Analysis: Medicaid Expansion Brings ‘Minimal’ State Costs

A new report finds California could see a significant increase in Medi-Cal coverage at “minimal” cost to the state. Medi-Cal is the state’s version of Medicaid, health insurance largely for the poor. In the new study from researchers at UC Berkeley and UCLA, analysts report that 1.4 million California adults under 65 will be newly eligible for Medi-Cal. The Affordable Care Act says the federal government will pay 100 percent of the costs of these new enrollees from 2014 to 2016 and no less than 90 percent of the cost after that.

In addition, the implementation of the ACA is expected to bring many people already eligible for Medi-Cal into the fold. The state will pay a greater share of the costs for those people.

Altogether, analysts project that from 2014 to 2016, California will incur additional annual costs between $188 million and $471 million. But at the same time, billions of dollars will flow into the state, paying the overwhelming majority of total costs for the newly enrolled and those already eligible.

“This is a really great opportunity for California to enroll and offer coverage to over a million people at a very low cost to the state,” said Laurel Lucia, lead author of the study and a policy analyst at the UC Berkeley Center for Labor Research and Education.

And those billions of dollars will lead to additional jobs in California, she says. “Those federal dollars will create jobs in the health care system and those health care workers will spend money in the community.”

From the report:

  • The Medi-Cal Expansion and enrollment growth among those already eligible is predicted to bring between $2.1 and $3.5 billion in new federal Medi-Cal dollars to California in 2014, growing to between $3.4 and $4.5 billion in 2019.
  • Overall, the federal government will pay for at least 85 percent of the total new Medi-Cal spending between 2014 and 2019, including:
        1. 100 percent of the health care spending for the newly eligible for the first three years (and no less than 90 percent in 2017 and after);
        2. 50 percent for those already eligible for Medi-Cal but not enrolled; and
        3. 88 percent for children already eligible for Healthy Families but not enrolled in 2015 through 2019, and 65 percent in 2014.

In a statement, Anthony Wright, executive director of Health Access, an advocacy group said the study makes clear that Medi-Cal expansion would be a “boon, not a burden,” to California. “The state should take quick action to be ready for health reform in early 2013,” he said. “We must work to maximize the benefit for Californians, and bring in as much federal dollars into our health system and economy.”

While the federal overhaul of health care initially required a massive expansion of Medicaid, last June’s Supreme Court ruling on the Affordable Care Act made the Medicaid expansion optional, state by state.

While California has moved forward with county-wide “Bridge to Reform” programs, the state legislature has yet to formally approve the statewide Medi-Cal expansion. Gov. Brown is expected to call a special legislative session soon to address the Affordable Care Act.

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