Senate Budget Committee Discusses Medi-Cal Expansion

The Senate Budget Committee met today to hold an overview hearing on the state and county relationship and responsibilities related to Medi-Cal Expansion proposal as part of implementing the Affordable Care Act.

This is the first time since the Governor announced his budget in January that the legislature has had the opportunity to discuss the two Medicaid expansion proposals (state vs county based) in depth.

The hearing consisted of several panels of speakers providing expertise representing various perspectives: the California Department of Health Care Services (DHCS), the Legislative Analyst’s Office (LAO), counties and county-based leaders, as well as consumer groups including Health Access, clinics, mental health providers, consumers, communities of color and other experts.  Panelists and Committee Members weighed in on issues related to the Governor’s two proposals for expansion, a state-wide program and a county-based expansion, as well as a realignment of safety net dollars.

There was little disagreement that the state should move forward with expanding Medi-Cal to the estimated 1 million Californians that are eligible and likely to enroll. The LAO gave a ringing endorsement of the benefits of Medi-Cal expansion as well.  The state will also benefit from billions of federal dollars to fund the program and general fund savings that will result from shifting people from partial coverage programs to Medi-Cal. Additionally, a Medi-Cal expansion is projected to create 100,000 jobs statewide and create $190 million in tax revenue, according to University of California data. However, even after the expansion, it is estimated that another 3-4 million Californians will remain uninsured.

Largely, with the exception of DHCS, there was agreement that the expansion should be done on the state level, and not by individual counties. Though the Administration has suggested that it might be easy to build off the Low Income Health Programs, implementation has been inconsistent across counties, with 5 counties not implementing the program at all.  Representatives from counties and from the County Medical Services Program, which administers indigent care in small rural counties, testified that this was not feasible. Advocates also fear that this will lead to confusion among consumers and barriers to access.

The state estimates that in 2021, California will incur $600 million in state costs for the expansion, although in context, it is likely to bring as much as $4 billion in federal dollars–picking up 85% of the cost).  The Administration further contends that counties will save $700 million of what they currently spend on the uninsured because many of those individuals will have health coverage.  Thus, the state argues that for realigning or shift that savings back to the state.  However, various stakeholders pointed out that it is not that simple.  Many safety net providers will lose other sources of funding, like federal DSH payments as fewer of their clients are uninsured, and that this should be accounted for. Additionally, counties and safety net providers will continue to provide for the 3-4 million Californians that remain uninsured. Many stakeholders including Health Access contended that any cost savings should be reinvested in local health care capacity, including to be used to care for the remaining uninsured.

We look forward to additional information on this issue as details from further negotiations between the state and counties emerge.

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