California’s healthcare spending per person among lowest in U.S.

For more evidence that the Golden State has lost some of its luster, consider this news from the federal government: California spends less per person on healthcare than all but eight states.

New data show that total spending by insurers, government agencies and individuals amounted to $6,238 per resident in 2009, well below the national average of $6,815. That puts California on a bottom tier with Arkansas, Georgia, Texas, Utah, Nevada, Arizona, Colorado and Idaho.

Healthcare analysts blame the low spending largely on the fact that the state has more than 7 million people who are uninsured, or about 1 in 5 Californians. As a result, many of these people seek medical treatment only when they are severely ill or injured.

Another factor is the low reimbursement rate the state Medi-Cal insurance program pays doctors and hospitals to treat the poor. California spent a smaller amount on low-income care — $4,569 per person — than any other state in 2009, the federal report shows. Healthcare providers are suing the state to block a 10% cut in reimbursements.


Larry Levitt, a healthcare and insurance analyst with the nonprofit Kaiser Family Foundation, worries that the figures suggest that many Californians aren’t getting the care they need and that the state’s already fragile economy will suffer as a result.

“The state is essentially under-investing in healthcare and ending up with an unhealthier population as a result,” he said. “If people aren’t healthy, they are not able to work or to be as productive as they otherwise would be.”

There are other reasons for the state’s low ranking that are less downbeat. California has a relatively young and healthy population compared with other parts of the country, and these people generally don’t need to go to the doctor very much. And California has a larger proportion of residents covered by health maintenance organizations than most other states, and that helps keep costs lower for more than 21 million Californians.

Overall, however, the report by the Centers for Medicare & Medicaid Services should be viewed as another sign that California faces profound challenges because of growing poverty and dwindling public resources, said economist Gerald Kominski, associate director of the UCLA Center for Health Policy Research.

“It’s not the great state it once was. We’re still living off a reputation that was developed in the ‘40s, ‘50s and ‘60s,” Kominski said. “Suddenly we are incapable of making the necessary investments in public infrastructures that our parents’ generation was able to make.”

The federal study looked at healthcare spending in 2009 across the nation and sought to explain the wide variations among states and regions.

It found that spending was generally higher in states with older populations, relatively high incomes and larger-than-average groups of women ages 20 to 44, those most likely to use maternity services.

The Northeast was home to many of the highest-spending states, including New York, Rhode Island, New Hampshire, Connecticut, Maine and Pennsylvania.


Lower-spending states tended to have low incomes, high uninsured rates and younger populations.

Demographers say all of these factors, along with a large immigrant population, help explain the low spending figures in California. And few expect the situation to improve anytime soon as poverty rates climb at a time when the state is cutting back insurance programs for the poor.

Many doctors already won’t accept the Medi-Cal because it pays so little.

“We have low-income people who are functionally uninsured because they can’t find a medical provider,” said Jean Ross, executive director of the California Budget Project.


President Obama’s healthcare reforms are expected to add 4 million to 5 million low-income residents to insurance rolls in 2014. About half would qualify for Medi-Cal, and the others would get federal subsidies to buy private insurance.

But healthcare experts question how useful the reforms will be if the state continues to pay low rates and doctors shy away from patients with government insurance. Several other factors also could affect the availability of care, including the unemployment rate and cuts to the federal Medicare insurance program for the elderly.

“All of those things will have a direct impact on healthcare spending and are outside the purview of healthcare reform,” said Dr. Mark Smith, president of the nonprofit California HealthCare Foundation. “While we expand coverage, we have to work on making the system more affordable and more accessible to people.”