L.A.’s Health-Care Reform Is a Lesson for Democrats

In 2013, Los Angeles County implemented its own version of a “public option.” It’s delivered change, but not the revolution some advocates want.

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The dozen elementary- and middle-school students who were practicing calisthenics, before they began a class on healthy eating, surely had no idea they were at the forefront of the debate over the future of health care in America. But the young people who gathered here last week for the Healthy Cooking for Kids session at the Lynwood Family Resource Center are part of what may be the country’s most thorough test in establishing a public competitor to private health insurance.

The Lynwood Center in this predominantly Latino neighborhood southeast of downtown Los Angeles is operated by the L.A. Care Health Plan, the nation’s largest public health-insurance company. L.A. Care was launched in 1997 by the state to manage the health care of Los Angeles County participants in California’s Medicaid program, known as Medi-Cal. But since 2013, it has also sold insurance to the general public through the state insurance exchange established under the Affordable Care Act. In the process, L.A. Care has directly competed with private health insurers for customers, exactly as many Democrats want a “public option” to do nationwide.

“The only income we get is the premium income,” John Baackes, L.A. Care’s chief executive officer, told me. “We don’t get a subsidy; we don’t get any special treatment; we have to go through all the same regulatory hoops that [private insurers] do. So I’m saying, ‘If you want to see what a public option looks like, come take a look.’”

Health care remains perhaps the most significant policy divide among 2020 Democrats, an issue that has infused two rounds of presidential debates and seems likely to do so yet again when the candidates convene in Houston next month. The field is split between the candidates proposing to move the country to a single-payer health-care plan that would eliminate private insurance (most vocally, Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts) and those who would establish a public option to compete with private plans.

The House passed a public option in the original version of the ACA in fall 2009, but the idea died in the Senate. Now the Democrats most vocally opposing single payer, such as former Vice President Joe Biden and Senator Michael Bennet of Colorado, rely heavily on a public option in their own health-care plans as a way to increase access to coverage and reduce cost.

The experience of L.A. Care shows the possibility of the public option to leverage change, but also the tough choices that loom in implementing the idea. The plan has created a sturdy competitor to private insurers, but it hasn’t had a transformative effect on cost. L.A. Care “ended up being a good and lower-cost option, but it’s not the revolution,” Anthony Wright, the executive director of Health Access California, a consumer-advocacy organization, told me. “It shows both the potential and the limits of a public option.”

L.A. Care’s roots stretch back to California’s decision in the 1990s to move most of its Medicaid population into managed-care programs. To run them, the state authorized counties to establish their own nonprofit, publicly operated health-insurance programs. As Wright told me, the thinking was that since much of the care for these low-income families would come through the public-health system of hospitals and clinics already run at the county level, it made sense to create a public-insurance plan to coordinate with them.

Los Angeles County, the nation’s most populous, was one of several counties in the state that decided to do so. Though L.A. Care is tied to the county government, Baackes told me it operates “definitely at arm’s length” from it, with only one L.A. County supervisor sitting on its board. Managing the medical benefits for Medicaid recipients in L.A. County became a big operation: L.A. Care now coordinates health care for just over 2 million people on Medicaid. After former President Barack Obama signed the ACA into law, L.A. Care won approval from the state to compete for non-Medicaid consumers in the insurance exchanges it established under the law. Today it is the only public-health-insurance plan operating on California’s exchanges, serving about 80,000 consumers. That ranks it first among health-maintenance organizations selling on the exchange in L.A. County, and fourth among insurance plans overall.

 

Ronald Brownstein is a senior editor at The Atlantic.

 

 

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