After nine years in charge of LA Care Health Plan, John Baackes will retire at the end of 2024.
During his tenure at the largest publicly operated health insurance company, LA Care implemented a scholarship for medical students who want to provide care in low-income areas, launched home health training for families and more than tripled the number of community resource centers it operates.
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Baackes said the future of these accomplishments, which he will hand over to incoming CEO Martha Santana-Chin on Jan. 6, is uncertain under incoming Republican President Donald Trump and a GOP-led Congress.
The Heritage Foundation’s Project 2025 policy agenda calls for slashing Medicaid financing, toughening enrollment rules, promoting alternatives to health exchange plans and other major changes to the healthcare system. While Trump has distanced himself from Project 2025, his first administration sought or implemented many of the same policies.
“With this new administration, and the challenges that are going to be thrown at those of us who provide Medicaid coverage, Medicare and the marketplace, it's going to be a fight,” Baackes said.
The interview has been edited for length and clarity.
Enhanced exchange subsidies will expire at the end of 2025. What would be the consequences if they aren't extended?
With what little has been said by the new [Health and Human Services] Secretary and the new administrator for [the Centers for Medicaid and Medicare Services], I would be concerned, and I am concerned.
About 75% of our members don't pay a monthly premium because the subsidy covers it. Prior to the increase, no more than about 50% of our members had no premium because the subsidy covered everything. I'd say 25% of them are in jeopardy because they would now have to pay a monthly premium. I don't have a sense of how many people would say, "Well, that’s too much," and opt out of insurance.
Trump has promoted block grants for Medicaid funding. How would that impact insurers?
Those in the business know that block grants are just a way of cutting the federal contribution to Medicaid. That's a terrible idea because the Medicaid program has always been underfunded. It's always had rates that are, nationwide, 60% to 70% of what Medicare pays for the same procedure, or half of what a commercial plan pays.
That's why we have so much disparity in healthcare outcomes. We've never funded this program, from 1965 on, at the same rate we have funding for other cohorts of people to get healthcare.
In his first term, Trump invited states to establish Medicaid work requirements. How would that change the program?
We think that the work requirement is a headline grabber because most of these people are already working.
I'm not sure how effective it is, except for one thing: It will put in another administrative barrier that the beneficiary has to jump through to prove that they're eligible. We're burdening people eligible for Medicaid with more hoops to jump through than people who have Medicare or commercial insurance because they have to be redetermined every year. It's an administrative nightmare.
Californians approved a measure on Election Day to boost provider reimbursements from Medicaid managed care plans. How could that be replicated elsewhere?
We were one of the plans that led to charge on Proposition 35. The coalition was huge: It was the hospital association, the medical association, the clinic association and most of the insurers. What we were saying is, "We cannot run a quality healthcare system for a third of the population of the state if we can't pay providers adequately so that they will participate in the program."
Each of the constituents in that coalition had previously elbowed each other out in lobbying activities. But now they came together and it was successful.
The takeaway I have is that you can do something big from ground up.
California recently penalized LA Care for having a backlog of claims and prior authorization requests. What advice do you have for insurers dealing with delays?
The backlog occurred when we were installing a new utilization management system. We self-reported the problem to the Department of Managed Health Care and the Department of Health Care Services. All those backlogs have been cleared up, and we settled the issue with the state.
The next chapter is that we went through all the codes, and we eliminated 14,000 and said, "Look, you don't need prior auths for these anymore." There were codes where 99.9% of the time we were authorizing. So we said, "Why are we wasting time?"
Are Individual Coverage Health Reimbursement Arrangements the next big thing for the exchanges and employers?
Most employers wish they were not in the health insurance business. Saying like, "Here’s a set amount of money, go do whatever the hell you want," there may be an appetite for that.
I can also see some employers who are a little more paternalistic saying, "Well, then we're worried people will get bad coverage. They will buy a cheap plan and then we'll have more absenteeism." So I think it's too early to judge whether it would be welcomed by a majority of employers.
But it might improve the risk pool. One would assume that people coming out of an employee benefit program have had access to good coverage all along, and probably are either under care for ongoing issues or always have been able to address issues if they came up.
