Expanding Medi-Cal: Small State Cost, Big Impacts

December 19, 2012

In January, the Legislature likely will begin considering how to implement a key component of the federal health care reform law in California: the expansion of Medicaid coverage to most people with incomes at or below 138 percent of the federal poverty line (an eligibility limit that currently is $15,415 per year for an individual). As we noted in a blog post last week, the vast majority of the cost of the expansion will be covered by the federal government, including 100 percent of the cost from 2014 to 2016. As a result, the expansion is likely to have a relatively minor impact on the state budget. This assessment is reinforced by a new report from the Kaiser Family Foundation. The report, authored by researchers from The Urban Institute, uses a rigorous study design to estimate the impact of boosting access to Medicaid — known as Medi-Cal in California — in all 50 states.

The cost to California of expanding Medi-Cal coverage is projected to account for less than 2 percent of total state Medi-Cal spending over the next 10 years. Specifically, the report projects that California is on track to spend about $375 billion on Medi-Cal between 2013 and 2022 — without taking the Medi-Cal expansion into account. Expanding Medi-Cal as envisioned in the federal Affordable Care Act would add only about $6 billion to the state’s costs over this 10-year period, equal to just 1.7 percent of total projected state Medi-Cal spending.

The study estimates that the state’s relatively modest $6 billion investment would allow an additional 1.9 million Californians to access affordable health care coverage through Medi-Cal in 2022 alone. In addition, the study projects that expanding Medi-Cal would bring nearly $69 billion in additional federal dollars — 11 times the state’s investment — into California’s health care sector and the broader state economy over the next decade. That’s quite a bang for the state’s health care buck.

— Scott Graves

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Bill To Boost CalFresh Participation Set for Hearing in State Senate

June 25, 2012

It’s no secret that California ranks dead last among states in enrolling eligible individuals in the Supplemental Nutrition Assistance Program (SNAP), which was formerly known as food stamps. The state has been chipping away at the problem for several years now, and the most recent effort – AB 1560 (Fuentes) – is working its way through the Legislature, with a hearing scheduled for tomorrow, June 26, in the Senate Human Services Committee at 1:30 p.m.

AB 1560 could help bring more low-income individuals into SNAP – known as CalFresh in California – by simplifying the eligibility rules for certain households and creating a direct link between CalFresh and Medi-Cal, which provides basic health coverage to more than 7 million low-income Californians. Specifically, the bill would raise the gross income limit applicable to CalFresh for families who have at least one person enrolled in Medi-Cal. For these families, the “gross income test” – which looks at a family’s total income – would be increased from 130 percent of the federal poverty line (currently $2,008 per month for a family of three) to 200 percent of the poverty line ($3,090 per month for a family of three), thereby removing a key obstacle to CalFresh participation for many low-income families. These families, however, would continue to be subject to a secondary income limit, known as the “net income test.” Families’ net income – that is, gross income minus certain allowable expenses, such as child care – would have to be at or below the poverty line ($1,545 per month for a family of three) in order to qualify for CalFresh food assistance.

Low-income working families who have a connection to Medi-Cal and who spend much of their incomes on child care and housing – leaving relatively little in their budgets for food – would benefit the most from this change. These families are currently excluded from CalFresh if their total incomes exceed 130 percent of the poverty line. For example, two parents who each work full-time at a minimum-wage job earn about $2,800 per month, putting their household income above the CalFresh income limit, but leaving their income well below 200 percent of the poverty line. Under AB 1560, this family would no longer be automatically excluded from CalFresh on the first pass – so long as at least one family member is enrolled in Medi-Cal. Instead, they would move right to the second test and, if their net income falls at or below the poverty line, would be eligible to receive CalFresh food assistance.

By establishing a direct link between CalFresh and Medi-Cal, AB 1560 also could help to boost CalFresh participation among the estimated 1.2 million Medi-Cal enrollees who are currently eligible for CalFresh, but either have not applied or have “fallen off” CalFresh due to excessive reporting requirements. Linking CalFresh and Medi-Cal also would eliminate duplicative steps for county eligibility workers, who assess eligibility for both CalFresh and Medi-Cal.

Boosting the number of low-income families who receive vital food assistance. Increasing efficiencies. Sounds like a win-win.

– Scott Graves

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Supreme Court To Weigh In on California’s Budget

October 6, 2011

On Monday, the US Supreme Court heard arguments on three cases that will have direct implications for the state budget and more than 7 million Californians who rely on Medi-Cal coverage for access to health care. At issue are three cases filed as a result of recent state budget cuts that sought to reduce payments to providers, and whether health care providers and patients can sue the state for failing to comply with federal Medicaid laws.

In 2008 and 2009, the state reduced Medi-Cal provider payments by an amount ranging between 1 and 10 percent as part of efforts to close budget gaps. Patients and providers of Medi-Cal services both sued the state on grounds that the reductions would diminish access to care. The reductions were subsequently blocked by the courts, which ruled that the state had adopted the reductions without “provid(ing) any evidence that the (state) had considered the impact … on quality and access to care.” The issue before the US Supreme Court is not whether the state reduced payments appropriately, but whether providers and patients have a right to sue to enforce the federal law.

The lawsuit has split top Democrats. The Obama Administration has sided with the state, arguing that private lawsuits to enforce the Medicaid law should not be permitted. On the other side, Democratic leaders in Congress, including House minority leader Nancy Pelosi, filed a brief supporting the ability of private parties to sue if they felt federal Medicaid law was being violated.

California’s payments to providers are already among the lowest in the nation. In 2011-12, the state – again – adopted 10 percent Medi-Cal provider payment reductions, though those reductions are pending approval at the federal level and could be affected by the Supreme Court’s decision. Low provider payments are cited as the primary reason why physicians and other providers are discouraged from participating in the program. Patients already report difficulty finding a physician who accepts Medi-Cal. In 2008, 57 percent of all physicians were accepting new Medi-Cal patients. Reducing provider payments further would make this situation even more acute.

– Hanh Kim Quach

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Federal Reductions Could Mean Deep Cuts For Medi-Cal

July 7, 2011

It has been one week since California enacted a rare on-time and lean budget. For those of you longing for a months-long fiscal fight, look 2,700 miles eastward to the nation’s capital where discussions about reducing the deficit, increasing the federal debt ceiling, and passing a federal budget have been heating up.

As part of efforts to balance the federal budget, President Obama unveiled his “Framework for Shared Prosperity and Shared Fiscal Responsibility” in April, which would reduce Medicaid spending by $100 billion over the next 10 years and could result in additional cuts to Medi-Cal, further weakening the program. To achieve this reduction, the Obama Administration proposes to:

  • Restrict states’ ability to use taxes or fees paid by health care providers to draw down federal funds. California, along with 45 states and the District of Columbia, imposes fees and taxes on health care providers to provide additional state dollars that are then used to draw down federal matching funds. In 2010-11, California imposed fees and taxes on hospitals, long-term care facilities, and managed care plans, enabling the state to draw down an estimated $2.5 billion in federal funds. President Obama’s 2012 budget, released in February, proposed to reduce the maximum assessed tax on providers from 6 percent of revenues in 2014 to 3.5 percent in 2017 and beyond. The Administration’s April framework would also restrict the amount of federal funds that could be obtained using provider taxes and fees, though the framework did not specify an amount.
  • Change the way federal payments for Medi-Cal are calculated. In general, the state and federal governments each pay 50 percent of the cost of Medi-Cal. For some services, however, such as family planning, the federal government pays a greater share. Under the President’s framework, the various federal matching rates would be “blended” to create one rate. Calculating California’s “blended” rate would require federal officials to make a number of projections – including how many adults will enroll in Medi-Cal as a result of the federal health reform law – without any actual experience.

Together, these proposals would mean only one thing: fewer federal dollars for Medi-Cal. With fewer federal dollars, the state would be forced to spend more to maintain current services or cut Medi-Cal even further. The CBP has documented that reductions to Medi-Cal since 2008-09 have totaled $2.7 billion – the state is already providing fewer services at greater cost to individuals enrolled in the program. Further reductions would result in even greater harm for 7.4 million Californians who rely on Medi-Cal.

– Hanh Kim Quach

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Countdown to 2011-12: Deep Cuts to Health Programs Looming

June 27, 2011

In recent days, we have been highlighting reductions that will take effect in 2011-12 to underscore the depth and breadth of the cuts. Today, we’ll focus on Medi-Cal and Healthy Families, the state’s two health coverage programs that have experienced cuts of roughly 10 percent and nearly 25 percent, respectively, from 2010-11 funding levels. These cuts will profoundly affect the lives of the 8.3 million Californians who rely on this coverage. Specifically, the Legislature:

  • Increased premiums for about 565,000 children in Healthy Families. Beginning July 1, 2011, premiums for children in families with incomes between 151 percent and 200 percent of the federal poverty line will increase from $16 to $30 per child per month, up to a maximum of $90 per family. Premiums for children in families with incomes between 201 percent and 250 percent of the poverty line will rise from $24 to $42 per child per month, up to a maximum of $126 per family. This policy change requires federal approval, though. In recent months, federal regulators have issued guidance indicating that the Affordable Care Act of 2010 may preclude implementation of this increase.
  • Increased and imposed new copayments in both Medi-Cal and Healthy Families. Medi-Cal patients will be required to pay $5 for physician office visits, dental visits, and brand-name prescription drugs and $3 for lower-cost drugs. Both Medi-Cal and Healthy Families patients will be required to pay $50 for emergency room visits and $100 per day for hospital stays, up to a maximum of $200 per person per year. This policy change also requires federal approval.
  • Reduced payments to Medi-Cal health care providers by 10 percent. California’s provider payments are among the lowest in the country and have been faulted, in part, for low provider participation in Medi-Cal, making it more difficult for patients to find a doctor. In 2008, 68 percent of physicians responding to a statewide survey reported accepting Medi-Cal, compared to 92 percent of physicians who reported accepting private coverage. Prior years’ budgets have included provider payment cuts ranging from 1 percent to 10 percent, most of which have been blocked by the courts. The US Supreme Court has agreed to consider this issue, and the state assumes that the Court will reverse lower court rulings this fall, allowing the cuts to take effect.

This list of cuts is in addition to reductions made to these programs in recent years, the cumulative effects of which are documented in our fact sheets here and here.  These reductions have left California’s health coverage programs ill-equipped to cope with the ongoing impact of the Great Recession and the challenges of rising inequality and a growing population.

– Hanh Kim Quach

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