Medi-Cal growth 'unsustainable': Study says revenue can't meet costs as 5% of clients require 60% of the spending

And California's legislators are trying at the moment to socialize their medical care even further!

Medi-Cal costs are likely to rise faster than state revenue and could consume one out of every five dollars the state spends by 2015, according to a study the Public Policy Institute of California released Tuesday. The Schwarzenegger administration said the findings supported the governor's controversial plan to save money by moving 500,000 aged and disabled Medi-Cal recipients into managed care. The projected growth in the program is "unsustainable," said California Health and Human Services Secretary S. Kimberly Belshe, who asked the institute to perform the study.

Though about 6 million Californians are enrolled in Medi-Cal, the study also found that only 5 percent of Medi-Cal recipients accounted for 60 percent of the spending among enrollees who are not in a managed-care plan. Data for recipients enrolled in managed care were not available. Medi-Cal, the state's most costly program after education, is often described as a government insurance program for the poor, but it also covers those with severe disabilities and the elderly in nursing homes. Those older, sicker patients account for most of the spending, the study found. Among the biggest cost drivers: nursing home care, hospital services and prescription drugs.

The small group of top consumers uses so many resources that even if benefits for the healthiest 75 percent of Medi-Cal recipients were cut in half, the state would save only 3 percent of the multibillion-dollar Medi-Cal budget, the study found. The state currently spends 15 percent of its general fund budget, about $13 billion, on Medi-Cal. The federal government contributes an additional $19 billion annually in Medicaid funds.

The study comes at a time when the federal government is pressuring states to rein in Medicaid costs. The study predicted that Medi-Cal costs could grow by 8.5 percent a year over the next few years, outstripping a 6 percent annual growth in revenue. Gov. Arnold Schwarzenegger's plan for a Medi-Cal overhaul - recently rejected in part by legislative budget committees - would expand managed care, cap dental benefits and start charging premiums for some enrollees. The state Department of Health Services is also emphasizing better case management for chronically ill Medi-Cal recipients, Belshe said. "These are all examples of things we need to be doing, targeting these high-use, high-cost users," she said.

But the Republican governor's proposed managed-care expansion has met with opposition from some who say it could provide less care for people with serious health needs and would not necessarily save money.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation.

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