Written by Sally C. Pipes
In January, California became the first state to open its Medicaid program, known as Medi-Cal, to all undocumented immigrants within the state’s borders. Currently, approximately 700,000 adults between the ages of 26 and 49 are eligible for publicly funded health insurance.
This is the fourth time the program has been extended to undocumented immigrants, following children in 2015, youth in 2019, and people over 50 in 2022.
No state has yet gone as far as California. Some countries have partially extended public health guarantees to illegal immigrants. At least one state, Minnesota, plans to follow California’s lead and offer compensation to low-income undocumented immigrants in the state next year.
These efforts are based on the fundamental belief that opening up Medicaid to more people is a cost-effective way to receive quality care. That’s misguided. There are far better and cheaper ways to expand access to quality health insurance.
First, some background. Medicaid is a public health insurance plan for low-income people. It is jointly managed and funded by the state and federal governments. The federal government will provide at least $1 for every dollar each state spends on the program.
Last year, California spent $152 billion on Medi-Cal. A quarter of that amount came from the state’s general fund.
A new expansion of Medi-Cal could cost more than $2 billion each year, according to the state Legislative Analysis Service. And that may be significantly underestimated.
More than 300,000 illegal immigrants crossed the Mexico-California border last year alone. If this trend continues, taxpayers who already subsidize medical insurance for 14.6 million Californians could end up being asked to buy even more coverage.
California cannot afford the additional expense. The state already suffers from a $38 billion budget deficit, according to the governor’s calculations. The state Legislative Analysis Service estimated the budget deficit at $73 billion.
But Gov. Gavin Newsom is stepping up, recently saying he is “fully committed” to expanding Medi-Cal. He may come to regret that promise. States will take on a larger share of overall Medicaid claims as coronavirus-era federal aid expires. This year, state Medicaid spending is scheduled to increase by 17%.
Adding more people to Medi-Cal not only strains state coffers, but also makes it harder for the program’s traditional beneficiaries to secure care. Already, there are not enough health care providers to care for Medicaid recipients. Only 70% of physicians are accepting new Medicaid patients, according to a 2021 report from the Medicaid and CHIP Payment and Access Commission. This compares to 90% of providers who reported accepting new patients with private insurance.
The reason for this disparity is clear. Because Medicaid doesn’t pay providers enough. This program reimburses her doctor 30% less than Medicare. And Medicare pays 30% less than commercial insurance.
As a result, Medicaid recipients are 1.6 times less likely to successfully schedule a primary care appointment and 3.3 times less likely to successfully schedule a specialty appointment compared to those with private insurance.
If Medicaid recipients don’t have access to their regular health care provider, they’re more likely to end up in the emergency room. His 2008 study of Medicaid expansion in Oregon found that insurance coverage increased emergency room visits per person by 40%, including visits for conditions that could have been treated by primary care providers. It turns out.
Adding millions more to the Medi-Cal roster could make these problems even worse for all beneficiaries.
If improving access to quality health care is truly what California, and all other states considering similar moves, want, there are better ways to do it.
California could start by lifting its ban on selling short-term plans. These plans can cost up to 70% less than unsubsidized options on the Obamacare exchanges. Short-term plans may also be a particularly good option for undocumented immigrants, who are not eligible for Obamacare coverage or premium credits.
Private insurance options can affordably provide the care our state residents want and need. Lawmakers in California and across the country would be wise to start expanding access to Medicaid instead of the failing Medicaid program.
Sally C. Pipes is president and CEO of the Pacific Institute and a health policy researcher.
