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California Subsidizes Medicare HMOs for Low Income

Wed, 01/17/2001 - 1:00am — Karen Stevenson
Description: 

Governor Gray Davis announced a new initiative to pay premiums of approximately 40,000 elderly and disabled Californians who faced disruption of their health care when nine Medicare+Choice HMOs in California implemented price increases on January 1, 2001. Last fall, nine Medicare+Choice HMOs in California and others nationwide announced plans to increase premiums to cover rising costs of health services. These increases affected beneficiaries who are eligible for both the state's Medi-Cal program and the federal Medicare program. By ending enrollment in their plans these individuals would have returned to a fee-for-service health care plan. These plans are more costly to the beneficiaries and the state.

Under the new program, California will pay the premiums for these individuals, effective January 1. The state is paying the HMOs directly, eliminating the need for individuals to make a payment each month. The payments are comprised of 50 percent General Funds and 50 percent federal matching funds. Initial annual cost projections for the program are $8 million in the current fiscal year and $17 million in subsequent years.

Governor Gray Davis announced a new initiative to pay premiums of approximately 40,000 elderly and disabled Californians who faced disruption of their health care when nine Medicare+Choice HMOs in California implemented price increases on January 1, 2001. Last fall, nine Medicare+Choice HMOs in California and others nationwide announced plans to increase premiums to cover rising costs of health services. These increases affected beneficiaries who are eligible for both the state's Medi-Cal program and the federal Medicare program. By ending enrollment in their plans these individuals would have returned to a fee-for-service health care plan. These plans are more costly to the beneficiaries and the state.

Under the new program, California will pay the premiums for these individuals, effective January 1. The state is paying the HMOs directly, eliminating the need for individuals to make a payment each month. The payments are comprised of 50 percent General Funds and 50 percent federal matching funds. Initial annual cost projections for the program are $8 million in the current fiscal year and $17 million in subsequent years.