Medi-Cal's Share of Cost Does Not Match the Montly Housing Costs

Medi-Cal policy is imposing a share of cost that is unrealistic. Many Medi-Cal recipients are not on welfare but are offered assistance from the government because they make too much money to qualify for welfare but not enough to pay for health care costs. As a result, they must contribute to their healthcare by paying for a portion of the cost of the services they receive. The calculated amounts of share of costs for a family or individual do not consider the monthly housing costs in California.

Share of cost refers to the amount the recipient must pay the health care provider for health care services each month before Medi-Cal takes over to pay for additional expenses needed for that month. The “share of cost” requires the recipient to pay the full amount of health-care expenses up to a predetermined amount. It is not the same as “cost-sharing” or “premiums”.

The share of cost is calculated by deducting a fixed amount, the “maintenance need level” from the net income. The net income is determined by subtracting allowable deductions from the gross income. The gross income includes earned income from a job, disability income or alimony. There are about 40 allowable deductions which may include educational expenses, dependent care (e.g., childcare), alimony payments, and an “earned income deduction.” The earned income deduction is the amount deducted for earnings for a job. For example, for families, the first $90 dollars of monthly gross earned income is deducted and then divided in half.

State law determines the maintenance need level that is regulated by federal guidelines. The maintenance need level is the amount that the state law feels a recipient needs to provide food, clothing, and shelter for themselves. As of 1998, federal law has established the maximum maintenance need to be, for instance, $600 for a family size of one adult. A family size of one adult and one child has a monthly maintenance need level of $750. The amounts increase slightly as the family size increases. Unfortunately, California state law and federal officials fail to realize that the cost of living in California is outrageous. U.S. Census Bureau 2000 reported median gross rents (the amount of rent plus the estimated average of monthly cost of fuel and utilities) at $602 a month. New census reports state that cities like Irvine, Sunnyvale, and Santa Clara in California has a median gross rent of $1,200 a month.

Eligibility is determined by type of family income. So, if the recipients receive cash aid or are on SSI, they do not have to pay a share of cost. Those that are required to pay a share of cost include those not receiving cash aid benefits due to income. There are two categories of recipients that must pay the share of cost: the medically needy and the medically indigent.

The medically needy (MN) include the aged, blind, and disabled people along with low-income families who are unable to receive cash aid (e.g., CalWORKS or SSI). However, these families who are not able to receive cash aid due to high incomes must meet other requirements to qualify for MN assistance such as a single parent household or two parent household that is unemployed or underemployed. According to the Medi-Cal Policy Institute, in October 1997, there were about 614,000 MN Medi-Cal recipients.

The medically indigent (MI) Medi-Cal program offers Medi-Cal coverage to low-income children under 21 years of age who do not qualify for cash aid and who are not eligible for MN Medi-Cal. They either do not meet the requirement needed for SSI disability benefits or CalWORKS deficiency requirements. This program also includes low-income adults needed long-term care or pregnant women. According to the Medi-Cal Policy Institute, there were about 252,000 MI Medi-Cal recipients in October 1997.

Although not all MN and MI Medi-Cal recipients are subject to paying a share of cost because their incomes are low, many have to pay a share of cost that is unreasonable. For instance, a single mom with a four year old has an income of $1,200 and an alimony payment of $250 (Total income of $1,450) would be allowed a $50 per month deduction for alimony and a $90 per month deduction for her job. Although she may pay more in childcare (e.g., $300 a month), she is only allowed to deduct $175 for childcare because of the age of her child. After deductions (net income=$1135) and a set maintenance need for a two person family size of $750 per month, she has a share of cost of $385 per month. So, she must pay the health care provider $385 per month before Medi-Cal can provide the remaining health care costs per month (California Health Care Foundation 2007). Medi-Cal policy makers do not take into account whether the recipient is paying more than $750 in rent a month. If so, then that leaves nothing for food and clothing or ability to pay the share of cost, for that matter.

The Medi-Cal Policy Institute states that 1.4% of MI recipients and 15.5% of MN recipients met a share of cost in October 1997 whereas 200,000 Medi-Cal recipients did not meet that share of cost. They suggest the reason for those recipients not meeting the share of cost was due to not having medical expenses that surpassed the share of cost in a given month. Therefore, these recipients did not need Medi-Cal’s assistance. However, it doesn’t occur to the institute that maybe recipients are not seeking medical attention because they cannot afford the share of cost.

The rising cost of housing and stagnant wages in California has made it very difficult for families to make ends meet. Medi-Cal has imposed a share of cost for healthcare that is often at times impossible to meet, especially with California’s high median rental rates. Additionally, federal guidelines suggest an unrealistic monthly maintenance need that does not coincide with the rental rates. If federal and state policy makers were to incorporate the median rental rates, they will come to see that almost all Medi-Cal recipients may be eligible for “free” services without a share of cost. Under Medi-Cal’s current policy, many may benefit from purchasing private insurance as a cheaper route.