Medi-Cal Expansion: Full Steam Ahead or on the Slow Track?

Medi-Cal – our state’s Medicaid Program – provides health coverage to well over 7 million low-income Californians, primarily children, youth, and women. The program soon will cover hundreds of thousands of additional residents as part of an expansion authorized by federal health care reform. Under the expansion, California will extend Medi-Cal coverage to parents and childless adults who are currently excluded from the program and whose incomes do not exceed 138 percent of the federal poverty line (see chart). But is California on track to expand Medi-Cal by January 1, 2014? That’s the date when the federal government will begin paying the full cost of the expansion for the first three years, phasing down to a still-high 90 percent of the cost by 2020. With less than nine months to go, and much work left to do, there is considerable concern that the state isn’t moving quickly enough to ensure a timely expansion of Medi-Cal.

We take an in-depth look at the Medi-Cal expansion – and the debate surrounding it – in a new CBP report released yesterday: Expanding Horizons: Key Facts About the Medi-Cal Program as California Implements Health Care Reform. In addition to providing a comprehensive overview of the program, our report highlights significant differences of opinion that have emerged regarding the Medi-Cal expansion. For instance, identical bills moving through the Assembly and Senate (AB X1 1 and SB X1 1) envision a state-led expansion, an approach endorsed by the nonpartisan Legislative Analyst’s Office (LAO). In contrast, Governor Brown has suggested that either the state or the counties could lead the expansion, a position the Governor has maintained since January despite major concerns that counties, health advocates, and the LAO have raised about the county-led option.

Another point of contention is the Governor’s decision to link the Medi-Cal expansion to his proposal to “capture,” for the state’s benefit, some of the state dollars that counties now use to provide health care to low-income, uninsured (“medically indigent”) Californians – many of whom would enroll in Medi-Cal under the expansion. The Governor’s proposal has generated concern among county officials and health advocates, who worry that the state may shift too much funding, too soon, from a county health care safety net that is sorely in need of new investments and will remain in high demand even after health care reform is fully implemented.

Our report concludes that policymakers should move quickly to put in place the changes needed to ensure a successful, state-led expansion of Medi-Cal by January 1, 2014. Starting the expansion after that date would leave federal dollars on the table and delay coverage for hundreds of thousands of low-income Californians. We also suggest that policymakers consider taking a “wait and see” approach as to the appropriate level of state funding for county indigent health care services. At the moment, it’s unclear how the Medi-Cal expansion will affect the use and the cost of the county health care safety net. This picture will come into focus over the next few years, at which point lawmakers – armed with better information – could revisit the Governor’s proposal to shift county indigent health care dollars to the state.

Finally, we note that California’s improving fiscal situation provides an opportunity for policymakers to reconsider reductions made to Medi-Cal in recent years, some of which are highlighted in our report. This includes the deep cut to provider payments that has been subject to legal challenges, but which could go into effect this year if upheld by the federal courts – on the eve of the Medi-Cal expansion.

— Scott Graves