Health care bill’s big impact

Effect on California: Millions could lose coverage, suffer benefits cuts

Senate Republicans’ health care bill to replace the Affordable Care Act, released Thursday, would lead to millions of Californians losing health coverage, paying more for insurance or seeing their benefits scaled back, according to health policy experts.

The measure would impose steep cuts in the Medi-Cal insurance program that provides benefits to 14 million Californians — nearly a third of the state’s population. And it would reduce federal subsidies that help 1.5 million residents buy health insurance on the state’s exchange, Covered California.

Those and other proposed changes could halt or even reverse many of the gains California has made under the Affordable Care Act to get more of its residents insured.

“The consequences for California are devastating,” said Gerald Kominski, a professor

of health policy and director of the UCLA Center for Health Policy Research. “This is a heartless bill that has one primary objective, which is to make good on the promise to repeal Obamacare and save the federal government money. It doesn’t do anything to benefit the people of California or the people of the United States. There is nothing in here that is good for consumers.”

The bill’s proponents say the changes would give states more flexibility, in part because a state could choose to require Medicaid beneficiaries to show they are working or trying to find a job. The measure could benefit young, healthy consumers in the short run because their insurance premiums would largely stay the same, Kominski said.

The biggest hit, experts said, would be to those who receive health care through Medi-Cal, California’s joint federal-state Medicaid insurance program for the poor.

The Affordable Care Act funnels billions in extra federal dollars to Medi-Cal, allowing California to cover 4 million people who did not have insurance before the law took effect in 2014. Under the Senate plan, those extra federal dollars would start getting phased out in 2021.

The bill would also cap federal funding for the entire Medicaid program in the long run — a drastic change from its current open-ended funding mechanism that takes into account rising medication costs and other factors. California would receive a set amount of federal money per Medi-Cal enrollee that, after 2025, would grow each year in accordance with the overall Consumer Price Index. That growth rate is slower than that of the medical care component of CPI, which is what was proposed in the House version for Medicaid spending.

The proposed changes would probably force the state either to cover fewer people or reduce benefits for all Medi-Cal beneficiaries. Half of all children in California are covered by MediCal.

“This would make draconian cuts to the Medi-Cal program that millions of Californians depend on,” said Anthony Wright, executive director of the consumer advocacy group Health Access. “The only flexibility states would have is to cut, and cut deeply.”

Even if the Senate bill passes, it would have to be reconciled with the health care measure the House passed last month. There are differences between the two.

Unlike the House plan, the Senate measure mostly keeps intact the general structure of Affordable Care Act subsidies. In California, this means that subsidies that help residents buy plans through Covered California would continue. However, under the Senate plan, fewer people would be eligible to receive the aid.

That’s because the Senate bill would change income eligibility for the subsidies from 400 percent of the federal poverty level to 350 percent — leaving tens of thousands of individuals who earn between $42,000 and $48,000 a year without financial assistance.

And those who would continue receiving assistance would get smaller subsidies because of a proposed change in the way the value of the plans is calculated. This means many Covered California consumers would be enrolled in health plans with higher deductibles — leaving them with potentially thousands of dollars more per year in out-of-pocket costs.

“It looks like this new subsidy structure would provide far skimpier coverage than what’s available in the law today,” said Covered California spokeswoman Lizelda Lopez.

The Senate measure also aims to end a critical source of federal funding created under the Affordable Care Act, called cost-sharing subsidies, which are separate from the subsidies people receive to pay for their insurance premiums. This second stream of money helps the poorest people who receive premium subsidies pay for out-of-pocket costs like co-pays, prescription drugs and deductibles.

The federal government spends $7 billion a year on these payments nationwide, and about $750 million of it goes to help 680,000 low-income residents of California. Under the Senate plan, these payments would end after 2019.

Like the House version, the Senate bill would block federal funding to Planned Parenthood for one year and prohibit Californians who receive federal subsidies from buying plans that cover abortion, except to save the life of the mother or in the case of rape or incest. This comes in direct conflict with state law, which requires private insurers to cover abortion. Under the GOP proposal, any consumer who wants abortion coverage included in a plan would have to buy it separately and pay for it out of pocket, Kominski said.