With more than one out of every three Angelenos eligible for government health care programs targeting low-income residents – more than 3.6 million in all – insuring and caring for low-income Angelenos is big business.

A wide array of insurers and health care providers serve this huge market. In this special report, the Business Journal looks at some of the major players, both on the insurance and on the care provider end.

But first, a look back at how insuring and caring for low-income Angelenos has evolved. Prior to the mid-1960s, charitable hospital organizations – often with religious affiliations – provided most of the care to the poor. Then in 1965 came the establishment of Medicaid – one of the most lasting accomplishments of the late President Lyndon Johnson’s so-called “Great Society.” Medicaid began as an income means-tested program that reimbursed health care providers for treating no-income and low-income patients; the program was administered by individual states and it ran on a fee-for-service basis, meaning the treatment was provided and then reimbursed through Medicaid. In California, the program became known as Medi-Cal.

Concurrently, a number of health care clinics, sometimes known as “free clinics,” were established whose mission was to provide care to the poor and uninsured. AltaMed Health Services started out in 1969 as one such clinic serving largely Latino and immigrant communities in East Los Angeles.

In the early 1970s, California experimented with managed care, with Medi-Cal administrators negotiating fixed per-patient prices with health plans. The idea was to keep costs in check. To accomplish this, health plans began limiting patient choice of doctors to those physician groups that would agree to the fixed per-patient costs. By the mid-1990s, managed care had spread to dozens of other states, transforming the Medicaid market.

Companies like Long Beach-based Molina Healthcare Inc. exploded in size as they won state contracts to provide managed care services to Medicaid-eligible enrollees.

In the 1990s, under a new state law, the Medi-Cal insurance market in Los Angeles County was reorganized. To promote competition, a public-administered health plan was set up to supplement the commercial insurer. Out of this effort came L.A. Care Health Plan, which today is the largest public health plan in the nation, serving more than 2.6 million members – roughly one out of every four Angelenos.

On the health care provider side, physician practices began merging into large provider groups to better compete for managed care contracts, both in the commercial market and for Medi-Cal services. And a new class of hospitals emerged: so-called “safety-net hospitals” that were required to serve all incoming patients, regardless of their ability to pay. At first, these were mostly county-run hospitals, including the original Martin Luther King Jr. Hospital established in Willowbrook after the 1965 Watts riots. Over the decades, problems accumulated at the hospital, leading to the county’s decision to shut it down in 2007.

The replacement hospital, known as Martin Luther King Jr. Community Hospital, opened in 2015. That hospital has tried to fill the need for health care services in low-income communities in and around South Los Angeles, though at times, such as during the Covid-19 pandemic, it was overwhelmed.

“Given the community we are in, we’ve always had a high volume of emergency room visits,” Elaine Batchlor, the hospital’s chief executive, said in a 2021 interview.

Batchlor said this was due to high rates of illness in the community that has not been regularly addressed. To help combat this, the hospital has increasingly located patient screenings and other programs, such as diabetes prevention, in the community, targeting people who don’t regularly visit doctors.

“It’s all about pushing more care into the community,” she said.

Since the Covid pandemic, two major lasting challenges have emerged among insurers and providers of health care for low-income Angelenos. First, the Medicaid/Medi-Cal reimbursement rates for providing care to low-or no-income individuals have been too low, putting tremendous financial strain on hospitals and other care providers. Then, last year, as part of a nationwide mandate to end the Covid-era easing of Medicaid enrollment restrictions, Medi-Cal and other state Medicaid administrators began culling the enrollment rolls, dropping coverage for millions of people nationwide. This has hit both insurers and care providers hard.

The Business Journal looks at these and other issues impacting a sampling of the local companies and nonprofits that insure and care for low-income Angelenos.