Medicaid and the Mainstream: Reassessment in the Context of the Taxpayer Revolt

California's Medicaid program—Medi-Cal—attempted to implement the ideal of mainstream medical care for the poor by giving program beneficiaries a “credit card” for use in the private health care marketplace. This exposed the program to the perverse economic incentives of the fee-for-service, costplus health care system, and contributed to a high rate of increase in program costs. Attempts to control costs have been equally perverse, resulting in low payment rates, the second-guessing of physician professional judgments, the probing of medical and fiscal records, and the use of computerized surveillance systems. Attempts to shift to the use of more efficient delivery systems have had small success. Attempts to attain cost containment through restructuring the Medi-Cal program have been rejected in the name of the mainstream ideal. Costs have continued to escalate, with annual increases as high as 20 percent in some years. Medi-Cal now costs $4 billion per year, the largest single program in California state government. The taxpayer revolt in California is creating a fiscal crisis that will force rethinking of the premises of publicly funded health care for the poor, and a restructuring of strategies for reaching that objective. In the short run, it appears that the issue may not be whether the indigent will have access to mainstream medical care, but whether they will have access to any medical care. In the longer run, the crisis should represent an opportunity for building a system of health care that can serve the financially disadvantaged at a cost tolerable to our society.