Three years ago, upon purchasing an optometry practice in Southern California, Hunter Morgan immediately began serving patients covered by Medicaid, the government-funded health insurance program for low-income individuals. Despite the previous owners’ decision to not accept Medicaid patients, Morgan believed it was his duty to assist those in need. However, after just five months, he was forced to cease treating Medicaid patients due to the inadequate reimbursement rates. Despite charging $175 for eye exams, Medicaid only provided around $40, making it financially unsustainable for Morgan to cover expenses such as staff salaries and rent in the affluent beach community of Encinitas.
Governor Gavin Newsom and Democratic lawmakers in California have significantly expanded Medicaid enrollment, now covering approximately 15 million individuals, including undocumented adults. Nevertheless, reimbursement rates for doctors have not kept pace with this expansion, exacerbating financial strains on healthcare providers. This issue has led to crises in rural hospitals and has made it increasingly difficult for Medicaid enrollees to find willing providers, often necessitating long journeys to access care.
In response to mounting pressure from healthcare providers, California’s Medicaid program, known as Medi-Cal, sought to increase payments. However, constrained by budget deficits, the state opted to raise funds through a tax on managed care organizations. This tax hike, signed into law by Newsom, is projected to generate billions of dollars through 2026, with further increases proposed by the Legislature.
While these additional funds could potentially alleviate the financial burden on healthcare providers, concerns linger regarding the state’s ability to sustain such payments amid ongoing deficits. Moreover, federal approval is required every three years for California’s tax on managed care organizations, and recent signals from the Biden administration suggest potential limitations on state revenue collection, potentially jeopardizing future payment increases.
Despite criticism from Republican lawmakers, Democrats in the Legislature are generally supportive of Newsom’s plan to raise the tax to fund healthcare initiatives. The proposed increase in payments for optometrists could particularly benefit low-income residents in cities like Fresno, where Medicaid patients comprise a significant portion of the population seeking eye care services. Dr. Anthony Chavez of Fogg Remington optometry in Fresno expressed optimism about the possibility of reversing their decision to stop accepting new Medicaid patients if California were to raise reimbursement rates, underscoring the desire within the healthcare community to serve those in need.
