Kaiser, you may have heard, is a large, profitable health system that provides health care and coverage to millions of Californians, including my family and me. It is efficient and highly integrated. It knows how to manage its business.
I learned this month that Kaiser took a loss of $1.8 billion in 2020 caring for patients insured by Medi-Cal, the state’s Medicaid program for the poor. California’s Medicaid program has the third lowest provider payment rates in the country, so Kaiser’s loss makes sense. It was the magnitude of the loss that was eye-opening.
Here in California, we are extending Medi-Cal coverage to the maximum number of people, achieving near universal health coverage. The state’s new CalAIM program accomplishes this by extending eligibility to the last low-income group in our state – undocumented residents. With the implementation of CalAIM, virtually all California residents will have access to health insurance. I applaud this effort—it is better to have insurance than none at all.
Our state’s Medicaid program also covers a broad range of health services. CalAIM is adding a new set of services aimed at addressing social determinants of health, such as temporary housing. Again, it is laudatory to cover a full range of services needed to secure health.
But — and here is the rub — after generous coverage of people and services, there has not been enough money left in the budget to pay providers market rates for their services. The consequences of this trade-off — low payments to providers — shows up in poor access to services, lower healthcare quality, and health disparities in underserved communities.
Only 10% of Kaiser’s patients are insured by Medi-Cal. By comparison, my health system, MLK Community Healthcare (MLKCH), serves a population that is more than 70% Medi-Cal. Kaiser is able to cover its losses on Medi-Cal patients with payments from better-insured patients (commercial insurance). My health system doesn’t have that cushion. At MLKCH, only 4% of our revenue comes from commercially insured patients.
So here’s my question: If Kaiser cannot make the math work with just 10% of their patients in Medi-Cal, what happens with providers like MLKCH?
Hospitals that care for a high percentage of Medi-Cal and uninsured patients receive supplemental payments above the baseline rates that Medi-Cal pays. These supplements provide enough additional funding to help safety-net hospitals remain financially sustainable. At MLKCH we receive supplemental payments for patients admitted to our hospital.
Unfortunately, doctors who provide preventive services and disease management in the community do not get supplemental payments. They get low Medi-Cal payments, which contributes to a doctor shortage — South LA lacks 1,300 primary and specialty care providers—and an epidemic of poorly treated diseases with tragic consequences.
South LA’s doctor shortage is a direct result of the community’s dependence on Medi-Cal. Providers struggle to support quality medical practices on Medi-Cal payments.
Here’s how we can fix this problem: Increase Medi-Cal payments for providers in low-income communities like South Los Angeles. This is exactly what we are hoping to achieve with the assistance of Assemblymember Mike Gipson who, with State Senator Steve Bradford, have sponsored a bill, AB 2426, to add hospital-based outpatient care (emergency department) to the supplement we currently receive for inpatient care.
Covering our multi-million dollar annual losses in the emergency department will allow us to invest in the community-based care that will improve the health of community residents and reduce emergency department visits.
The result could be a game changer. We could hire more doctors in a place that desperately needs them. We could add resources for prevention and management of diseases like diabetes, which will in turn keep people from ending up in the hospital.
Most importantly, it’s the right thing to do. For too long, communities like South L.A. have suffered without access to quality healthcare. Here, in this bill, is the beginning of a just solution.
Dr. Elaine Batchlor is the chief executive officer of Martin Luther King Jr. Community Hospital in South Los Angeles.