Medicaid in California: Making the rich richer, keeping the poor poorer

One of the largest, most complicated government programs in America today is Medicaid, which in the last few decades has spun out of control and is now on track to potentially bankrupt every state in the country. The state of California has it’s own Medicare-related problems, and they come in the form of an ever expanding gap being wedged between the rich and the poor.

Even though Medicare is not normally associated with getting rich, many insurance companies in California are now taking advantage of the taxpayer-funded program to collect enormous profits. A unit of Centene Corp., for example, acquired an astonishing $1.1 billion in profits between the years 2014 and 2016, and Anthem has California’s Medicaid program to thank for their profit of $529 million during the same time period. The figures are according to state data that was obtained by Kaiser Health News.

In total, Medicaid insurers in California collected $5.4 billion between 2014 and 2016. In addition, the state made more money last year than all Medicaid insurers combined in 34 other states that offer managed care plans, and what’s worse is that while these insurance companies are raking in enormous profits, the actual patient care remains subpar. (Related: Medicaid is on the brink of financial collapse in Illinois as well as in other states.)

Reactions to these profits thus far have mostly been a combination of shock and dismay. “Those profits are gigantic – wow,” said Glenn Melnick, a health economist and professor at the University of Southern California. Another educator, professor Alan Sager of Boston University, said, “California is wildly open handed and excessively generous with insurers.”

But change to the Medicaid program may be just over the horizon. Just last week, House Speaker Paul Ryan announced that 2018 would be the year that Republicans tackle the issue of Medicaid, as well as Medicare and welfare spending. (Related: The government has indicated that Medicare will be completely bankrupt by the year 2024.) “We’re going to have to get back next year to entitlement reform, which is how you tackle the debt and the deficit,” explained Ryan in an interview on Ross Kaminsky’s talk radio program. “…Frankly, it’s the health care entitlements that are the big drivers of our debt, so we spend more time on the health care entitlements – because that’s really where the problem lies, fiscally speaking.”

Assuming that Paul Ryan and the congressional Republicans keep their promise to tackle these issues, this is very good news for Americans across the country. Entitlement reform is needed now more than ever, because at this point, the only conceivable alternative appears to be nationwide bankruptcy.

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