Kaiser Permanente is reportedly getting a deal that has other California insurers crying foul.
The proposed no-bid contract, beginning in 2024, would allow Kaiser to skip a bidding process required by other insurers to expand their Medi-Cal coverage area. In a prepared response, Kaiser says since they operate as both as a health insurer and a healthcare provider, they should be treated differently. Other health insurance providers worry that the health giant would be allowed to "cherry-pick" the healthiest patients, leaving them to pick up the extra costs of treating the rest while Kaiser would get to avoid state procedures.
“Offering a statewide, no-bid contract on a silver platter to a commercial plan undercuts the local public health infrastructure while paving a path for large-scale corporate health plan expansion in Medi-Cal,” Linnea Koopmans, chief executive officer of the Local Health Plans of California, said in a statement. Her organization represents 16 local health plans, which will not have to bid for a contract since they are nonprofits.
Critics point out the close relationship between Kaiser and Governor Newsom, citing recent contributions to causes important to the Governor. In 2020, Kaiser was the top donor of behested payments to Newsom, giving the Governor's administration $35.5 million in charitable donations.
The contract still needs approval of the state legislature and federal officials.