Insurers make billions off Medicaid in California during Obamacare expansion

by Chad Terhune and Anna Gorman. (November 5, 2017). Los Angeles Times. 

[Excerpts only. Complete article here.]

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

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.

Jennifer Kent, California’s Medicaid director, said that health plan profits were higher than anticipated during the ACA expansion. But she said the state expects to recoup a significant amount of money within the next year once audits are complete and other retroactive rate adjustments are made.

…“If there is that much extra money sloshing around in California, then it’s worth asking whether you could expect more in terms of performance,” said Andy Schneider, a research professor with Georgetown University’s Center for Children and Families.

California officials acknowledge they need to do a better job of connecting money and quality.

… some evidence suggests that in California, richer plans provided care of poorer quality.

The state scores Medi-Cal insurers from zero to 100% on how they perform on dozens of measures, such as diabetes testing, cancer screenings and checkups for children. Statewide, the average score was 63% for 2016.

… Among patients, a chief complaint is how hard it is to find a specialized doctor. In a March audit, Medi-Cal said Health Net “did not maintain an adequate number of specialists within its network.” The state found that “member grievances on referral for services and availability of appointments with specialists were among the highest complaints.”

… In the case of Anthem, eight of its 12 regional Medi-Cal plans scored below average on patient care. The state has told Anthem to do better at providing prenatal care, controlling patients’ high blood pressure and monitoring medications for asthma patients, among other issues.

… Eight of California’s 22 Medicaid insurers failed to hit 85% in medical spending for the year that ended June 30, 2016, according to state data obtained by Kaiser Health News. Anthem ranked lowest at 77%; Health Net spent 81% of Medicaid premiums on medical care, according to state calculations.

… Michael McCue, a professor at Virginia Commonwealth University who studies Medicaid managed care, said the profit margins in California “raise a lot of red flags.” He said government officials owe it to taxpayers and patients to speed up their audits and do more to hold insurers accountable.

“You have to make sure you’re getting a bang for your buck,” McCue said. “Right now, [for insurers] California’s Medicaid program is the golden nugget.”

[Read complete article here.]

Terhune and Gorman are senior correspondents for Kaiser Health News, an editorially independent publication of the Kaiser Family Foundation.