California Officials: State Will Lose $24 Billion by Decade’s End Under GOP Health Plan

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California would lose $24.3 billion in federal funding by 2027 for low-income health coverage under the current Republican plan to replace the Affordable Care Act, according to a new state analysis released Wednesday.

The bill, up for a vote in the House on Thursday, represents a “massive and significant fiscal shift” from the federal to state governments by setting caps on spending, reducing the amount of money available for new enrollees and eliminating other funding for hospitals and Planned Parenthood, the analysis said. The analysis, based on internal cost, utilization and enrollment data, was sent Tuesday to the state’s secretary of Health and Human Services.

“It’s really devastating,” said Mari Cantwell, state Medicaid director with the California Department of Health Care Services, who co-wrote the analysis. “It raises some serious questions about whether we can continue to operate the program the way we do today.”

Although the analysis didn’t explain how the state would deal with the federal cuts, Cantwell said it would have to look at changes to eligibility, benefits or provider rates — or all three.

The Republican bill, called the American Health Care Act, would dramatically change funding for the Medicaid program, known as Medi-Cal in California. Since its inception, Medicaid funding has been open-ended, based on need. Under the new bill, federal money would be capped either through block grants or fixed per-capita amounts.

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Medi-Cal provides coverage to 13.5 million low-income residents, about half of California’s children and a third of the adults. About 3.7 million people of those became newly eligible for the publicly funded health coverage through the Affordable Care Act, helping to reduce the state’s uninsurance rate from 17 percent in 2013 to about 7 percent in 2016, according to the UC Berkeley Labor Center for Education and Research.

The public insurance program is funded jointly by California and the federal government and provides health, dental, mental health, long-term care and other services. The Affordable Care Act allowed states to expand their Medicaid programs in 2014 to low-income childless adults, and the federal government is paying nearly all the costs for those new beneficiaries.

The bill could put hospitals, clinics and other providers in a tenuous financial position by forcing them to live within the cost limits while at the same time seeing more uninsured patients, the analysis said.

California health officials said they estimated that Medi-Cal costs would exceed per-capita caps by nearly $680 million in 2020, with the gap growing to $5.28 billion by 2027. That spending limit could have a “devastating and chilling effect” on any increases in provider payments or plan rates, according to the analysis.

The state also expects an additional $3.3 billion in costs in 2020, growing to $13 billion by 2027, because of a change that reduces federal funds for new enrollees and for people who have a break in coverage. The bill would require certain beneficiaries to renew coverage every six months rather than once a year, which state officials say will cause many to lose their coverage.

According to the analysis, the state would face additional costs from other federal cuts, including to a program that pays for in-home care for elderly and disabled residents. In addition, the proposed freeze on federal funding to organizations that provide abortions would make the state responsible for $400 million in payments to Planned Parenthood, which serves more than 600,000 people in Medi-Cal and a state family planning program.

A new study by UC Berkeley’s Labor Center released Wednesday also warned of dramatic cuts in federal Medi-Cal funding that would threaten coverage for low-income adults. The center estimated that the state would have to increase spending by $10 billion each year to maintain coverage for those who became eligible for coverage under the Affordable Care Act. Without that funding, the researchers wrote, 3.7 million people could lose coverage by 2027.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.