by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Expansion of Medicaid under the Affordable Care Act has been wildly successful in improving the fortunes of one particular group in California — just not the group Medicaid was intended to help.
A recent Kaiser Health News story reported that from 2014 (when the state expanded its Medicaid program under Obamacare) to 2016, Medicaid insurers made $5.4 billion in profits. During this same period, the massive expansion of Medi-Cal (the state’s Medicaid program) saw its enrollment grow to one out of every three California residents. Some California Medicaid insurers’ profit margins increased by 200 to 300 percent after the expansion.
This is problematic because many in the Medi-Cal program are reporting that they receive substandard care compared with the care given to those enrolled in private health plans. The Kaiser article notes, “Two of the most profitable insurers in California — Centene and Anthem — run some of the worst-performing Medicaid plans, according to medical quality scores and complaints in government records.”
Though California is a particularly egregious case of private companies siphoning off billions of taxpayer dollars meant to help the less fortunate, it is by no means the only state where insurance companies are getting rich while the low-income and disabled get stuck with substandard care. In 2013, before expansion, Medicaid managed-care profits totaled $1.1 billion in 34 states and the District of Columbia. In 2015, one year after expansion, that number had more than tripled to $3.9 billion.