In many ways California health care is different - not necessarily better, just different.
It is American alright - quintessentially so. But its history, geography and social
context have come together to create some of the great experiments in health care
finance and delivery in the United States: for example, the Ross Loos Medical Group,
the nation's first prepaid group practice; California Physician's Service (now California
Blue Shield), the nation's first statewide Blue Shield plan; Kaiser.
A HERITAGE OF EXPERIMENTATION
From the mid-nineteenth century, California's
health system evolved uniquely. It was isolated from other American population
centers by great distances. The health system was highly competitive. The population
influx following the discovery of gold and silver brought an abundance of both regular
and irregular practitioners. California had the highest physician-to-population ratio of
any state from the late 19th Century through the mid 20th Century.
California's health system incorporated alternative healing approaches. Alternative
practitioners of all types flooded into the state. Especially in Southern California,
many infirm sought the alleged healthful qualities of California's climate. Ultimately,
the nation's most extensive public hospital system was constructed to care for this
largely indigent population.|
European immigrants pouring first into San Francisco and later into Los Angeles
brought with them traditions of mutual risk sharing. In 1851, the nation's oldest
prepaid health plan was established in San Francisco by the French Mutual Benevolent
Society. Later, German and Italian health societies were formed.
Geographically isolated industries, including mining, timber, the railroads and, later,
the great public works projects of the Depression in California's deserts and
mountains, led to the establishment of a number of closed health systems created by
employers, unions, mutual benefit associations and fraternal organizations. These
traditions led ultimately to the establishment of Kaiser Permanente Health Plan.
With the turn of the century came a quick sequence of health system experiments: a
referendum battle over compulsory health insurance in the teens; the establishment of
the state's early medical groups; the explosive growth of unregulated capitated health
plans during the depression; the formation of the nation's first all-hospital Blue Cross
Plan in Sacramento in 1935 and the first statewide Blue Shield Plan in 1939; and the
emergence of Kaiser.
THE CALIFORNIA MODEL
By the early 1990s, California's health care vision had
coalesced into what many observers called The California Model. This model was
founded on a contractual partnership among purchasers, payers and providers
intended to restructure and revitalize the health care landscape. Activist employers
would drive employees into a limited number of health plans, and would unite to
negotiate aggressively to lower premiums. Rapidly consolidating health plans in turn
would capitate and delegate function to providers to encourage utilization efficiencies
and quality enhancements. Providers would then pursue horizontal and vertical
integration strategies to rationalize resources. Physician organizations, funded
primarily by Wall Street or health systems, would coalesce to manage large pools of
A TROUBLED PARADIGM
California employers have enjoyed an unprecedented long
run of medical cost inflation, arguably helping fuel California's long economic boom.
Managed care California style has also lowered resource use, especially inpatient days
per thousand population. However, many of the goals of the California Model remain
The vision of provider integration proved remarkably difficult and expensive to
implement and operate. Mergers, both horizontal and vertical, failed to deliver on
expected efficiencies. Consumers revolted against gatekeeper models, re-popularizing
open network plans and sending a strong message to the market that
provider choice was everyman's proxy for quality health care. Capitated medical
groups struggled to survive, and risk-sharing experiments with hospitals were
abandoned as many integrated systems terminated capitated contracts. In short, by
the end of the 1990's it was obvious that something had gone awry with the model.
At the same time, California's uninsured population continued to
grow. More than 21% of California's population, or approximately seven million
residents, are uninsured. At a time of extraordinary economic prosperity, the problem
of the uninsured worsens.
California is the "Blade Runner" society of the 21st
Century. Ethnically, racially, linguistically and culturally disparate, California is a melting pot. For example, Latinos make up nearly 33% of California's population.
Since 1990, 55% of the State's population growth has been Hispanic.
Distinct cultural, ethnic and linguistic populations have special medical needs, as well
as access issues. Issues of cultural and linguistic competency have emerged as
crucial policy and operational matters for California's health plans and providers.
THE CONSUMER REVOLUTION
Just when plans and providers sought to create an
economical and accessible managed care-based health system for patients,
consumers rose up to speak for themselves. Rejecting limits on choice of physician,
this "managed care backlash" has resulted in benefit package revision to create
broader provider networks and passage of patient protection legislation by the
legislature. The role that the empowered consumer will play in the future of
California's health system remains unclear.
SCIENCE AND TECHNOLOGY
Extraordinary advances in science and technology
create new pharmaceuticals and medical devices. While such developments offer
hope of advances in health status and treatment, new costs are being added to the
system. In particular, the increased costs of outpatient pharmaceuticals have been felt
by California health plans and risk-bearing providers.
The Internet investment bubble has burst - especially in health
care. Still, some feel that the Internet may transform health care finance and delivery.
Will content sites empower the new health care consumer? Will Internet connectivity
prove to be an effective surrogate for the bricks and mortar approach to health system
integration of the past decade? Will e-commerce create a much more efficient health
care supply chain? Only time will tell.
How and the extent to which California's health plans and providers
should be regulated are hotly debated issues. Patent protection, health plan liability
and medical group solvency regulation all hang fire. Issues of seismic safety and
power availability challenge California's health care providers.
LEADERSHIP AND THE FUTURE OF CALIFORNIA'S HEALTH SYSTEM
The challenges facing California's health systems are daunting - the opportunities great.
Leadership not found within the system will be imposed from without.
Important questions and issues will be addressed at
California Health Care Symposium 2001. At the conclusion, attendees should be able
- Recognize what California's health care consumers want.
- Describe the future of employer-sponsored health insurance in California.
- Determine if major health care purchasers will contract directly with providers in
- Explain how California benefit packages will evolve; defined benefit to defined
contribution, co-pays and deductibles, annual maximums, etc.
- Discuss the future of Medicare risk in California.
- Explain premiums, capitation, and risk adjustment in California; where are we,
and where ought we be?
- Discuss the regulatory agenda of California's Department of Managed Care.
- Describe the demographics of California's uninsured.
- Employ effective strategies to enroll eligible uninsured in existing programs, e.g.,
Healthy Families, Medi-Cal, etc.
- Recognize health reform legislation needed to address the issue of the uninsured.
The Symposium will be attended by the following individuals
and institutional representatives:|
- Consumers and Consumer
- Purchasers, including Private
Employers and Public Purchasers
- Health Plan and Health Insurers
- Hospitals and Health Systems
- Medical Group and IPA Leaders
- Health Care Executives and Board
- Health Plan, Health System, Medical
Group and IPA Medical Director
- Physicians, Registered Nurses, Pharmacists,
Physician Assistants and
Other Allied Health Professionals
- Investment Bankers and Venture Capitalists
- Health Care Consultants and Advisors
- Health Care Attorneys and In-House Counsel
- Health Care Policy Makers and Regulators
- Health Services Researchers and Academics
- Commentators and the Press