Health Care Reform Continues to Work in California, but Progress Is Threatened by Federal Proposals

Access to health care coverage continued to expand in California in 2016 largely because of our state’s decision to fully implement federal health care reform, including strengthening Medi-Cal so that it reaches more residents who otherwise couldn’t afford private health insurance. However, these health care coverage gains are threatened by ongoing efforts by President Trump and some congressional leaders to sharply reduce federal support for health care.

California’s Uninsured Rate Declined in 2016, Continuing a Multiyear Trend

The share of Californians without health insurance fell to 7.3 percent in 2016, down from 8.6 percent in 2015, according to data released yesterday by the US Census Bureau.* This one-year drop comes on top of an 8.6 percentage-point decline in the uninsured rate from 2013 to 2015, a period when California implemented key provisions of the federal Affordable Care Act (ACA). Overall, California’s uninsured rate has dropped by more than half (57.0 percent) since 2013, when the share of residents lacking health care coverage stood at 17.2 percent.

Continued Health Care Coverage Gains in 2016 Reflect California’s Implementation of Federal Health Care Reform

The health care coverage gains shown in the new Census data reflect California’s efforts to fully implement the reforms and coverage expansions included in the ACA. As a result of these changes:

  • Enrollment in Medi-Cal, our state’s Medicaid program, is up substantially. The number of people receiving health care through Medi-Cal has increased from 7.9 million in 2012-13 — just before California fully implemented health care reform — to a projected 13.7 million in 2017-18, the current fiscal year. This more than 70 percent jump in enrollment primarily stems from two sets of policy changes that have helped more Californians get the care they need to go to work, take care of their kids, and be healthy, productive members of their communities:
    • California expanded eligibility for Medi-Cal to low-income parents and childless adults who previously were excluded from the program, a change that took effect in January 2014. The federal government paid the full cost of this “optional expansion” through 2016 and currently pays 95 percent of the cost, with California paying the remaining 5 percent. Under current federal law, the state’s share will gradually rise to a maximum of 10 percent in 2020 and beyond. California is one of 31 states, plus the District of Columbia, that have opted to expand eligibility for Medicaid as allowed by the ACA.
    • California simplified Medi-Cal’s eligibility and enrollment rules, which made it easier for all eligible Californians to sign up for the program and stay enrolled. Simpler rules, along with the ACA’s requirement that people have health care coverage or pay a penalty, have encouraged more Californians who were eligible for Medi-Cal prior to health care reform to sign up.
  • People who earn too much to qualify for Medi-Cal but still lack access to affordable job-based coverage can shop for a health plan through Covered California. This online health insurance marketplace allows people to compare the prices and benefits of different health plans. In addition, people who purchase a plan through Covered California may qualify for federal subsidies that reduce the cost of their premiums and related expenses, such as co-pays for doctor visits and prescription drugs. Nearly 1.4 million Californians were enrolled in health plans offered through Covered California as of March 2017, with almost 9 in 10 receiving federal subsidies.

Efforts by the President and Some Congressional Leaders to Repeal the ACA and Gut Federal Funding for Medicaid Threaten California’s Recent Gains

Congressional leaders have made multiple attempts this year to repeal the ACA and gut federal funding for Medicaid. To date, these efforts have failed. However, some GOP Senators are floating a new “repeal-and-replace” proposal that would make sweeping changes to the ACA, including eliminating subsidies for private insurance and ending the Medicaid expansion. The Trump Administration has voiced support for this newest plan to dismantle the ACA. In addition, the President continues to use his executive authority to undermine health care reform and has proposed a budget for the upcoming federal fiscal year that assumes deep spending cuts to Medicaid. Still, as we saw earlier this year, Republicans don’t speak with a unified voice when it comes to health care. In fact, even as ACA repeal efforts continue, some Senators are trying to forge a bipartisan compromise that would shore up the ACA’s health insurance marketplaces and leave the basic framework of the ACA in place — at least for now.

If federal policymakers succeed in rolling back health care reform, tens of millions of Americans would lose coverage, and millions more would face higher costs for skimpier benefits. Most of the projected coverage losses would occur in Medicaid. This is because proposals to radically restructure Medicaid financing and end the optional expansion would shift massive — and unaffordable — new costs to the states, forcing state leaders to scale back their Medicaid programs in order to balance their budgets. In California, this cost-shift would amount to between $24 billion and $30 billion in 2027 alone, according to state projections. Because the state could not take on new spending obligations of this magnitude, the Governor and lawmakers would have to rethink California’s approach to Medi-Cal, raising the prospect of devastating cuts to eligibility, services, and provider payments. The impact of tens of billions of dollars in Medi-Cal spending cuts would be felt in local communities across the state.

Even If Republicans Abandon Their Efforts to Roll Back Health Care Reform, California Must Still Strive to Improve Its Health Care System

Many Californians would breathe a sigh of relief if the President and congressional leaders abandoned their twin goals of repealing the ACA and slashing federal support for Medicaid. But even if Obamacare survives intact, California — a staunch supporter of the ACA — should not rest on its laurels. Much work remains to be done to improve our state’s health care system. For example, even with full implementation of the ACA, more than 2.8 million Californians lacked coverage in 2016, according to the most recent Census data. Research shows that people who go without coverage face both health and financial consequences.

Moving toward universal coverage is a high priority for many Californians, including a number of state lawmakers. But how can the state achieve this goal, particularly in light of perennial concerns around financing as well as California’s strained relationship with federal policymakers? The state Assembly will explore this question in a series of public hearings over the coming months. According to a statement released by Assembly Speaker Anthony Rendon, the forthcoming hearings “will provide a new opportunity to determine the best and quickest path forward toward universal health care.”

— Scott Graves

* The changes in the uninsured rate reported in this post are statistically significant at the 90 percent confidence level. The data come from the American Community Survey (ACS) and reflect 1-year estimates. These estimates are based on respondents’ coverage status at the time of the ACS interview and reflect “an annual average of current health insurance coverage status,” according to the US Census Bureau.