Working Paper No. 06-01

Making Babies Healthier by Providing a Managed Care Option to California's Poor
Tania Barham, Paul Gertler and Kristiana Raube
January 2006


The first chapter investigates whether mandating a managed care option for California Medicaid beneficiaries improves access to prenatal care and birth outcomes in a traditionally fee-for-service system. We compare two competing models: one that only offers a county-organized health system option (COHS), and the Two Plan Model (TPC) that provides mothers with a choice between the county system and a commercial managed care organization. The results show that while COHS improved access, only the TPC program led to reductions in low-birth weight. The superior health outcomes obtained with TPC might be explained by higher quality care induced by competition among health providers and/or mainstreaming Medi-Cal beneficiaries into commercial organizations that also serve higher income populations.