Financial Performance and Participation in Medicaid and Medi-Cal Managed Care

This article assesses the participation and the financial performance of licensed health maintenance organizations (HMOs) in the Medicaid market. The study found that participation by Medicaid Dominant plans has more than doubled from 11 percent in 1992 to 23 percent in 1998 while Medicaid membership in Commercial Dominant plans declined from 71 percent in 1994 to 51 percent in 1998. Both participating and non-participating plans incurred operating losses in 1998. Medi-Cal participating plans had higher operating margins than Medicaid participating plans throughout the United States. Interviews with key informants express concern about competence in program management, rate adequacy, decline in Medicaid enrollment, and turbulence forces of managed care market on Medicaid programs.