Managed Care Mandates Fall Short of Curbing California Medicaid Costs

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Over the past several years, growth in Medicaid spending has far outpaced the growth in state tax revenues and now accounts for nearly 22 percent of total state government spending. Rapid health care cost increases during the 1990s led many state governments to shift Medicaid recipients into managed care plans in an effort to control costs. The conventional wisdom at the time suggested that states would save money as a result. Like many other states, California sought relief through managed care; it passed legislation to foster enrollment and county by county, Medicaid recipients moved from fee-for-service (FFS) system to managed care plans.