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'Affordable' Care Act? Not so much for Sacramento

CAPITOL JOURNAL

Obama's healthcare overhaul is one more costly program for a red-ink state.

July 09, 2012|George Skelton | Capitol Journal
  • In Washington, it's called the Affordable Care Act. In Sacramento, it could be become known as another budget buster.
In Washington, it's called the Affordable Care Act. In Sacramento,… (Mark Boster / Los Angeles…)

In Washington, it's called the Affordable Care Act. In Sacramento, it could be become known as another budget buster.

Obamacare — as it's pugnaciously tagged by the political right — may not be affordable at all for California state government.

Soon after the federal healthcare act was passed by Congress in 2010, the Schwarzenegger administration in Sacramento calculated a state price tag of up to $2.65 billion annually.

The Brown administration has torn up that price tag, but doesn't have a new one. They're working on it, "trying to be much more precise," says Len Finocchio, associate director of the Department of Health Care Services.

Good luck on that. As Sacramento consistently demonstrates, being precise on government spending projections is virtually impossible.

But Finocchio acknowledges that the federal act will result in a heavier state financial load. "We almost certainly will be adding Medi-Cal enrollees, and that will be a cost," he notes.

The additional burden on the states is a negative aspect of the healthcare overhaul that seldom gets discussed, especially in Obama-rooting, liberal-dominated Sacramento.

It's as if somehow it would be contradictory — even Democratic heresy — to support a laudable expansion of healthcare coverage and to also acknowledge that it was going to require more California tax dollars. To ignore the cost is to be intellectually dishonest.

There's a lot of emphasis on the additional federal funds — up to $15 billion annually — expected to be spent in California because of the healthcare law.

But there will be an added state cost for the expansion of Medi-Cal, the California version of the federal Medicaid program for the poor. Finocchio estimates that up to 1.6 million more Californians will enroll in Medi-Cal. But it's really anybody's guess. Each person will cost the state more money.

Some of those enrollees will be people currently eligible for Medi-Cal but for whatever reason — perhaps stigma — haven't signed up. Under the new law, it will be easier and more beneficial to enroll.

The other newcomers to Medi-Cal will be people who became eligible only because of the new law's looser eligibility rules.

The cost of coverage for the currently eligible will be shared 50-50 by the feds and the state. Washington will pay 100% of the tab for newly eligible enrollees for two years, then reduce it to 95% and permanently kick in 90% starting in 2020.

In all, 7 million Californians now are uninsured. Starting in 2014, more than 2 million are expected to buy policies with federal subsidies for families earning $92,000 or less.

"We want to make it as easy as buying a book on Amazon," says Peter Lee, executive director of the California Health Benefit Exchange, an online market where consumers and small businesses will be able to comparison shop for medical insurance.

"This is by far the biggest change in health coverage since Medicare" was enacted in 1965, he says.

But the big cost to the state will be for the generous expansion of Medi-Cal, a Medicare offshoot.

And it's ironic because California can't even afford its current Medi-Cal program. It has been cutting back on poor people's care in recent years to staunch budget bleeding.

The state budget passed by the Legislature and signed by Gov. Jerry Brown last month included more than $1 billion in cuts to Medi-Cal and other health programs.

Two years ago, after passage of the federal act, Kim Belshe, then secretary of the California Health and Human Services Agency, told me: "Medicaid is crumbling. It makes no sense to be building on a house that's falling apart."

And then-Gov. Arnold Schwarzenegger proclaimed: "I have always supported the need for comprehensive health reform. However, for healthcare reform to succeed, states must either have the flexibility to live within the revenues that are available to them or the federal resources to fully fund its mandates."

In upholding the constitutionality of Obama's prized act, theU.S. Supreme Courtgave the states an opportunity to bow out of the Medicaid expansion without penalty. But there's virtually no chance that California will take the court up on its offer.

First, California always has had one of the most generous Medicaid programs for patients — although for physicians it's one of the worst because of low fees.

Second, as Finocchio notes: "It's hard for politicians to take something away" once it has been given.

The Brown administration has been moving at full speed to position California for the act's implementation. In fact, it already has begun covering 280,000 people — mostly childless adults — as part of a demonstration program.

"This is a very great day," state Health and Human Services Secretary Diana Dooley declared after the court gave the act the green light. "We are in the full-go mode here."

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