Ambitious experiment to revamp Medi-Cal
State to spend billions adding social services to health insurance program for the poor.
OAKLAND — Living unmedicated with schizophrenia and bipolar disorder, Eugenia Hunter has a hard time recalling how long she’s been staying in the tent she calls home at the bustling intersection of San Pablo Avenue and Martin Luther King Jr. Way in Oakland’s hip Uptown neighborhood. Craft coffee shops and cannabis dispensaries are plentiful here, and one-bedroom apartments push $3,000 per month.
“At least the rats aren’t all over me in here,” the 59-yearold Oakland native said on a bright August afternoon, stretching her arm to grab the zipper to her front door. It was hot inside, and the stench of wildfire smoke hung in the air. Still, after sleeping on a nearby bench for the better part of a year, she felt safer here, Hunter explained.
Hunter has been hospitalized repeatedly, including once last summer after she overdosed on alcohol and lay unconscious on a sidewalk until someone stopped to help. But she is reluctant to see a doctor or use Medi-Cal, California’s health insurance program for low-income and disabled people, largely because it would force her to leave her tent.
“My stuff keeps on getting taken when I’m not around, and besides, I’m waiting until I got a place to live to start taking my medication again,” Hunter said, tearing up. “I can’t get anything right out here.”
Hunter’s long and complex list of ailments, combined with her mistrust of the healthcare system, make her an incredibly difficult and expensive patient to treat. But she is exactly the kind of person California intends to prioritize under an ambitious experiment to move Medi-Cal beyond traditional doctor visits and hospital stays into the realm of social services.
Under the program, vulnerable patients like Hunter will be assigned a personal care manager to coordinate their healthcare treatments and daily needs such as paying bills and buying groceries. And they will receive services that aren’t typically covered by health insurance plans, such as getting security deposits paid, receiving deliveries of fruits and vegetables, and having toxic mold removed from homes.
Over the next five years, California is plowing nearly $6 billion in state and federal
money into the plan, which will target just a sliver of the 14 million low-income Californians enrolled in MediCal: homeless people or those at risk of losing their homes; heavy users of hospital emergency rooms; children and seniors with complicated physical and mental health conditions; and people in — or at risk of landing in — expensive institutions including jails, nursing homes and mental health crisis centers.
Gov. Gavin Newsom is trumpeting the first-in-thenation initiative as the centerpiece of his ambitious healthcare agenda — and vows it will help fix the mental health and addiction crisis on the streets and get people into housing, all while saving taxpayer money.
But the first-term Democrat is making a risky bet. California has neither the evidence to prove this approach will work statewide
nor the workforce or infrastructure to make it happen on such a large scale.
Critics also fear the program will do nothing to improve care for the millions of other Medi-Cal enrollees who won’t get help from this initiative. Medi-Cal has been slammed for failing to provide basic services, including vaccinations for kids, timely appointments for rural residents and adequate mental health treatment for Californians in crisis.
Yet the managed-care insurance companies responsible for most enrollees’ health will nonetheless be given massive new power as they implement this experiment. The insurers will decide which services to offer and which high-needs patients to target, likely further contributing to an unequal system of care in California.
“This will leave a lot of people behind,” said Linda
Nguy, a policy advocate at the Western Center on Law & Poverty.
“We haven’t seen health plans excel in even providing basic preventive services to healthy people,” she said. “I mean, do your basic job first.”
This revolution in MediCal’s scope and mission is taking place alongside a parallel initiative to hold insurance companies more accountable for providing quality healthcare. State health officials are forcing Medi-Cal managed-care plans to reapply and meet stricter standards if they want to continue doing business in the program. Together, these initiatives will reinvent the biggest Medicaid program in the country, which serves about onethird of the state population at a cost of $124 billion this fiscal year.
If California’s experiment succeeds, other states will probably follow, national Medicaid experts say. But if the richest state in the country can’t pull off better health outcomes and cost savings, the movement will falter.
When Newsom signed the California Advancing and Innovating Medi-Cal initiative into law in July — CalAIM for short — he celebrated it as a “once-in-ageneration opportunity to transform the Medicaid system in California.” He declined an interview request.
Beginning next year, public and private managed healthcare plans will pick high-need Medi-Cal enrollees to receive nontraditional services from among 14 broad categories, including housing and food benefits, addiction care and home repairs. The insurers — 25 are participating — will focus most intensely on developing housing programs to combat the worsening homelessness epidemic. The state was home to at least 162,000 homeless people in 2020, a 6.8% increase since Newsom took office in 2019.
Jacey Cooper, the state’s Medicaid director, said all Medi-Cal members would eventually be eligible for housing services. Initially, though, the services will be available only to the costliest patients. State Medi-Cal expenditure data show that 1% of Medi-Cal enrollees, many of the homeless patients who frequently land in hospitals, account for a staggering 21% of overall spending.
State officials do not have a savings estimate for the program or a projection of how many people will be enrolled.
The plan, Cooper said, builds on more than 25 successful regional experiments underway since 2016. From Los Angeles to rural Shasta, counties have provided vulnerable Medi-Cal patients with different services based on their communities’ needs.
Cooper highlighted interim data from the experiments that showed patients hospitalized due to mental illness were more likely to receive follow-up care, obtain treatment for substance abuse, avoid hospitalizations and emergency department visits, and see improvements in chronic diseases such as diabetes.
California will have five years to prove to the federal government it can save money and improve healthcare quality.
Health insurers will not be required to offer social services because federal law requires nontraditional Medicaid services to be optional. But California is enticing insurers with bigger payouts and higher state rankings. “We are asking the plans and providers to stretch,” Cooper said. “We’re asking them to reform.”
In Alameda County, two plans are available to serve Hunter. “People like Eugenia Hunter are exactly who we want to serve, and we’re prepared to go out and help her,” said Scott Coffin, chief executive of the Alameda Alliance, a public insurer.
But first they’d have to win her trust. In one moment, Hunter angrily described how health plans had tried to enroll her in services, but she declined, mistrustful of their motives. In the next moment, she said she desperately wanted care.
“Someone is going to help me?” she asked. “All I want to do is pay my rent and succeed.”