Governor has grim health bill analysis
Office estimates Medi-Cal costs would rise by billions
SACRAMENTO — The Republican-backed bill that would overhaul the Affordable Care Act would shift billions of dollars in health care costs from the federal government to states, with California on the hook for $6 billion in 2020 and growing to $24.3 billion by 2027, according to an analysis released Wednesday by Gov. Jerry Brown’s administration.
Nearly 14 million Californians, one in three adults and half the state’s children, are covered by Medi-Cal, the state’s version of the federal Medicaid program. Four-million residents enrolled through the Affordable Care Act. It’s unclear how the state would deal with the added costs under the bill — whether through new
taxes, cuts to other state services or by dropping coverage or enrollees in the program.
“This raises a lot of questions about how we would finance the Medicaid program in general going forward,” Mari Cantwell, state Medicaid director with the California Department of Health Care Services said Wednesday.
Health care advocates fear the bill, which is scheduled to be voted on in the House on Thursday, would lead to devastating cuts to the program, hurting the state’s poor and the broader insurance market.
“This is multiple times worse than what we were faced with in the depths of the recession,” said Anthony Wright, executive director of the advocacy group Health Access California. To put the costs into context, he said, “We spend about $16 billion on higher education throughout the state from UC to CSU to community colleges. This is a magnitude bigger than that. This is not money that we can easily make up, even with a significant tax increase.”
The bill, dubbed the American Health Care Act, is spearheaded by House Speaker Paul Ryan, R-Wis., and backed by President Trump. It proposes significant changes to the 50year-old Medicaid program by capping spending, increasing how much states pay for new enrollees and cutting funding to hospitals and Planned Parenthood.
House Majority Leader Kevin McCarthy, R-Bakersfield, said the bill would stop “out of control” spending, drop federal mandates and taxes, and maintain protections for people with pre-existing conditions. McCarthy added that the bill would put Medicaid on a “fiscally sustainable path.”
“Doing nothing has never been an option,” he said in a statement. “The American people need relief. Obamacare is a sinking ship.”
The state’s analysis on the impact of the bill was shared with the California delegation of lawmakers in Washington, D.C. In a letter the governor sent to McCarthy in January, Brown said the Affordable Care Act led to 5 million more Californians having health insurance and the state’s uninsured rate dropping from 17.2 percent in 2013 to a historic low of 7.4 percent in 2016. Brown urged McCarthy not to support a bill that would shift billions of dollars to states as a way to prop up the federal budget.
“Going back to a system where the only available care is an emergency room is not smart,” Brown wrote. “This will make our communities less healthy and drive up the cost of care for all of us.”
If the House passes the bill on Thursday, it would head to the Senate.
Since Medicaid was created, the funding for the program has been uncapped so that anyone who needed coverage received it. The bill in the House would cap how much the federal government spends on Medicaid and force states to cover anything beyond that. The analysis from the Brown administration called that shift a “fundamental change in the federal-state partnership” and said that the changes in the bill would leave the state plugging a $6 billion hole by 2020 and a $24.3 billion hole by 2027.
Most of those extra costs would come from a change in the cost-sharing formula for how some new enrollees are covered.
States were allowed to expand their Medicaid programs in 2014 under the Affordable Care Act by adding low-income adults without children who were previously exempt. Under the Affordable Care Act, the federal government pays 95 percent of the cost of insuring those people. By 2020, the federal share will drop to 90 percent, where it would stay — if the Affordable Care Act was left intact.
However, under the bill currently being considered, the formula for new enrollees would change after 2019. Instead, the federal government would split the cost for new enrollees 50-50 with states. If a person dropped their coverage for more than one month, they would be considered a new enrollee upon joining again, thus triggering the 50-50 formula. The bill adds a significant paperwork hurdle, critics argue, that would lead to most people dropping their coverage at some point by requiring income eligibility checks every six months.
“By 2027, no one would be at the 90 percent anymore,” Cantwell said. “It would shift to 50-50.”
Beginning in 2020, the bill would reduce federal funding by an estimated $400 million for In-Home Supportive Services, which pays for a caregiver to assist elderly and disabled residents in their homes. For many, this service lets them avoid placement in costlier nursing homes. California’s program is the largest in the country and serves nearly half a million people.
Planned Parenthood in California would receive a one-year $400 million cut in funding under the bill, which requires a one-year freeze on federal payments to places that provide abortions.
“The state’s analysis confirms that the American Health Care Act will devastate the health care safety-net and that it is not a viable replacement for the ACA,” said Carmela Castellano-Garcia, president of CaliforniaHealth+ Advocates, which advocates for community health centers. “President Trump and Congress are forcing low-income communities to foot the bill for their cost-cutting measures and eliminating health care coverage for millions of Californians.”