Medicare+Choice in California: Lessons and Insights.

Examines the California experience from year-end 1997 through the beginning of 2002 to identify lessons that can be applied to the national M+C environment. California enrollees account for about one-quarter of the national enrollment in the M+C program, and the state has a much higher market penetration rate than the rest of the nation. The market in California is dominated by three national firms—Kaiser-Permanente, PacifiCare, and Health Net—which account for 83 percent of M+C enrollment in the state. While the maturity of California’s market has contributed to some stability and California has been less affected by withdrawals than other states, the same market pressures—such as physician networking problems and cost pressures—that are affecting other states are also impacting California. Furthermore, health plans that use a delegated risk model are under much more pressure than firms with an integrated delivery structure. The authors note that provider infrastructure and contracting have had a large influence on the program's success, and M+C will likely remain an almost exclusively urban product.