been released) it is doubtful that they are at the same level of a Platinum plan through Covered California or off-exchange for 2018.
The Medi-Cal expansion HMO plan rates don’t reflect the full scope of all health care services that might be demanded by their members unlike private insurance. This is because Medi-Cal has separate plans and programs for pregnant women, breast and cervical cancer treatment program, people in long term care facilities, and individuals who qualify for Medicare. These people are not necessarily in the Medi-Cal expansion plans.
Additionally, the summaries for the different Medi-Cal county models note-
Rates do not include the impact of:
- Blood factor pharmaceuticals were carved out of rates effective July 1, 2014, and are paid through the Fee-for-Service rates.
- Health Insurer Fee.
- Hepatitis C supplemental payments.
- Hospital Quality Assurance Fees, Senate Bill 239 (Chapter 657, Statutes of 2013).
- Managed Care Organization Tax, Senate Bill 78 (Chapter 33, Statutes of 2013).
It is fair to say that the Medi-Cal HMO plans may not be exposed to the same high cost services that private insurance must consider when setting their monthly rates. Private health insurance must consider that they will have to share the cost of some expensive medical treatments that a Medi-Cal HMO may not have to realize because the Medi-Cal beneficiary is moved to another program.
Medi-Cal HMO plan are also the beneficiary of thousands of young healthy adults who never use health care services. In particular, college students who may use the on-campus student health center for their health care needs and never even interact with their Medi-Cal HMO plan.
It’s possible, but hard to prove without additional data, that the pool of adults in expanded Medi-Cal HMO plans is actually healthier than those in private insurance. Anecdotally, I have helped many people enroll in private health insurance because they have health challenges that they don’t believe a Medi-Cal HMO plan can address. These people are paying the full health insurance rate – or a family member is paying it for them – in order to have access to a larger network of doctors, hospitals, and prescription medications that are not available through a Medi-Cal HMO plan.
Does Medi-Cal Have Healthier Member Pool?
The question no one can answer for me is if the expanded Medi-Cal HMO capitation rates have been decreasing because there are more healthy people in the Medi-Cal pool? Or are there other factors that are driving down the rates. There must be good money in Medi-Cal as Aetna, Blue Shield, and United Healthcare have all been approved to offer Medi-Cal HMO plans alongside other private health insurance companies such as Anthem Blue Cross, Health Net, Kaiser, and Molina.
Perhaps the expanded Medi-Cal HMO plans will be the blue print for the proposed California single payer legislation. If the rates really are coming down, and it is because Medi-Cal has more healthy people enrolled, then maybe that might be a model for containing the continuous increases to private health insurance rates.
Types of County Medi-Cal HMO Models
COHS: County Organized Health Systems Model
DHCS contracts with a health plan created by the County Board of Supervisors. Local government, health care providers, community groups, and Medi-Cal beneficiaries are able to give input as the plan is created. The health plan is run by the county. In a COHS county, everyone is in the same managed care plan.
GMC: Geographic Managed Care Model
DHCS contracts with several commercial plans. This provides more choices for the beneficiaries.
Two-Plan County Model
In Two-Plan Model counties, there is a Local Initiative (county organized) and a Commercial Plan. The Department of Health Care Services (DHCS) contracts with both plans.
Regional County Model
In Regional Model counties, there are two Commercial Plans that contract with the Department of Health Care Services (DHCS).
Imperial and San Benito counties have slightly different models. In Imperial County there are two commercial plans while San Bernardino has one managed care plan and regular Fee-for-Service that beneficiaries can select from.
The capitation rates were pulled from Department of Health Care Services capitation summary reports. At the time of publication, there was no report for the 2015-15 Regional Plan Model capitation rate summary. The reports include a lower bound, midpoint, and upper bound capitation rate figure. I used the midpoint in my analysis. From reviewing rate range development documents on the DHCS website, the differences between the three capitation rates (Lower, Midpoint, Upper) seem to center around administration, profit, risk, and contingency related costs.
Capitation Summary Reports
- COHS FY2010_11Rate Range Certification
- Medicaid_ACA_Expansion_Rates 2014
- Medi_Cal Capitation Rate Comparison
- Medi_Cal County Model FactSheet