Throughout the State Californians Pay More Than They Can Afford for Housing

Medi-Cal, our state’s Medicaid program, is the cornerstone of California’s health care system. Funded with both state and federal dollars, Medi-Cal provides health care services to more than 13 million low-income Californians who live in all 58 counties. Of the 10 counties with the highest shares of residents enrolled in Medi-Cal, six are in the San Joaquin Valley: Tulare (54.8%), Merced (50.9%), Fresno (49.9%), Kern (45.9%), Stanislaus (45.1%), and Madera (45.1%). However, millions of Californians — including children, older adults, and people with disabilities — would be at risk of losing Medi-Cal coverage or benefits if the US Senate agrees to the deep cuts that were recently approved by House Republicans (H.R. 1628) with President Trump’s support. These cuts include 1) phasing out the Medicaid expansion, through which California has extended coverage to nearly 4 million nonelderly adults, and 2) shifting massive — and unaffordable — costs to states by capping federal Medicaid funding. In California, this cost-shift would amount to nearly $6 billion in 2020, rising to an annual shift of $24.3 billion by 2027, according to a Department of Health Care Services analysis.

On May 4, the House of Representatives narrowly approved — on a 217 to 213 vote — H.R. 1628, the American Health Care Act of 2017 (AHCA). Every Democrat and 20 Republicans voted against the bill. This legislation would reverse the progress that California and the rest of the nation have made in extending health coverage to millions of people under the framework of the Patient Protection and Affordable Care Act (ACA), which President Obama signed into law in 2010.

The AHCA would make several changes that would damage the health and economic security of millions of Americans. These include, but are not limited to, 1) phasing out the Medicaid expansion, through which California and many other states have extended health coverage to millions of low-income adults under age 65; 2) shifting huge new costs for Medicaid to the states by capping annual federal funding for the program; 3) restructuring federal premium assistance — which lowers the cost of monthly health insurance payments — in a way that disadvantages people who are older and/or have lower incomes; 4) eliminating federal subsidies that reduce the cost of copays and deductibles for people with low or moderate incomes; and 5) ending nationwide protections for people with pre-existing health conditions. At the same time, the AHCA would provide massive tax breaks for the wealthy and for drug and insurance companies.

Republicans in the House approved the AHCA even though the final version of the bill had not been analyzed by the nonpartisan Congressional Budget Office (CBO), which estimates the potential impacts of proposed legislation. Today — nearly three weeks after House Republicans approved the AHCA — the CBO released its assessment of the bill.

On a nationwide basis, the CBO estimates that if the AHCA were signed into law:

• By 2026, an additional 23 million people would be uninsured compared to current law. This includes 14 million fewer Medicaid enrollees by 2026, a reduction of 17 percent relative to the number expected to be enrolled under current law. The CBO notes that the increase in the number of uninsured “would be disproportionately larger among older people with lower income — particularly people between 50 and 64 years old with income of less than 200 percent of the federal poverty level.”
• Federal spending for Medicaid would be reduced by $834 billion over the 2017-2026 period compared to what the CBO projects under current law.
• Less healthy people in states that fully opt out of certain health care regulations would face particularly difficult challenges in purchasing health coverage on the individual (or “nongroup”) market. About one-sixth of the US population lives in states that would obtain waivers — as allowed by the AHCA — to 1) narrow the scope of benefits that must be covered by health insurance and 2) let insurers charge premiums based on an individual’s health status if they fail to maintain continuous coverage. (The CBO does not indicate which states it presumes would fall into this category.) As a result of these changes, the CBO anticipates that “people who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under H.R. 1628 to help reduce premiums.” Consequently, the nongroup markets in these states “would become unstable for people with higher-than-average expected health care costs,” according to the CBO.

The CBO does not assess the potential impacts of the AHCA on individual states. However, state-level research from other organizations shows that the House-passed bill would:

• Shift nearly $6 billion in Medicaid costs from the federal government to California in 2020, rising to an annual cost-shift of $24.3 billion by 2027, according to the state Department of Health Care Services.

   

  • These massive annual cost-shifts would result from several AHCA provisions. These include 1) the substantial reduction in the federal government’s share of costs for people who sign up for coverage through the Medicaid expansion; and 2) the proposal to cap federal funding for the entire Medicaid program — through a “per capita cap” or a block grant — at a level that would fail to keep pace with anticipated Medicaid spending growth, resulting in federal funding cuts that would grow every year.
  • California’s state budget would not be able to absorb these sizeable annual cost-shifts. As a result, state policymakers would face the very real prospect of having to repeal the Medi-Cal expansion. Such an action would eliminate the only viable source of health coverage for nearly 4 million nonelderly adults, who live in every Congressional district in the state (see table below). Moreover, Medi-Cal coverage and benefits would be put at risk for the nearly 10 million additional Californians — including children, people with disabilities, and adults age 65 or older — who qualify for Medi-Cal through other eligibility pathways (i.e., not through the expansion).
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• Disproportionately harm women, according to the Center on Budget and Policy Priorities (CBPP). Women and girls comprise more than half of Medi-Cal enrollees (54 percent as of December 2016), and women “are much more likely to use Medicaid’s long-term services and supports as they age,” the CBPP notes. Medi-Cal also plays a significant role in women’s health by financing roughly half of all births in California (50.4 percent as recently as 2011). Federal cuts to Medicaid could require California to scale back the state’s investment in these and other critical services for women. In addition, family-planning services would be threatened because the AHCA would prevent states — including California — “from reimbursing Planned Parenthood for its preventive health and family planning services” for people enrolled in Medicaid, according to the CBPP.
• Hurt military veterans, according to Families USA. Medicaid is a critical source of health coverage for veterans, who are “at a higher risk than most for unique and sometimes serious or complicated health care issues as a result of their service.” Nationwide, more than 1.7 million veterans (nearly 1 in 10) were enrolled in Medicaid in 2015, with roughly 183,000 of these former servicemen and -women receiving services through California’s Medi-Cal program. (A California-specific estimate is not available.) For some veterans, Medicaid supplements the health coverage that they receive through the federal Department of Veterans Affairs; for others, Medicaid “is their only source of coverage,” Families USA notes. By cutting and capping federal Medicaid funding, the AHCA would threaten access to health coverage for tens of thousands of veterans in California.
• Increase total health costs by an average of $2,800 in 2020 for people who buy coverage through Covered California, the state’s health insurance marketplace, according to the CBPP. This increase “would be larger for people who have lower incomes, are older, or live in high cost counties,” with average increases projected to exceed $4,000 in 32 counties. This analysis does not account for “additional premium increases and benefit reductions” that could occur under the AHCA proposal to end nationwide protections for people with pre-existing health conditions.