Medi-Cal and the Senate Republicans’ Health Proposal
Medi-Cal covers about 14 million Californians and costs about $90 billion. It covers about a third of all Californians, pays for nearly 70% of all nursing home residents and pays for over half of all births in California. About 5.5 million children depend on its coverage. Enrollment in the program has grown from just under 8 million at the end of 2013 to about 14 million today. In California’s rural communities, Medi-Cal is the most important payer, accounting for coverage for nearly half of area residents and key to the financial stability of local hospitals, clinics and doctor’s offices.
Medicaid (Medi-Cal) was established in the mid 60’s along with Medicare. Medicaid pays for coverage for the poor while Medicare pays for seniors and the disabled. However Medicaid also pays for services, which are incredibly important to seniors and the disabled with chronic disabilities, such as nursing home and in home care not covered by Medicare. It also pays for the copays and deductibles for seniors and the disabled, and it also helps fund Part D, prescription drug coverage for Medicare patients.
About 80% of the Medi-Cal program’s participants are enrolled in managed care plans. Almost all children, parents and other adults are enrolled in managed care. The program is one of the most cost efficient in the nation.
The Affordable Care Act expanded Medi-Cal eligibility for uninsured US citizens to 133% of the federal poverty level (a bit over $16,000 annually). Who did this expansion include? It included eligibility for the MIA’s (Medically Indigent Adults), adults without dependent children living at home. Low wage workers, laid off workers, students, and the homeless were among those covered. Previously the program was limited to children, their parents, pregnant women, seniors and the disabled. To encourage states to expand, the federal government paid 100% of the costs of the expansion population, phasing down to 90% by 2020 and thereafter.
The eligibility expansion enabled 4 million, previously uninsured Californians to qualify for the program. While most were the MIAs; many were parents who became eligible when the Medicaid income standards in California increased from 100% of FPL to 133% of the federal poverty level. This expansion allowed California to extend drug treatment services and mental health services to the mentally ill and those with severe substance abuse disorders.
The Supreme Court decided the ACA’s Medicaid expansion was optional with the states. Over thirty states, including California have implemented it, while twenty states led by Texas and Florida have not. Many of the Southern states with very high poverty rates and very high uninsured rates have not yet implemented it.
The Senate Republican proposal, known as the Better Care Reconciliation Act, would reduce the federal matching rate for the MIAs and the parents covered by Obamacare from 90% of the costs to the traditional federal match -- 50% in California. The Senate proposal would also cap the federal matching payments to the states so that the federal match would not exceed current spending levels plus the Consumer Price Index (CPI). This would freeze states with low per capita spending like California, and it would impair the ability of those states, which have not expanded Medicaid (many poor Southern states) to expand and cover their citizens. Both of these proposals together would reduce federal Medicaid spending by $770 billion over ten years; they are phased in so the annual hit on states' budgets get worse and worse over the years, but are relatively modest to begin. The reduction in program spending is 1/3rd over the next two decades. The Congressional Budget Office projects that 15 million Americans would lose their coverage due to these changes by 2026.
Recently State of California Department of Health Care Services reported the financial impacts to the California state budget are $115 billion over the seven years from 2020 to 2027. The financial impacts of the per capita cap on California are $37 billion over that period, increasing to $11 billion in the year of 2027. The reductions in the federal Medicaid match for the Obamacare expansions costs California $74 billion, beginning in 2021 and continuing through 2027. The annual impact in 2027 on the California budget of shifting costs for the Medicaid expansion from the federal to the state government would be $18 billion. So the combined budgetary impact in 2027 alone would be $29 billion for the state of California – a very large hit on California’s budget and thus potentially the state’s tax payers.
California Department Of Health Care Services, Summary And Preliminary Fiscal Analysis Of The Medicaid Provisions In The Better Care Reconciliation Act (June 27, 2017)
California Department of Finance, 2017-18 California State Budget, enacted June 27, 2017 at http://www.ebudget.ca.gov/
Congressional Budget Office, Analysis of the Better Care Reconciliation Act (BCRA) of 2017 (June 26, 2017) at https://www.cbo.gov/publication/52849
Prepared by : Lucien Wulsin