The Obama Administration’s Correct, But Inconsistent Health Care Decision

Posted on 29 March 2012

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By Eric Wooten

Last week, federal health care officials denied California’s request to start charging Medi-Cal patients co-payments on everything from prescriptions to hospital stays. That would have been unprecedented and would have had a detrimental effect on access to health care services for the most vulnerable among us.  For those insured by the state, even a small co-pay would certainly lead to fewer seniors and children receiving services at all.

While the decision was the right thing to do to preserve the safety net for the 7.5 million Californians who rely on the state for health insurance, it was inconsistent with the Obama Administration’s previous damaging decisions, and out of line with California’s routine and unreasonable stance on Medi-Cal reimbursement rates.

Health care providers know that the co-payments proposed by the state were simply a backdoor reduction in the reimbursement rates paid to doctors, dentists and pharmacists to cover the costs of treating Medi-Cal patients. The Obama Administration said this was wrong, yet the Centers for Medicare and Medicaid Services (CMS) late last year approved Governor Jerry Brown’s 10 percent cut to providers’ reimbursement rates - not a backdoor cut but a direct and open attack on the safety net.

In fact, this has become commonplace. Each year, in shortsighted attempts to balance the state budget, legislators vote to cut back the Medi-Cal program through reduced compensation paid to physicians, pharmacists and dentists who are willing to treat Medi-Cal enrollees. At this point, those payments have been cut back so dramatically that, in many cases, they don’t even cover the base cost of providing the health care service. For example, a pharmacist in Los Angeles may dispense a medication worth $120 but receive only a $10 reimbursement from the state.

In a scenario like that, health care providers will not be able to continue participating in the Medi-Cal program.  Doctors will stop setting aside a percentage of their clinic time for Medi-Cal patients and hospital-based skilled nursing facilities will not be able to keep their doors open. When that happens, it will mean layoffs in pharmacies and hospitals that are significant economic engines in local communities.

It will also mean that the one in every five Californians who rely on Medi-Cal will find it harder to get the care they need.  When nearby pharmacies and clinics close their doors to Medi-Cal patients, those patients will have to travel further and look harder to find medical care. We know this will lead to fewer Californians receiving health care services. Many low-income Californians rely on public transportation, and being forced to travel outside of their neighborhoods to fill a prescription or get a regular check-up will very likely mean that they go without the care they need.

There’s also a very real legal problem. When California annually receives tens of billions of dollars from the federal government to administer Medicaid here, it comes with one key requirement: make sure the state’s insured population has equal access to medical services as individuals who are privately insured.  When fewer doctors and pharmacists are willing to treat Medi-Cal patients, that access is no longer equal and those billions of dollars are in jeopardy.

In denying the state’s request to begin charging co-payments to Medi-Cal enrollees, the Obama Administration appears to understand the need to preserve the health care safety net. But if it truly understands the detrimental effect reduced reimbursement rates - either direct or backdoor cuts - will have on access to health care services, it needs to change its approach to the cuts regularly proposed by the state and supported by the federal government. And to fall in line with its federal partners, Sacramento ought to end the wrong-headed routine of attacking the safety net in the name of state budget problems.


Eric Wooten is a Democratic activist and former lobbyist on healthcare issues. When he worked with the It’s OUR Healthcare campaign in 2007 to bring affordable, quality healthcare to all Californians, he talked to thousands of people about their healthcare concerns. Eric currently lives in San Luis Obispo County with his loving wife and two precocious daughters.

It is reasonable to require Medi-Cal recipients to pay a small co-payment.Medi-Cal is very expensive. It cannot be maintained without major changes. It is not fair that those on Medi-Cal have better coverage than many middle class workers who have to pay for their own health coverage and also, via their taxes, pay for luxury Medi-Cal coverage.