Guest Commentary written by

Sally Pipes

Sally Pipes

Sally C. Pipes is the president, CEO and a health care policy fellow at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All.”

In January, California became the very first state to open its Medicaid program, called Medi-Cal, to every undocumented immigrant within its borders. Some 700,000 adults between the ages of 26 and 49 now qualify for publicly funded health coverage.

It’s the fourth expansion of the program to undocumented immigrants, after kids became eligible in 2015, young adults in 2019 and those over the age of 50 in 2022.  

No other state has gone as far as California – yet. Others have partially expanded public health coverage for undocumented people. At least one – Minnesota – is planning to follow California’s lead and offer coverage to low-income undocumented immigrants in the state next year.

These initiatives rest on an underlying belief that opening Medicaid up to more people is a cost-effective way to get them quality care. That’s misguided. There are far better and less expensive ways to expand access to quality health coverage.

First, some background. Medicaid is the public health insurance plan for low-income residents. It’s jointly administered and funded by the states and the federal government. The feds provide at least $1 for every dollar that the states spend on the program.

This past year, California spent $152 billion on Medi-Cal. One-quarter of that amount came from the state’s General Fund.

The new Medi-Cal expansion could cost more than $2 billion every year, according to the state’s Legislative Analyst’s Office. And that could be a significant underestimate. 

More than 300,000 undocumented individuals crossed the border between Mexico and California last year alone. If that trend continues, taxpayers, who already subsidize Medi-Cal coverage for 14.6 million Californians, could eventually be on the hook for more.   

California can ill afford the additional expense. The state is already grappling with a budget deficit of $38 billion, by the governor’s math. The state Legislative Analyst’s Office pegged the budget deficit at $73 billion.

Yet Gov. Gavin Newsom is doubling down, saying recently that he’s “committed” to expanding Medi-Cal. He may come to regret that commitment. States are set to pick up a greater share of their overall Medicaid bill as COVID-era federal aid expires. This year, state Medicaid spending is set to increase 17%.

Adding more people to Medi-Cal won’t just strain the state’s coffers – it’ll make it harder for the program’s legacy beneficiaries to secure care. Already, there aren’t enough providers available to care for Medicaid recipients. According to a 2021 report from the Medicaid and CHIP Payment and Access Commission, just 70% of physicians accept new Medicaid patients. That’s compared to the 90% of providers who reported accepting new patients with private insurance.   

The reason for this disparity is clear: Medicaid doesn’t pay providers enough. The program reimburses physicians 30% less than Medicare does. And Medicare pays 30% less than commercial insurance. 

As a result, Medicaid recipients are 1.6 times less likely to successfully schedule a primary care appointment and 3.3 times less likely to successfully schedule a specialty appointment when compared to individuals with private insurance.

When Medicaid recipients can’t access a regular provider, they’re more likely to go to the emergency room. A study of Oregon’s 2008 expansion of Medicaid found that coverage was associated with a 40% increase in emergency department visits per person – including visits for conditions that could have been treated by a primary care provider.  

Adding millions more people to Medi-Cal’s rolls may well exacerbate these problems for all beneficiaries. 

If improving access to quality care is truly what California – and all other states contemplating similar moves – is after, there are better ways to do so.

California could start by lifting its ban on the sale of short-term plans. These plans can cost up to 70% less than unsubsidized options on the Obamacare exchanges. And since undocumented immigrants are ineligible to enroll in Obamacare or receive premium tax credits, short-term plans may be a particularly good option.

Private insurance options can deliver the affordable care state residents want and need. Lawmakers in California and across the nation would do well to start expanding access to them – instead of their failing Medicaid programs.