The Obama administration Tuesday approved a $10-billion plan to help California modernize its Medicaid health insurance program, pushing the state to the forefront of the national effort to implement the new healthcare law.
The administration's much-anticipated decision to grant a so-called Medicaid waiver to California could ultimately help cover more people over the next five years.
And state and federal officials hope it will bolster efforts to improve the quality and efficiency of care provided to the state's poorest residents.
"California is now firmly leading the country in the implementation of health reform," said Peter Harbage, an independent consultant who has worked extensively on healthcare policy in the state.
That carries a substantial price tag, which will come from federal money already planned for Medicaid. The Obama administration, which is under pressure to control spending, made no official announcement of the waiver Tuesday.
But at a time when some states are suing to stop the law, California's moves — which have involved bipartisan cooperation — have emerged as a bright spot for advocates of the health overhaul.
A month ago, Gov. Arnold Schwarzenegger, a Republican, signed legislation to create a California insurance exchange, making the state the first to create such a market since the law was enacted. ( Massachusetts and Utah had set up exchanges before the law passed).
Beginning in 2014, these state-based exchanges, a foundation of the new healthcare law, are to become the central Internet-based marketplace for consumers who do not get health benefits at work.
The major coverage expansion envisioned by the new law will also rely heavily on Medicaid.
California currently covers approximately 7.5 million people in its $51-billion program, known as Medi-Cal.
But Medi-Cal, which like all Medicaid programs nationwide is jointly funded by the state and federal governments, primarily covers poor children and their families, seniors and disabled people.
The waiver will allow the state to phase in coverage for all Californians who make less than 133% of the federal poverty level, or $14,404 for single person.
Under the new healthcare law, all state Medicaid programs will have to reach that goal starting in 2014.
California also plans to use the waiver to work on expanding coverage to people in some counties with incomes up to twice the federal poverty level.
In addition to expanding coverage, the Medicaid waiver is designed to shift more Medi-Cal beneficiaries into managed care, a move many healthcare experts believe can help improve quality while also containing costs.
That will be even more important in 2014 when more Californians are moved into the program.
The waiver will also make billions of dollars available to safety-net hospitals that better coordinate care and meet new quality standards, key goals of the national healthcare overhaul.
"We're happy to join in partnership with California to model a healthcare delivery system that works better for patients as well as builds a bridge to 2014," said Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services, which approved the waiver.