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Medi-Cal would take $114 billion hit under Senate health reform bill



July 07, 2017
Area(s) of Interest: Health Care Reform 

The California Department of Health Care Services (DHCS) has issued an analysis of the Senate Republicans' Better Care Reconciliation Act (BCRA), which shows that Medi-Cal would take a $114.6 billion hit from 2020 to 2027 if the Senate bill were voted into law.

The Senate health care proposal would result in a drastic shift in responsibilities and health care costs from the federal government to the state. It would dramatically slash federal Medicaid funding, eliminating the Affordable Care Act (ACA) Medicaid expansion program for low-income adults and instituting per-capita cap funding limits beginning in 2020. The cumulative cost to the state from 2020 through 2027 would total an estimated $114.6 billion. The report notes that increased costs would require the state to consider reductions in services and coverage to the Medi-Cal population.

""This funding formula represents a fundamental change in the federal-state partnership that has existed since the Medicaid program’s inception over 50 years ago and a pure cost-shift from the federal government to the states,"" said DHCS Director Jennifer Kent. “This bill takes a sledgehammer to the improvements we have made in our state’s health care delivery system.""

The BCRA would effectively reverse California's efforts to expand coverage to low-income adults under the ACA. The budget impact would force California and other states to consider reducing or even ending vital health care services to our state’s most vulnerable individuals.

“The BCRA would impose a massive, regressive restructuring of the Medicaid program that upends more than a half-century of state-federal partnership, while harming the health of Americans,” Kent said. “The long-term impact of this bill cannot be understated: It is simply devastating.”

The BCRA, even without the structural changes, would quintuple the state’s costs for the more than 3.8 million Californians in the ACA expansion population covered by Medi-Cal. That change alone would cost the state an estimated $74.1 billion from 2021 through 2027, the analysis found.

The Senate bill would also shift costs to physicians, forcing hospitals, emergency departments and clinics serving the poor and uninsured to live within the new financial limits, leading to uncompensated care in the hundreds of millions, if not billions, annually. The California Medical Association (CMA) is concerned that the BCRA is also a cost shift to physicians – increasing the uncompensated care burden. Physicians are also worried that these dramatic federal cuts will force California to reduce Medi-Cal physician payment rates, which already rank last in the nation and are 50 percent below Medicare. Access to care is already a challenge in the Medi-Cal program – these cuts make it even worse.

Currently, over 14.3 million (one in three) Californians are covered by Medi-Cal, including over 50 percent of the state’s children. Slashing funding for essential programs like Medi-Cal guarantees that more Californians will delay needed care and ignore the warning signs of chronic health problems until it becomes a matter of life or death. CMA believes the Senate should be working to increase the number of Americans with access to quality, affordable health insurance instead of pursuing policies that have the opposite effect.

Click here to read the DHCS analysis of the BRCA.

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