SAN QUENTIN (CBS 5) — One out of every four Californians has no medical insurance. But $2 billion in taxpayer money is being spent each year to provide medical care to California’s prisoners.

Take the case of San Quentin prison. The state built a brand new $136 million hospital at the prison for some of the state’s worst offenders. But why were some inmates, including those on death row, being sent to outside hospitals for sleep studies?

Prison healthcare CEO Jackie Clark recently took CBS 5 on a tour of the state of the art facility.

“We have exam rooms, we have our primary care clinics, we also have lab service, physical therapy service,” Clark said.

None of this came easy. Health care at San Quentin used to be so bad that inmates filed a class-action lawsuit. In 2005, a three judge panel found the entire California prison healthcare system “broken beyond repair” and ordered a federal receiver to take over and fix it.

Sam Johnson is serving life for first degree murder. He told CBS 5 things are much better now.

“Before we used to dread going to medical, but now when we come in they make us feel like humans,” he said.

He’s recovering from a weekend warrior injury to his knee. “I had arthroscopic surgery on it three weeks ago,” he said.

So did inmate Isaiah Thompson. “I tore it up playing football,” he admitted, grinning sheepishly.

Both prisoners were injured in the prison yard. But even though there’s a surgeon on staff, their surgeries were done at outside hospitals.

“This is not an acute care facility. We do what we can here and what we can’t, we refer out,” said Clark.

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They’re referring out a lot. “I actually went to Kentfield last week in Marin, it’s like a little outpatient clinic,” said David Cole. His medical emergency: A blister on his toe. As a diabetic, he could easily be treated inside.

So why does he go out for a blister? “They do have a podiatrist here. I don’t know, I can’t tell you,” he said.

In fact there are 14 doctors and 100 nurses working at San Quentin, many earning six-figure salaries, for inmate treatment much of which is being done elsewhere.

It’s something that bothers Chuck Alexander, vice president of the California Correctional Peace Officers Association.

“Why can’t we have one of these medical personnel that we have hired for $2 billion, make a legitimate assessment right there in the prison, so we are not taking this guy out on his weekly joy ride,” he said.

Alexander hears stories like this from the guards every day. “Routinely we get complaints about people being taken out for lancing of a boil, a couple of stitches for a cut,” he said. “I recently heard of an inmate on death row that was taken out to participate in sleep apnea treatment.”

CBS 5 followed an unmarked corrections car from the prison, with a van of inmates in tow, across the Richmond-San Rafael Bridge. Half an hour later, the caravan was in the parking lot of Doctor’s Medical Center in San Pablo.

Three shackled prisoners lumbered out of the van into the darkness, followed by six guards, all headed into the sleep clinic. The next morning, before daybreak CBS 5 was there as they filed back into the van to head back to their cells.

CBS 5 has learned that last year alone, San Quentin sent 17 prisoners, including death row inmates, to sleep clinics.

“If that’s happening, it shouldn’t be,” said Clark Kelso. He is the federal receiver hired to fix the prison healthcare system. “We still have work to do there, to tie down excessive referrals,” he said.

But Kelso defends the $136 million new hospital. “I think it was a necessary use of taxpayer dollars,” he said.

Kelso said spending has been curbed, by setting up an HMO-like network for providers. “We were paying about twice as much in many cases to send somebody out. So we are doing much better,” he said.

The private insurer Health Net runs the program. But when CBS 5 asked for a breakdown of claims he said, “There’s a state statute that prohibits me from disclosing confidential trade secrets.”

That’s not sitting well with at least one lawmaker: “To leave this area untouched and unknown I think has to raise concerns for all of us,” said Assemblyman Roger Dickinson (D-Sacramento).

Dickinson was behind a bill that would have forced Health Net to reveal its billings. It never passed. “The argument made by the health insurance companies is that it would be a competitive disadvantage,” he said.

CBS 5 asked Kelso: What answer do you give to those millions who don’t have healthcare, but are paying taxes, and their taxes are going to these confined, sometimes condemned inmates?

He responded, “We are providing care that is medically necessary. If you’re going to incarcerate this number of prisoners you have to be willing to pay for what you have to do to incarcerate, and providing healthcare is one of those things.”

Chuck Alexander disagrees. “I think that people at home hearing a report like this should be concerned about how that $2 billion a year is being utilized.”

After CBS 5 exposed inmates and their regular visits to the sleep clinic, the federal receiver sent an email that said things have changed. Starting next week, sleep studies will be conducted inside San Quentin’s new hospital.

Meanwhile these expenditures aren’t the end of it. An $800 million hospital is already under construction in Stockton, for long-term care and mental health prisoners. Also because of the federal lawsuit, another $2 billion has been set aside to medically upgrade other prisons. But a fight is on: the state wants the receiver out. The receiver wants to finish the job.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)