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Cost to expand Medi-Cal a mystery

February 19, 2013|By Evan Halper

SACRAMENTO -- Gov. Jerry Brown’s administration has warned repeatedly that California is venturing into unknown territory with the expansion of healthcare under the new federal law. The exact cost of implementation is unknown.

A report issued Tuesday by the Legislative Analyst’s Office shows how big a range of potential bills California taxpayers are confronted with when it comes to a central component of the healthcare law: growing the Medi-Cal insurance program for the poor by about 1 million people.  

The federal government has vowed to pick up the tab for the first few years. But costs for the state could grow quickly after that. By 2021, the state could be spending as little as $300 million annually to pay for the Medi-Cal expansion -- or as much as nearly $1.4 billion.

The understatement in the report: “Expansion costs are subject to substantial uncertainty.”

The analyst’s office nevertheless urges lawmakers to continue moving aggressively to grow Medi-Cal. They say the costs to the state will be outweighed by the savings that come from getting as many as 1 million more lo- income Californians insured.

The expansion amount of “uncompensated healthcare” would drop dramatically, the report notes, saving California counties as much as $1.2 billion per year. Private hospitals and physicians would still end up providing some “charity care” to the uninsured, but it wouldn’t be nearly as much as the current $1-billion worth.

The analyst’s bottom line: “We believe the policy merits of the expansion and the fiscal benefits that are likely to accrue to the state as a whole outweigh the costs and potential fiscal risks.” 


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Twitter: @evanhalper

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