'Devastating' Cuts to Come: How California Would Suffer Under GOP Health Plan

Sen. Bill Cassidy (R-LA) talks with members of his staff as protesters interrupt a hearing Monday of the Senate Finance Committee about the proposed Graham-Cassidy healthcare bill. (Chip Somodevilla/Getty Images)

State officials are sounding the alarm over a last-minute push by Republican Senators to "replace and replace" the Affordable Care Act. Health officials warn it's the worst proposal yet, with California set to lose billions of dollars.

"Simply stated, this proposal is the most devastating of the three federal health care proposals that we have evaluated this year," said Jennifer Kent, Director of the Department of Health Care Services.

The two previous plans debated in Congress only partially dismantled the structures that undergird the Affordable Care Act.

But the new Graham-Cassidy proposal would blow up those ACA structures, and retract the money that currently pays for them, starting in 2020. After lopping off more than $200 billion from the retracted money, the federal government would use a new formula to scatter the remaining funds across the 50 states and District of Columbia.

Prominent losers in this scenario include states like California that eagerly embraced the Affordable Care Act. Health consulting firm Avalere predicts 34 states and DC would experience funding cuts, and 16 states would see an increase.

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What Graham-Cassidy does, starting in 2020:

Ends payments for Medicaid expansion, which allowed 3.8 million Californians to join Medi-Cal.

Ends federal subsidies for private insurance coverage sold through "Covered California," which cover more than one million Californians.

Removes guarantees that insurance plans cannot charge higher prices to patients with pre-existing conditions to pay more for coverage, or must offer plans that include a basic suite of services, such as prescriptions, maternity care, and mental health treatment. States could opt out of many of these protections, although most experts agree that California  would try to maintain them.

But that could be an empty promise, warns Peter Lee, executive director of Covered California. Even if California continued the protections for sick people, the insurance market could collapse as healthy people stop buying coverage when federal subsidies end.

California's projected losses:

Number of uninsured:  More than 10 million Californians will lose health coverage by 2027, according to an new analysis by Covered California.  (UC Berkeley has a breakdown by Congressional district and county).

That's nearly 1 in 4 Californians under age 65, worse than pre-Obamacare levels. 

Federal funds loss: Total losses for health care in California ratchet up to $28 billion/year by 2026, then increase dramatically to $57.5 billion a year later, in 2027. That's equivalent to more than a third of all General Fund spending in California's budget.

Medi-Cal changes: In addition to changes to the Affordable Care Act, the Graham-Cassidy proposal radically changes how traditional Medicaid, dating back to 1965, is funded. 14 million Californians depend on Medi-Cal coverage, and it's particularly critical for people with disabilities and residents of nursing homes.

California stands to lose the most money of all the states.

Supporters of the new plan's redistribution formulas explain that it's a matter of fairness to all states.

“Four states get 40 percent of the money under Obamacare: New York, California, Massachusetts, and Maryland," said Senator Lindsey Graham. "Our goal is by 2026 to make sure every patient in every state gets the same contribution, roughly, from the federal government.”

Opponents of the repeal efforts point out that California gets more money under the law because it has the largest population in the country, and because it embraced the Affordable Care Act's funding opportunities.

Other states such as Texas didn't get as much money under the ACA not because the distribution wasn't fair, but because officials in those states refused to expand Medicaid to more residents, so they didn’t pull down the federal money to pay for that. Under the new plan, Texas will get $35 billion more in federal funds by 2026.