With more than one out of every three Angelenos eligible for government health care programs targeting low-income residents – more than 3.6 million in all – insuring and caring for low-income Angelenos is big business.
A wide array of insurers and health care providers serve this huge market. In this special report, the Business Journal looks at some of the major players, both on the insurance and on the care provider end.
But first, a look back at how insuring and caring for low-income Angelenos has evolved. Prior to the mid-1960s, charitable hospital organizations – often with religious affiliations – provided most of the care to the poor. Then in 1965 came the establishment of Medicaid – one of the most lasting accomplishments of the late President Lyndon Johnson’s so-called “Great Society.” Medicaid began as an income means-tested program that reimbursed health care providers for treating no-income and low-income patients; the program was administered by individual states and it ran on a fee-for-service basis, meaning the treatment was provided and then reimbursed through Medicaid. In California, the program became known as Medi-Cal.
Concurrently, a number of health care clinics, sometimes known as “free clinics,” were established whose mission was to provide care to the poor and uninsured. AltaMed Health Services started out in 1969 as one such clinic serving largely Latino and immigrant communities in East Los Angeles.
In the early 1970s, California experimented with managed care, with Medi-Cal administrators negotiating fixed per-patient prices with health plans. The idea was to keep costs in check. To accomplish this, health plans began limiting patient choice of doctors to those physician groups that would agree to the fixed per-patient costs. By the mid-1990s, managed care had spread to dozens of other states, transforming the Medicaid market.
Companies like Long Beach-based Molina Healthcare Inc. exploded in size as they won…
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