29 Aug MEDI-CAL: GROWTH, EXPANSION, AND IMPACT
Over the last three decades, Medi-Cal, California’s Medicaid program, has undergone considerable changes and expansion. By 2016, the program provided coverage to more than one in three Californians, and as of January 2024, eligibility has been expanded to include all residents with incomes below certain thresholds.
In 1990, Medi-Cal served about one in eight Californians, with eligibility limited to specific low-income groups like children, parents or caretakers of dependent children, and people with disabilities. Enrollment increased incrementally throughout the 1990s and 2000s, influenced by economic shifts and minor expansions in eligibility for children and pregnant women. The ACA brought a substantial change in 2014, allowing states to extend Medicaid coverage to most low-income adults without children or disabilities, with the federal government covering the majority of the costs. This brought about a more than 60% increase in Medi-Cal enrollment by 2016, adding over 5 million Californians to the program. At the moment, 46% of Medi-Cal enrollees are children and their caregivers, 34% are adults who gained coverage through the ACA, and around 15% are seniors and individuals with disabilities. Since the ACA expansion, the number of uninsured Californians has been reduced by half, with improvements noted in various health and economic areas. However, nearly 3 million state residents remain without comprehensive health insurance, many of whom are noncitizens excluded by federal policies. California has taken steps to address this gap.
As the state with the largest immigrant population, California has worked to close eligibility gaps created by federal requirements on Medicaid access for some immigrants. When welfare reform in the 1990s separated Medi-Cal from cash assistance and limited eligibility to documented immigrants with green cards for at least five years, California chose to cover these individuals before they reached the five-year mark. In addition, California extended coverage to several groups of low-income immigrants, including those with Deferred Action for Childhood Arrivals (DACA) status.
Recently, California has steadily expanded Medi-Cal eligibility, starting with undocumented children. This was followed by expansions to include undocumented young adults, older adults, and, as of January 2024, all remaining adults who meet the income criteria.
Medi-Cal’s massive expansion has made it the largest single expenditure in California’s state budget, with total costs predicted to approach $160 billion this fiscal year. This includes $98 billion in federal funds, $36 billion from the state General Fund, and $25 billion from other sources, including local governments and provider taxes such as the Managed Care Organization (MCO) Tax. The MCO tax was increased in both 2023 and 2024, with some of the revenue intended to raise payment rates for Medi-Cal providers to enhance access to care– an ongoing priority for healthcare stakeholders. However, concerns about the state budget have put this plan at risk. In November, voters will decide whether the revenue from the MCO tax should be committed to increasing provider rates or if more of it should be used to balance the state budget.
California Medi-Cal has been at the forefront of Medicaid expansion, and research indicates that this growth has resulted in better insurance coverage, improved health outcomes, and a reduction in poverty. As the program continues to be a lifeline for millions, preserving and responsibly managing its resources is important. One effective approach to do this is for health plans administering the program to leverage modern technology solutions to enhance the coordination of care, improving efficiency and reducing costs. By maintaining and strengthening this vital program, California can continue to provide critical healthcare services to those who need it most.