Losing Your Health Coverage –
the Consequences
The House GOP is looking at options to dismantle Medicaid coverage for America’s working poor. Two options attracting their attention are 1) reducing the federal match rate for the Medicaid expansion population and 2) adding a work requirement for adults on Medicaid. CBO estimates the GOP proposals could cut 10.6 million people from their Medicaid coverage. https://thehill.com/policy/healthcare/5298593-cbo-gop-medicaid-plan-would-make-7-6-million-people-uninsured/ This is a continuation of a GOP obsession from 2010 to the current date to unravel the ACA (Affordable Care Act). They have yet to propose a realistic alternative, in part because the ACA was an enactment of many Republican ideas on how to cover the uninsured; that first took shape as Romney Care in Massachusetts. Therefore, let’s do what we can to wreck simply because it became a signature accomplishment of President Obama.
7.6 million low and moderate income Americans will lose their coverage and become uninsured if they act. https://thehill.com/policy/healthcare/5298593-cbo-gop-medicaid-plan-would-make-7-6-million-people-uninsured/ Their goals are to fund the Trumpian tax cuts for the wealthy and so they need to enact the cuts as part of a global reconciliation package that will require only a majority vote. They don’t have the votes to cut Medicaid in the Senate and they most likely don’t in the House as well, but if they package it with the Trump tax cuts and use the budget reconciliation process, and Trump, Musk and Johnson twist arms, cajole, threaten and offer huge campaign financial assistance, they think they have their best shot.
I have lived through this type of health coverage massacre for the poor in the past in Massachusetts and California, so I’ll recount what happened at least as best as I remember.
Governor Mike Dukakis ran as a reformer, a progressive, a liberal. He was the newly elected Governor of Massachusetts, succeeding Francis Sargent, a liberal Republican, and taking on a state budget crisis. On taking office, Dukakis, with the approval of the Democratically controlled State House, proceeded to dismantle the Commonwealth’s health and social welfare programs. He faced a severe budget deficit due to the stagflation of the 70’s, combined with the loss of Massachusetts factories moving South for lower wages.
He ended the General Relief Medicaid program; he cut back eligibility for General Relief cash assistance. He reduced AFDC cash assistance, and he cut most social welfare programs. He terminated Medicaid coverage of dental care, hearing aids and vision care, except for those children protected through the EPSDT (Early and Periodic Screening, Diagnosis and Treatment) program. We filed lawsuit after lawsuit and lost nearly all of them as the courts sided with the Dukakis Administration, who was ably defended by a new Attorney General Francis Bellotti and his staff.
I still vividly remember some of my clients who were denied health care as a result. AA was a recent college graduate, a secretary who developed a serious disease and was losing weight and hair and was then laid off by her employer. She was cut off her GR Medicaid by the Dukakis Administration. Her doctor could no longer care for her; she had no assets and no income; her boyfriend took care of her as best he could with no other help. We helped her apply for SSI, a long process for the little-known disease she had. She had no coverage in the interim and no medical help; she was losing weight, strength and hair.
Another client was an artist, a US citizen who had been living in South America. She moved back to Boston to take care of and donate a kidney to her daughter, then in her early 20’s. She went to a highly esteemed local hospital to be tested for compatibility to donate her kidney. They found instead she had cancer, treatable, but extremely costly. The local hospital’s financial office told her she would need to bring them a check for $100,000 to begin treatment; she had no assets to speak of. She was denied Medicaid as a mother because her daughter was too old. Both she and her daughter were denied GR Medicaid because the state had terminated the program. Eventually we were able to secure Medicaid related to disability, but only after months had passed with no treatment for her cancer.
After the worst of the financial crisis had passed, the Dukakis Administration began to slowly restore some coverage – doctors and prescriptions for the GR Medicaid program were first, but no hospital care because it was too expensive. The optional benefits like dental, vision and hearing for adults were next restored. We discovered from our NHELP colleagues the requirements of the Hill Burton program, a federal program that had paid for hospital construction. It required hospitals receiving those funds to devote a certain amount of their care to the uninsured. It had never before been enforced in Massachusetts. Now with the assistance of the state Department of Public Health, it was.
Governor Mike Dukakis then lost his re-election campaign in 1978 to a more conservative Democratic candidate, Ed King, the head of the Mass Port Authority. Portions of Dukakis’ base of progressives and liberals were dismayed by the program cuts that he had imposed on the state’s low-income populations and voted instead for Cambridge Mayor Barbara Ackerman, or they stayed home. Governor King continued the assault on social programs for the poor during his single term in office.
In 1982, Dukakis beat King soundly and served two more terms as Governor of Massachusetts, where he focused on developing coverage for the uninsured during a period of extraordinary economic resurgence titled “The Massachusetts Miracle” – the phenomenal growth of tech in and around Route 128. Dukakis clearly deserves some of the credit for the turnaround in the Massachusetts economy, especially for his focus on bringing new economic development into the areas of the state which were being hardest hit by the exodus of factories to the South. https://dukakis.org/gov-michael-s-dukakis/presidential-candidate-1988/dukakis-had-help-with-massachusetts-miracle/
The Massachusetts Hospital Association worked with the Dukakis Administration to create an uncompensated care pool to reimburse hospitals and community care clinics for their care to the Commonwealth’s uninsured. Hospitals paid a tax to finance the care pool which helped equalize the burdens of caring for the uninsured among all the hospitals in the state. An alert state bureaucrat found a way to match those taxes with federal Medicaid funds, a program created during the Reagan Administration and known as the Disproportionate Share Hospitals.
Dukakis then developed a plan for universal coverage; the backbone was an employer mandate – a requirement that businesses cover their employees. But it also included a §1115 Medicaid waiver to transition the Uncompensated Care Pool and federal DSH funds into Medicaid coverage for the low-income working poor (i.e. it revived the old GA Medicaid program).
Dukakis was followed by a series of Moderate to Liberal Republican Governors, including Bill Weld, Paul Cellucci, Mitt Romney and Charley Baker. Governor Weld repealed Dukakis’ employer mandate (which never went into effect) but continued to expand Medicaid for children and adults up to 200% of the Federal Poverty Level for children in moderate income families, and 133% of FPL for low-income adults. Eventually, Governor Mitt Romney secured passage of RomneyCare, the precursor to the Affordable Care Act. It included Medicaid expansion, a federal waiver to cover the low income uninsured, a purchasing pool with premium subsidies for the moderate income uninsured, and an individual mandate that all residents enroll in some form of coverage.
An early client of mine, a Vietnam Vet with a service linked disability, was laid off from his job with health insurance and was able to get Medicaid for his wife and young kids until he got a new job. Unfortunately, the new job did not offer health benefits for him and his family. He asked me to help his wife and kids keep their Medicaid coverage; he explained that as a veteran with a disability, he could get care at the local VA – “don’t worry about me; I’m worried about my wife and kids”. I researched the Medicaid statutes thoroughly and had to come back and tell him that as crazy, ridiculous, and irrational as it sounded, the state and federal policy was that once he got a job, he and his whole family lost their Medicaid eligibility; in other words, “get a job, lose your health coverage”. The eligibility rules for Medicaid were tightly tied to the federal eligibility rules for welfare (AFDC and SSI). This needed to change.
I told him I would go to the Massachusetts legislature and try to get the laws changed. This would require 100% state General funds as the federal statutes and regulations excluded their eligibility. Even with incredible assistance from then Representative Barney Frank, we could not convince the State House to expand the Medicaid program to help lower income, intact, working families. He and his family have ever since been my lodestar in assessing health reforms for the uninsured.
Due to changes enacted under President’s Clinton and Obama, my client and his family would now have coverage in Massachusetts or in California. Under President Clinton, the CHIP program was passed for uninsured children in moderate income families, that would cover the kids. Under Clinton, the AFDC program was repealed and made into a block grant; Medicaid for families was no longer linked (shackled) so tightly to welfare eligibility rules; states had the freedom and opportunity to cover intact families and to set broader income standards for working families. They could not, absent a federal waiver, cover adults without minor dependent children living at home, until ObamaCare expanded Medicaid to cover all uninsured Americans with incomes below 138% of the Federal Poverty Level. Under Obama’s Affordable Care Act, states and the federal government operate Exchanges (the Connector in Massachusetts) with premium subsidies (tax credits) for moderate income individuals and families with no health insurance through their employers. This combination of reforms offers health coverage in 40 states, but not in the deep South hold out states like Texas, Florida, Mississippi or Georgia whose GOP Representatives wield inordinate power in this Congress. It took from 1975 to 2006 for low- and moderate-income Massachusetts residents to have their coverage restored.
I moved to California in 1979 to join the National Health Law Program. My specialty area of responsibility was Medicaid because of my hard learned experiences and steep learning curve with the program changes in Massachusetts. I knew nothing, absolutely nada, about California back then and had to learn fast about all 49 states other than Massachusetts.
Back then, California had a robust safety net system at both the state and county levels. Its Medicaid (MediCal) eligibility included individuals and the working poor who were not otherwise eligible for federal financing; they were known as the Medically Indigent Adults (MIAs). This was a compromise worked out by then Governor Ronald Reagan and legendary House Speaker Jesse Unruh. In addition, California’s 58 counties had an obligation (§17,000) to care for the poor. This included both cash assistance and medical care. The counties served as an arm of the state determining eligibility for the state administered programs, like Medicaid, AFDC and SSI. Counties also operated public health and mental health care systems.
Many counties had been closing their public hospitals and clinics because they were redundant with the new MediCal program which paid public and private hospitals, doctors and community clinics for their care to the poor, but large counties like LA, San Francisco, Alameda (Oakland) and Santa Clara (San Jose) kept theirs open.
California had an esteemed managed care system, the Kaiser Health Plan, and another well-respected health plan, Ross Loos. The state had been trying to develop managed care plans for the poor without much success and a fair amount of scandal and corruption throughout the 70’s.
California voters passed Prop 13 (1978), which rolled back and capped local property taxes. The state government now had to help finance cities, counties and local school districts, which had all depended on local property taxes. The severe recession of 1982 created an ever more dire financial situation for state government. Unlike Massachusetts, California had no hospital rate setting commission, and its hospital reimbursement rates were very high compared to other states; effective lobbying by the California Hospital Association had blocked the state’s establishment of hospital rate setting
The state of California, under then Governor Jerry Brown with the assistance of Speaker Willie Brown and Senate Minority Leader Ken Maddy, took fast, dramatic, and drastic actions. California rolled the dice and combined the following: elimination of coverage for the working poor with no federal match (MIAs, about 250,000 people), competitive (selective) contracting with hospital systems for the MediCal population and for private insurers as well, elimination of state health planning oversight of hospital construction, and mandatory MediCal enrollment in managed care plans in four selected counties, with more to come. As one prominent local physician put it; “we’d been fighting socialized medicine for so long, then we got blindsided and run over by capitalism”.
In the aftermath, Democrats lost the next 4 gubernatorial elections to GOP Governors George Deukmejian and Pete Wilson, but retained control of the legisalture.
After the 1982 elimination of coverage for the Medically Indigent Adults and the other reforms, I was hired to serve as Chief Consultant to the MediCal Oversight Committee of the California Assembly, chaired by Assemblymember Burt Margolin.
What happened to the patients who lost their coverage? What happened to California’s vaunted health systems. We held Oversight and investigative hearings every fall. Dr. Nicole Lurie documented the loss of lives of individuals without access to care for diabetes and hypertension due to the termination of their MediCal coverage. https://repository.library.georgetown.edu/handle/10822/725235 Many large counties, like Los Angeles, San Francisco, and Santa Clara decided not to reimburse private hospitals at all for their burgeoning §17,000 patients. Hospitals from the private sector shut down their trauma centers and emergency rooms because they could not financially absorb the losses. Major hospitals serving low-income patients shut their doors. https://www.nytimes.com/2004/08/21/us/los-angeles-emergency-care-crisis-deepens.html On call doctors refused to come in to care for patients in life threatening conditions in hospital emergency rooms – patient dumping. https://ajph.aphapublications.org/doi/pdf/10.2105/AJPH.76.1.74 and https://www.latimes.com/archives/la-xpm-1986-08-08-me-1913-story.html Some large, prestigious hospitals decided not to contract at all to care for MediCal patients, and exited the program. Pregnant women faced huge financial and systemic obstacles getting prenatal care; delivery rooms were at saturation, and women were giving birth in hallways at county hospitals. OB’s would not participate in MediCal because of the high costs of malpractice insurance. Dental care was scarce even for children with full dental coverage under MediCal, because so few dentists would participate in the program. Insurance companies redlined and excluded the sick, the pregnant and anyone else they thought would cost them money in the small business and individual health insurance markets.
So let’s go through what legislative changes happened in the aftermath in California and federally. We fought for, negotiated and won patient dumping legislation that penalized those hospitals and doctors that denied emergency care to patients, regardless of their payment status. We fought for, negotiated and won DSH funds, Prop 99 funds, SB 12 Maddy Funds and state General Funds for county health and county mental health for the uninsured. We fought for, negotiated and won increases in eligibility for pregnant women, increases in reimbursement rates for OB care, and improved perinatal services for pregnant women. We fought for, negotiated and won increased eligibility for children through CHIP, and improvements in the DentiCal program, such as coverage for dental sealants and better reimbursement rates. We fought for and ended redlining of the sick, the pregnant and the medically risky by insurers participating in the small employer market.
There were three main competing reform efforts to cover the uninsured during the thirty years in California before the enactment of the Affordable Care Act. The single payer bills, modeled on the Canadian system, were developed by Health Access and initially authored by Senator Nick Petris. They had widespread and passionate support among the health advocates, and equally widespread powerful opposition from plans, employers and providers, and they had no viable financing strategy due to the very high state taxes that were required to finance it.
The employer mandate bills were developed by the California Medical Association; they required no state financing, but did require approval from Congress as they tackled head on the federal ERISA ban. This was not going to be forthcoming. The legislation was initially sponsored by Assembly Speaker Willie Brown and Senate Minority Leader Ken Maddy; it eventually passed the legislature under the authorship of Senate President John Burton, but it was narrowly repealed by the state’s voters when health advocates like Health Access joined forces with the state’s Chamber of Commerce. There were two problems with these bills; first they did not cover most of the uninsured, and second, they depended on Congress enacting an ERISA waiver for California, and that was highly unlikely.
The hybrid bills authored initially by Burt Margolin and others proposed to get to universal coverage using a pay or play financing from employers who did not offer coverage and a §1115 waiver to match existing state and county financing for care to the uninsured. It would extend Medicaid coverage to the MIAs, the old state funded program for Medically Indigent Adults, and it would create a state purchasing pool with premium assistance to cover the uninsured with incomes above the MediCal eligibility limits. It would have required a state ballot measure to pass the financing because of California’s two thirds majority rules to increase taxes – a really tough undertaking with opposition from the state Chamber. Later, then Governor Arnold Schwarzenegger joined forces with Assembly Speaker Fabian Nunez to propose comparable legislation that sought to cover 80% of the state’s uninsured. It was modeled after Romney Care in Massachusetts. However, then Senate Health Committee Chair Sheila Kuehl and colleagues killed the bill in Committee because it was not the single payer solution which they so strongly favored.
In other words, California’s political leaders, advocates, policy makers and interest groups just could not get their acts together to cover over 7 million uninsured Californians. We ultimately had to have both the financial help and policy decisions of the ACA. Even the far smaller eligibility expansions during the 90’s and 2000’s required federal matches. California, even as the 4th largest economy in the world, could not/would not do it without substantial federal help.
Beginning in the late 80’s, we tried to secure federal matching for county health expenditures for the uninsured and restore coverage for the MIAs, we tried to use the §1115 waiver authority to draw down federal funds. Los Angeles County, in the midst of a major financial meltdown that threatened to close several of its large county hospitals, did secure a federal match in 1995 through the Clinton Administration; the federal match covered the uninsured for outpatient care and allowed the county to build and contract for a strong outpatient delivery system to complement its five hospitals. But for a long time, the county was unwilling to make major systemic changes needed to transform and evolve its hospital-centric delivery system even with the new funding.
We made only minor progress using §1115 waivers to cover the uninsured until the Affordable Care Act was passed. There were two obstacles. 1) The counties with large county hospitals and their union allies were not supportive of these proposed coverage expansions due to the need to add other hospitals, doctors and community clinics to the delivery system and potentially sacrifice some of their DSH funding. Hospitals generally were not prepared to move away from the emergency room centric delivery system of care for the state’s uninsured. 2) This combined with tepid disinterest of state government during the Davis Administration -- a period when the Clinton Administration was readily approving waivers to other states seeking to expand coverage. California at the time was dealing with chronic budget shortfalls and the urgent need to improve its badly underfunded public education system.
Local Health Plans, California’s Philanthropies and a smattering of Bay Area counties like Alameda, Santa Clara, and San Francisco were moving forward on plans (Healthy Kids) to cover all uninsured children regardless of their immigration status, and in the case of San Francisco the county was developing a plan to care for all of their uninsured (the Healthy San Francisco Program) regardless of immigration status. Their initial targets were coverage for the uninsured children in moderate- and middle-income families, and the immigrant children who were ineligible for Medicaid and CHIP eligibility.
California has disproportionately large immigrant populations primarily from Latin America, and Asia – about twice the national average; 27% of our population is foreign born. https://www.ppic.org/wp-content/uploads/jtf-immigrants-in-california.pdf Most are documented and/or naturalized citizens. They are overwhelmingly workers and children. They undergird a wide range of the state’s economy: including the agricultural, construction, restaurant, foreign trade and high-tech industries. The numbers of undocumented Californians have fallen to 1.8 million. Many live in mixed status families where the children and one spouse are legal, and one parent may be illegal. They are now under near constant assault from the Trump Administration.
In 2015, during the third term of the Brown Administration, California’s legislature passed, and the Governor signed measures to cover low-income undocumented children with state only funding. During the Newsom Administration, beginning in 2020, this was slowly expanded to low-income undocumented working adults. These program expansions were not eligible for federal Medicaid matching funds because federal law excludes care and coverage for the undocumented except for deliveries and genuine emergencies. The House GOP now seeks to force California and other states to roll back coverage for undocumented workers and their families, to force California and other states to charge poor Medicaid patients copayments on necessary health care services, and to block states from using provider taxes to expand their programs for the poor and the uninsured. https://apnews.com/article/medicaid-cuts-trump-tax-cuts-bill-1e2b12a91a3d12ceb0420ce7053de58e Any GOP Representative from California who votes for these changes is voting to roll back and repeal the state’s hard-won progress in covering the uninsured. California’s uninsured rate is now 6.2%. https://www.chcf.org/resource/california-achieves-lowest-uninsured-rate-ever-2022/ Prior to the reforms they seek to unravel, it was over 17% and one of the highest in the nation.
It should be noted that there is a fair degree of hypocrisy going on; the Representatives of the 10 hold out states like Florida, Texas, Georgia and Tennessee that will not cover low income working adults despite a 90/10 federal match are trying to tell the 40 states who have expanded coverage to the working poor to cut off the populations they are covering. If they succeed, they and their allies in California and elsewhere ought to be soundly defeated by their local voters in the next election cycle.