California's Private Employer Health Premiums Increased 138% Last Decade; Healthy Families & Medi-Cal Premium Increases Substantially Lower

Main Category: Health Insurance / Medical Insurance
Also Included In: Medicare / Medicaid / SCHIP
Article Date: 01 Jun 2009 - 2:00 PDT

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Private business in California saw health care premiums increase by 138 percent between 1999 and 2008. Over a similar time period, Medi-Cal premiums for family enrollees increased by 23 percent, and Healthy Families premiums by 38 percent, according to a new study out of UC Berkeley.

The study, entitled Understanding the Slow Growth in Medi-Cal and Healthy Families Premiums, 1999-2008, was funded by the California Program on Access to Care (CPAC), part of UC Berkeley's School of Public Health. The study looked at managed care health premiums in both the public and private sectors.

While many managed care health plans insure enrollees in both private businesses and publicly funded programs, such as Medi-Cal (Medicaid) and Healthy Families, premium increases in the private sector were much higher.

The CPAC study comes on the heels of a Lewin Group report showing that Medicaid managed care programs nationwide improve patient outcomes and reduce states' health care costs.

"Any efforts to overhaul the current health care system must include a discussion about controlling costs," said CPAC Director, Gil Ojeda. "This new CPAC study enhances the dialogue around cost control."

Key findings from the CPAC study show that:

. California's private sector premiums increased by an average of 10.1% per year
. Medi-Cal premiums increased by an average of only 2.3% per year
. Healthy Families premiums increased by an average of 3.6% per year

"Differences this large are extraordinary," said study author and UC San Diego Professor, Richard Kronick. "The Medi-Cal and Healthy Families programs in California rank among the few health care programs nationwide that have been successful in controlling health expenditure growth."

Medi-Cal and Healthy Families are state-run health programs that contract with managed care health plans, including private health plans such as Blue Cross and HealthNet, and locally run public health plans such as LA Care and Healthy San Francisco.

"Mainstream and local-initiative health plans have been willing to accept the state's very low rates of premium increase largely because health plans have been able to contract with the physicians and hospitals who serve Medi-Cal or Healthy Families enrollees at very low rates of increase in payment," said Kronick.

However, Kronick warns that the states' proposed rate caps and cuts to Medi-Cal and Healthy Families will severely harm California's publicly funded managed care programs.

"Anthem Blue Cross, HealthNet and Blue Shield recently dropped out of Medi-Cal and Healthy Families in some counties due to premium cuts that started in the 2008-2009 budget cycle," said Kronick. "The State is likely to continue to lose managed care capacity, and to harm quality and access, if it does not pay health plans at reasonable rates."

Medi-Cal is California's version of Medicaid, providing no-cost health insurance coverage for qualifying children and adults. Healthy Families is California's low cost health, dental, and vision insurance plan for children (not adults) in low-income families who do not qualify for Medi-Cal.

The California Program on Access to Care, which funded the study, is an applied policy research program administered by UC Berkeley School of Public Health in coordination with University of California Office of the President. CPAC's activities provide independent research and analysis to State decision makers, including legislators and government agency leaders. CPAC works to expand health care access for the state's most vulnerable populations, including immigrants, agriculture workers, the working poor, and other low-income groups.

Source
University of California