Capitol Alert: Study sees big costs, big potential savings in Medi-Cal overhaul

California could see a 27 percent increase in those receiving medical care under Medi-Cal, the federal-state program that serves low-income residents, under a major provision of the newly adopted overhaul of national health care, a new study has found.

But UnitedHealth Group also says that California could offset the higher costs and much more by upgrading its medical care delivery system. In fact, it could save 10 times as much as those extra costs, the Minneapolis-based managed care firm says.

As the largest state, California is expected to see the largest numerical growth in Medi-Cal enrollment, some 2 million, over the next nine years. But the 27 percent growth is actually below the national average of 32 percent, largely because California has a relatively large recipient base already, due to its relatively low threshold of qualifying for benefits. The program is called Medicaid in most states.

Gov. Arnold Schwarzenegger has been critical of the Medicaid expansion and other elements of the health care overhaul for imposing billions of dollars in new costs on a state budget that's already facing large deficits.

UnitedHealth, in a detailed study of national impacts, says that placing another 2 million Californians in the system would cost $34.2 billion from 2014 to 2019, with the federal government picking up $32.4 billion and the state on the hook for the remaining $1.8 billion. But UnitedHealth says that with its relatively high current Medi-Cal costs, reforms could reduce costs in California by $39 billion, including a $18.4 billion reduction in the state's share.

UnitedHealth says its recommendations for streamlining health care delivery, if adopted, could save the nation $366 billion over the next decade. The proposals, broadly, including better coordination of care, greater use of managed care for recipients with long-term needs and modernizing Medicaid's administrative and financial procedures.

The full report is available here.