California Medicaid Is Generous… to Insurance Companies!

If you want to see what is wrong with “helping the needy,” look at who California Medicaid is “helping.”

California Medicaid—known as Medi-Cal—presents itself as free help to the poor and needy. Obamacare pressured states to expand Medicaid and California was happy to do so. But what even mainstream media sources have noticed is this program is actually “helping” insurance companies at taxpayer expense. This might give you an idea why insurance companies opposed Donald Trump’s promise to repeal and replace Obamacare.

The L.A. Times reports, “Insurers make billions off Medicaid in California during Obamacare expansion.

Medicaid is rarely associated with getting rich. The patients are poor, the budgets tight and payments to doctors often paltry.

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But some insurance companies are reaping spectacular profits off the taxpayer-funded program in California, even when the state finds that patient care is subpar.

Health Net, a unit of Centene Corp., the largest Medicaid insurer nationwide, raked in $1.1 billion in profit from 2014 to 2016, according to state data obtained by Kaiser Health News. Anthem, another industry giant, turned a profit of $549 million from California’s Medicaid program in the same period.

Overall, Medicaid insurers in the Golden State made $5.4 billion in profits from 2014 to 2016, in part because the state paid higher rates during the inaugural years of the nation’s Medicaid expansion under the Affordable Care Act, or Obamacare. Last year, they made more money than all Medicaid insurers combined in 34 other states with managed care plans.

“Those profits are gigantic — wow,” said Glenn Melnick, a health economist and professor at USC.

Alan Sager, a health-policy professor at Boston University, was surprised — and dismayed.

“California is being wildly open handed and excessively generous with insurers,” he said.


The profits of managed-care plans feed into Republican criticism of the ACA’s costs and its expanded Medicaid rolls. President Trump has called for the law’s repeal, in part, because it enriches health insurers.

“They have made a fortune,” Trump tweeted Oct. 13.

Read the entire L.A. Times story.

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