New UC Study: Medicaid Expansion Big Benefit, Minimal Cost

California can, through a Medi-Cal expansion under the federal Affordable Care Act, dramatically expand health coverage and create jobs, at a minimal cost to the state budget, according to a new study by UC-Berkeley researchers. Over 1.4 million Californians would be newly-eligible for coverage; Modeling suggested over 1 million Californians (including some already eligible) would actually enroll in the next several years.

The UC-Berkeley study, which was covered by the Sacramento Bee and KQED, is available here:



This study shows that the Medicaid expansion would be a boon, not a burden, to the state of California. The state should take quick action to be ready for reform in early 2013, so Californians can start signing up in 9 short months in October 2013. We must work to maximize the benefit for Californians, and bring in as much federal dollars into our health system and economy.

The study shows that depending on our enrollment efforts, California could bring in 2 to 4.5 billion of new federal Medicaid dollars a year into our struggling health system and economy–money that helps keep families economically insured and secure and creates jobs and revenue back to the state. We must work to maximize these dollars and this benefit for California families and our health system. Every month an eligible Californian is not enrolled is money that California is leaving in Washington, DC.

The study shows that for a small investment, California gets a big benefit from the Medicaid expansion–in coverarge and care for Californians, in federal dollars into our health system, our economy, and job creation, and even in state savings and new tax revenue. The costs are low compared with the benefits, of what California already spends in Medicaid, and the share of what the federal government is picking up. We must take advantage of this historic opportunities to improve our health system, to the fullest extent possible.

Here’s some further background on the Medicaid Expansion:

* Medicaid (called Medi-Cal in California) now covers 7.7 million Californians, largely children, parents, seniors and people with disabilities under the poverty level.

* Currently, the state pays 50% of the cost of Medi-Cal coverage, and gets a 1:1 match in federal funds.

* The Affordable Care Act requires states to expand coverage to all residents (excluding undocumented immigrants) up to around 133% of the poverty level. The majority of these are adults without children at home.

* The newly-eligible under the Affordable Care Act will be funded by the federal government for 100% of the costs in the first three years (2014-2016), 95% in 2017, and ultimately 90% in 2020 and beyond–still an generous 9:1 match.

* The “costs” for the first three years are not dependent on the expansion, but are of the “eligible but unenrolled” children and parents who may newly enroll, who the state will still have to pay 50% for. These costs should really not be considered new spending–these Californians can go a sign up tomorrow under current rules. There are estimates that some (but not all) of this group will enroll in 2014 with the marketing and mandates associated with the Affordable Care Act–but that is largely unrelated to the decision of whether the Medi-Cal program is expanded, or not.

* The LAO has estimated such costs–including enrolling those already eligible–as low hundreds of millions of dollars. Today’s study confirms this range.

* There are no other costs associated with Obamacare. All subsidies provided in the new Exchange, Covered California, are 100% federally financed, now and into the future. Even the administration of the Exchange is entirely federally funded through grants–a pending proposal would provide $700 million in start-up funds through 2014, and then the Exchange would be self-sufficient afterwards. The state law prohibits the Exchange from ever using state general funds dollars.

* California has already expanded Medicaid under the Affordable Care Act, more than any other state in the nation by far. Over 550,000 Californians are in 51 county Low-Income Health Programs, funded in part by counties and by the federal government. In 2014, these patients get transitioned into full Medi-Cal, 100% federally funded. California is already leading the way, more than any other state, in Medicaid expansion: Already over a half-million Californians are already getting the benefit of the Medicaid expansion through county-based “bridge to health reform” programs. As a result, we are getting people care, bringing in federal dollars, and helping invest in the health system on which we all rely.

* There is significant additional funding that has come from the Affordable Care Act to the states. California has received hundreds of millions of dollars in grants for public health efforts, community clinics, workforce development, rate review, consumer assistance, funding care for people with pre-existing conditions, and more.

* The ACA provides additional opportunities to maximize even more federal dollars, if California makes strategic investments. For example, restoring adult dental in Medi-Cal is not required, but would get the 1:1 match for existing eligible, and be 100% federally financed for newly-eligible recipients. The same is true for any increases in provider payments.

* These ACA expansions may yield savings to California that has yet to be fully quantified, for existing state programs and county services, and in other areas, such as corrections.

Health Access California promotes quality, affordable health care for all Californians.