CalOptima Health — a managed care health plan focused on covering low-income populations in Orange County, Calif. — has allocated close to $1 billion to provider rate increases since 2024.
The board of directors approved $429.6 million from reserves to boost rates for hospitals and specialists over the next 30 months, the organization said June 9. New rates take effect July 1 and will continue through Dec. 31, 2028.
In June 2024, the organization increased rates by $526.2 million for a 30-month period spanning July 2024 to December 2026.
“This investment reflects our commitment to our medical partners and our confidence in their vital role in serving our communities,” CalOptima Health Board Chair and Orange County Supervisor Vicente Sarmiento said in a news release. “I know this won’t solve all the issues they are facing, but it will offset some of the reductions, impacts and challenges affecting the healthcare industry right now.”
A 2025 KFF report estimated that HR 1 could cut $1 trillion from Medicaid over one decade. The legislation also included Medicaid work rules and more frequent eligibility checks, ultimately shaping coverage.
But federal pressures are not the only factor contributing to California’s healthcare landscape. The 2026-27 state budget includes Medi-Cal cost-containment and eligibility efforts, according to a California Hospital Association fact sheet. Medi-Cal also faced a funding shortfall in 2025.
In the news release, Sara May, the Hospital Association of Southern California’s Orange County regional vice president, said almost half of the county’s hospitals were already operating at a loss ahead of Medicaid cuts.
“At a time when many hospitals continue to face significant financial pressures, these funds will help preserve critical services and ensure patients have access to lifesaving care when they need it most. Investments like this strengthen the healthcare safety net and benefit the entire community,” she said in a June 10 statement shared with Becker’s.
CalOptima has nearly 830,000 members and works with 9,600 primary care doctors and specialists.
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