New Brief: New California Medi-Cal Restrictions Will Hurt Patients; Competition Key to Affordable, High-Quality Health Care

SACRAMENTO, Calif., Oct. 1, 2025 /PRNewswire/ -- As California prepares to restrict access to proven private health insurers for dual eligible Medicare and Medi-Cal patients, the Center for Medical Economics and Innovation at the Pacific Research Institute – the nonpartisan, California-based, free market think tank – today released a new brief showing that expanding competition—not imposing new government restrictions—is the best way to lower costs, expand access, and improve patient outcomes.

Download the new brief here

"California mistakenly believes that reducing health care choices will save money. The reality is that the fewer choices available, the more taxpayers will pay, the less access to quality care patients will get, and the worse their health outcomes will become," said Dr. Wayne Winegarden, the Center's director and the brief's author. "Decades of research in every sector shows that more competition drives down costs, spurs innovation, and improves quality."

The brief notes that the U.S. spends $1,055 per person on health care administration, according to a recent analysis from the Commonwealth Fund. Excessive health care administrative costs, Winegarden argues, are not caused by patients having a large number of health care choices, but rather are the result of an inefficient health care payment system. 

The brief highlights how California will soon limit private health care competition through the CalAIM (California Advancing and Innovating Medi-Cal) program. For the 1.7 million Californians eligible for both Medicare and Medicaid—the so-called Medi-Medi population—CalAIM will restrict private health plan competition to just one or two options per county for new patients beginning in 2026.

For example, in Alameda County, only Kaiser Permanente and Alameda Alliance for Health will be able to serve new Medi-Medi patients starting January 1, whereas Orange County patients would only have CalOptima or Kaiser as options, while Butte County's Medi-Medi patients will have just one option, Partnership HealthPlan.

These restrictions will exclude innovative insurers like Alignment Health, SCAN, and UnitedHealthcare and others—some of whose efforts were recently praised in a July congressional hearing for their focus on quality and value. These private insurers already serve tens of thousands of California's dual-eligible beneficiaries.

"Instead of banning proven, patient-preferred insurers, California policymakers should be encouraging more private plans to compete for Medi-Medi enrollees," Winegarden said. "Restricting competition will only drive up costs for the state and reduce care options for some of our most vulnerable patients."

The brief recommends that policymakers consider repealing state and federal rules and regulations that encourage consolidation in health care markets, and removing restrictions like California's Medi-Medi limits that will block private sector providers from competing and expanding the number of customers they serve.

"Markets work best when policies incentivize transparency and competition," Winegarden concluded. "By allowing more providers to compete, policymakers can unleash innovation and efficiencies that improve care quality while making health care more affordable for patients and taxpayers."

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SOURCE Pacific Research Institute