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California’s $4 billion “oops”

It was reported earlier this week that a state audit of the California Medicaid program called “Medi-Cal” revealed that the state had made at least $4 billion in “questionable payments” over a four-year period between 2014-2017 and that up to 453,000 people who were ineligible received benefits:

In one case, the state paid a managed-care plan $383,635 to care for a person in Los Angeles County who had been dead for more than four years, according to California State Auditor Elaine Howle.

She said she found “pervasive discrepancies” in Medicaid enrollment in which state and county records didn’t match up from 2014 to 2017, leading to other errors that persisted for years. The bulk of the questionable payments, or $3 billion, went to health plans that contract with the state to care for 80 percent of enrollees in California’s Medicaid program, known as Medi-Cal…

…California’s Medicaid program has 13.2 million enrollees, covering about 1 in 3 residents. It has an annual budget of $107 billion, counting federal and state funds. Nearly 11 million of those enrollees are in managed care plans, in which insurers are paid a monthly fee per enrollee to coordinate care.

The state’s Medicaid enrollment soared by more than 50 percent since 2013 due to the rollout of the Affordable Care Act and the expansion of Medicaid. Enrollment grew from 8.6 million in December 2013 to more than 13 million in December 2017, according to the audit report.

In the case of the dead patient, a family member had notified the county of the enrollee’s death in April 2014. However, the person’s name remained active in the state system, and California officials assigned the patient to a managed-care plan in November of that year.

Fraud in federal public health programs is not uncommon and neither is waste. Many of those, like myself, that oppose expanding Medicaid under the Affordable Care Act, don’t oppose it because of some evil notion that there is no need to help those who are truly in need of the assistance. The opposition is based on that fact that fraud and waste are widespread, and I believe that we can help those in need without inflating massive government programs whose funding cannot be accounted for.

California expanded Medicaid under the Affordable Care Act in 2013, so it’s no surprise that the inappropriate payments started and have persisted since then. California was one of the first states to switch to a managed care structure of Medicaid, a move which North Carolina is in the process of making. The evidence is inconsistent as to whether Managed Care can save the state money and produce healthier outcomes, it normally depends on the state administrators. As I’ve said before, I applaud North Carolina’s efforts to manage the care of Medicaid recipients through a new managed care program. But for those who insist that expanding the program is the preferable path to a healthier North Carolina – I would direct your attention to cases like California where there is clear evidence of how these public programs can be gamed at the expense of those who truly need that help.

Jordan Roberts / Health Policy Analyst

Jordan joined the Locke Foundation in the summer of 2018 as Health Care Policy Analyst. He analyzes state and national health policy issues with an eye toward removing governm...

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