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An Environmental Analysis of Health Care Delivery, Coverage, and Financing in California

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An Environmental Analysis of Health Care Delivery, Coverage, and Financing in California An Environmental Analysis of Health Care Delivery, Coverage, and Financing in California Delivered to Mark Ghaly, MD, Chair of the Healthy California for All Commission and Secretary, California Health and Human Services Agency Alice Chen, MD, Deputy Secretary of the California Health and Human Services Agency Final: August, 2020 Healthy California for All Environmental Analysis Final, August 2020 Authorship and Review Process This report was drafted and revised by a research team led by Andrew Bindman, M.D., of the University of California, San Francisco. Marian Mulkey was the lead author with major sections contributed by Richard Kronick, Laurel Lucia and Dr. Bindman. Additional contributors were Ken Jacobs, Jerry Kominski, and Srikanth Kadiyala. Early versions benefited from review by Alice Chen and Vishaal Pegany of the California Health and Human Services Agency. Juliana Fung and Joslyn Maula provided design and formatting assistance. In early June, 2020, a draft for review (“Version 2”) was provided to members of the Healthy California for All Commission. In connection with the June 12 Commission meeting, a version was posted for public review and comment. Extensive comments, including in-depth written comments from seven Commissioners, over 70 pages of written comments from consumer advocacy organizations and stakeholders, and additional verbal feedback from members of the Commission and members of the public, were received and carefully reviewed by the consulting team. In late July, Commission members received a revised version (“Version 3”) which reflected extensive adjustments in response to prior feedback. Changes included: • Clarified definition of Unified Financing • Added a section on “Equity and Community Health” and elaborated throughout on racial and ethnic disparities and issues affecting other marginalized populations • Clarified definitions of “quality” and population-based metrics as compared to individual health outcomes • Expanded and clarified discussions of risk, payment and population management, including greater attention to uncertain and potentially adverse outcomes related to integrated care and capitated payments • Added more information about financial incentives and financial performance of health plans, hospitals and other sectors of the health care economy • Updated references to COVID-19 and adjusted descriptions of pandemic implications, based on reviewer feedback as well as new realities • Substantially revised the discussion of self-insured employers and ERISA based on reviewer feedback 2 Healthy California for All Environmental Analysis Final, August 2020 • Restructured Section 2 with a different categorization of the types of steps California could take • Expanded the types of steps California might take to prepare to transition to a unified financing system Feedback from Commission members on Version 3 was addressed as follows: . When Commissioners proposed specific line edits that clarified the intended meaning, changes were made. When Commissioners offered additional context that could be readily incorporated in the draft as structured, changes were made. When requests involved extensive additional elaboration, or identification and incorporation of new data, changes were not made. Such suggestions will inform content for future Commission meetings and the Commission’s second report. When members of the Commission offered formal comments in the form of a one-page comment letter, they are incorporated within an appendix to this version. On August 13, this final version will be considered via a Commission advisory vote for delivery to Governor Newsom and to the Legislature. After August 13, the final report will be posted to the Healthy California for All web page with guidance on how public comments may be offered. Public comments that meet basic guidelines regarding accessibility and length will be posted as part of the public record. 3 Healthy California for All Environmental Analysis Final, August 2020 Contents Introduction and Overview ............................................................................................................7 Section 1: The Current State ........................................................................................................9 Equity and Community Health ...................................................................................................9 Demographics and Coverage ...................................................................................................9 Demographics .......................................................................................................................9 Key Health Indicators .......................................................................................................... 11 Health Insurance Overview ................................................................................................. 13 Who Pays? .......................................................................................................................... 23 Remaining Affordability Challenges ..................................................................................... 28 Coverage Transitions and Churn ......................................................................................... 31 Synthesis: Demographics and Coverage ............................................................................ 32 California’s Health Care Delivery System ............................................................................... 33 Hospitals, Physicians and Clinics ........................................................................................ 33 Health Plans and Insurance Carriers ................................................................................... 38 The Influence of Coverage on Sources of Care .................................................................. 40 Quality of Health Care ......................................................................................................... 42 4 Healthy California for All Environmental Analysis Final, August 2020 California’s Health Care Workforce ..................................................................................... 48 Provider Consolidation ........................................................................................................ 52 Synthesis: California’s Health Care Delivery System .......................................................... 59 How the Money Flows ............................................................................................................. 60 Comparison of California and U.S. Spending ...................................................................... 60 Public Sector Spending on Health Care in California .......................................................... 63 Why is Health Care So Expensive in the United States? ..................................................... 65 Price Variation Across Payers and Providers ...................................................................... 70 Synthesis: How the Money Flows ........................................................................................ 75 How Will a Pandemic Affect California Health Care? .............................................................. 75 California’s Health Care Environment: Implications for Unified Financing ............................... 76 Section 2: Steps to Prepare to Transition to Unified Financing ................................................... 78 Considerations Influencing California’s Path to Unified Financing .......................................... 78 Redirecting Medicare, Medicaid and Other Federal Funds ................................................. 78 Revisiting Employer Contributions and Obligations ............................................................. 79 State Capacity to Raise and Use Revenues for Health Care .............................................. 80 Additional Considerations .................................................................................................... 81 5 Healthy California for All Environmental Analysis Final, August 2020 Synthesis: Considerations Influencing California’s Path ...................................................... 82 Steps California Can Take to Prepare to Transition to Unified Financing ............................... 82 Design Steps ....................................................................................................................... 82 Legal Steps.......................................................................................................................... 83 Steps to Improve Care and Reduce Fragmentation ............................................................ 84 Synthesis: Steps California Can Take to Prepare ................................................................ 88 Section 3: Coverage Expansion Options .................................................................................... 88 Expand Eligibility for Medi-Cal ............................................................................................. 89 Administrative Simplification to Ease Enrollment ................................................................. 89 Expand Covered California Affordability Assistance ............................................................ 90 Improvements in Coverage within the Current System ........................................................ 90 Synthesis: Coverage Expansion Options ...........................................................................
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