For a politician who advocates for fairness and equity, it is concerning that CA Governor Gavin Newsom appears to have a penchant for awarding no bid contracts.
A no bid contract—at times referred to as a single source contract—is typically used to hire a vendor for a certain job. This method expedites the process because it bypasses the somewhat lengthy competitive bidding. No bid contracts can not only have a negative impact on the bidding process, they can also decrease the chances for startups, small businesses and women and minority owned businesses to win contracts with the government. Some also criticize no bid contracts as inefficient and wasteful.
Despite these concerns, Newsom has awarded several. Although some may argue those awarded in 2020 and 2021 were necessary in response to the pandemic. For example, a combined $282 million no bid contract was awarded to UnitedHealth subsidiary OptumServe on top of other contracts–some no bid in 2020 and 2021.
The UnitedHealth awards were criticized as unseemly because according to a CAPRadio report, “The company has contributed hundreds of thousands of dollars to Newsom’s reelection campaign and ballot measure committee since 2018.”
No bid contracts by-pass the bidding process that is not only intended to secure the best price for the state but is also intended to serve as a safeguard to prevent favoritism. However, declarations of a “state of emergency” under which the state has operated during COVID-19, allowed the governor almost carte blanche in this regard.
So, when news broke recently of a massive no bid contract that, beginning in 2024, allows Kaiser Permanente to skip the bidding process commercial insurers must adhere to in order to participate in Medi-Cal—including the Inland Empire Health Plan and Molina—both of whom serve Medi-Cal patients in the inland region, many insurers cried foul and consumer advocates wonder it the move is really in the best interest of low income residents who rely on Medi-Cal services.
Critics of the governor’s agreement with Kaiser say it will allow Kaiser to pick and choose its clients, leaving some of the sickest patients for other insurers to cover. Others have argued that because Kaiser will be required to serve people on both Medicare and Medi-Cal their cases will be more complicated.
Regardless of how that argument evolves, what appears undisputed is that Kaiser will grow its Medi-Cal subscribers by 25%.
The sweet deal with Kaiser allows the carrier to grow its Medi-Cal population with a selected group of candidates like those who lose their Kaiser coverage when they lose their employment, while other Medi-Cal carriers are required to take on a full spectrum of Medi-Cal patients.
The agreement with Kaiser also comes as California is in the midst of a major Medi-Cal transformation called CalAIM that offers services beyond typical Medi-Cal offerings like housing assistance, caregiver respite, food insecurity, etc. There are, however, critics of this program noting that Medi-Cal carriers can not only select what program options they will offer but also what Medi-Cal patients will be allowed to participate.
The Kaiser deal must still be approved by state legislators and if successful, not only will the giant health care service provider have a choice of Medi-Cal patients it will serve but also under the provisions of CalAIM it will further enjoy the benefits of choosing which CalAIM services it will provide and to whom—a winning ticket all around for the company but maybe not so much for Medi-Cal customers and the other healthcare providers who serve Medi-Cal subscribers.
The deal struck behind closed doors between the governor and Kaiser is currently working its way through the legislature. In my opinion, regardless of who negotiates them, no bid contracts are contrary to fairness and transparency. The Kaiser deal is not an emergency and could have been handled through the normal process.
Of course this is just my opinion. I’m keeping it real.