CBP Participates in Webinar Looking at the Medi-Cal Expansion

July 26, 2013

Yesterday, the CBP participated in a webinar looking at the pending expansion of the Medi-Cal Program — a cornerstone of federal health care reform — and what that change may mean for philanthropy and nonprofits. The webinar was sponsored by the California Association of Nonprofits and a consortium of California grantmakers called California Philanthropy. The webinar also featured Peter Long, president and chief executive officer of the Blue Shield of California Foundation, and Ellen Wu, executive director of the California Pan-Ethnic Health Network and a CBP board member.

The CBP’s presentation reviewed key changes to Medi-Cal that will be implemented in 2014 as a result of recent state legislation. We also highlighted two issues that could hinder low-income Californians’ access to health care services in the years to come: a pending cut to Medi-Cal provider payments (approved in 2011 but not yet implemented) and a major shift of health care dollars from counties to the state, a change that was included in this year’s state budget agreement.

— Scott Graves

Medi-Cal Expansion by the Numbers

July 11, 2013

Medi-Cal — the state’s Medicaid Program — provides health coverage to more than 8 million low-income Californians. This number is expected to climb sharply beginning this coming January due to a major program expansion adopted by state policymakers as part of the 2013-14 budget agreement. As authorized by federal health care reform, California will extend Medi-Cal coverage to more than 1 million parents and childless adults who are currently excluded from the program and whose incomes do not exceed 138 percent of the federal poverty line ($15,856 for an individual in 2013). The budget agreement also redirects — to the state — much of the funding that counties now use to provide health care to low-income, uninsured (“medically indigent”) residents. (Governor Brown insisted on linking this fund shift to the Medi-Cal expansion.)

We’ll be updating our Medi-Cal chartbook to reflect the framework of the expansion as agreed to by lawmakers and the Governor. For now, here are some numbers that help to put the Medi-Cal expansion into perspective:

  • 1/1/14 — the date that the Medi-Cal expansion is scheduled to begin.
  • 1.4 million — the number of Californians estimated to be newly eligible for Medi-Cal in 2014 under the expansion.
  • 635,000 — the number of newly eligible Californians expected to enroll in Medi-Cal during the first six months of 2014, according to recent state estimates. This figure includes 490,000 Californians who will transfer from the temporary Low Income Health Program (LIHP) on January 1, 2014. LIHP — which was created as a “bridge” to health care reform and expires at the end of 2013 — uses federal and county dollars to serve low-income adults who do not qualify for Medi-Cal under current rules. The vast majority of Californians enrolled in LIHP will be eligible for Medi-Cal in 2014, while the remainder will be eligible for coverage through Covered California, the state’s new health insurance exchange. The state’s estimate of the number of LIHP enrollees who will shift to Medi-Cal appears to be low. For example, in April 2013 LIHP enrolled about 575,000 Californians who will qualify for Medi-Cal under the expansion, or over 80,000 more people than the state estimates will move from LIHP to Medi-Cal. Moreover, LIHP enrollment could increase in the coming months to the extent that counties boost their outreach efforts. Therefore, the number of Californians who enroll in Medi-Cal under the expansion during the first half of 2014 could substantially exceed the state’s total estimate of 635,000.
  • 100% — the share of Medi-Cal expansion costs covered by the federal government from 2014 through 2016. The federal share will gradually phase down to a still-high 90% by 2020.
  • $1.5 billion — the amount of federal funding that California is expected to receive in 2013-14 to pay for the expansion. Federal funding is projected to increase substantially in later years. Using “moderate-cost assumptions,” the Legislative Analyst’s Office projects that California will receive $3.5 billion in federal funding for the expansion in 2014-15, rising to $6.2 billion by 2022-23.
  • $3.8 billion — the total amount of funding that is projected to be shifted from counties to the state over the next four years under the budget agreement ($0.3 billion in 2013-14, $0.9 billion in 2014-15, and $1.3 billion in each of 2015-16 and 2016-17). Counties use these dollars — which they receive as part of the 1991 state-to-county realignment of services — to provide health care to medically indigent residents. The budget deal assumes that counties will no longer need all of their 1991 realignment health care dollars as many medically indigent adults newly enroll in Medi-Cal under the expansion. The funds redirected to the state will be used to pay for CalWORKs grant costs that would otherwise be funded with General Fund dollars, and thus will generate substantial ongoing state savings. At this point, it’s not clear whether the amount of funding that remains with counties will be sufficient to provide health care for the millions of Californians who are projected to lack health coverage even after full implementation of health care reform.

— Scott Graves

Expanding Medi-Cal: We’re Not Starting From Scratch

December 21, 2012

California isn’t starting from square one as the state moves toward expanding Medi-Cal coverage to most low-income adults under age 65, pending approval in 2013 by state lawmakers and Governor Brown. Under a 2010 agreement with the federal government, California established a temporary, county-based Low Income Health Program (LIHP) that is building a bridge to an expanded Medi-Cal Program in 2014. LIHP provides health coverage to uninsured adults ages 19 to 64 who meet citizenship or immigration requirements and are excluded from Medi-Cal under current eligibility rules. The income of participating adults cannot exceed 200 percent of the federal poverty line (a limit equal to $22,340 for an individual in 2012), although counties generally may — and in many cases have — set lower eligibility thresholds. County participation in LIHP is voluntary; counties that opt into the program have half of their LIHP costs paid by the federal government. As of September 2012, more than 500,000 low-income Californians across 50 counties were enrolled in LIHP.

LIHP provides vital health care services to low-income adults who otherwise would be uninsured. It’s also bringing substantial federal dollars — projected to reach nearly $3 billion — into California’s health care sector and the broader state economy. But even more, LIHP is helping to prepare California for the expansion of Medi-Cal as envisioned in the federal health care reform law. This is because nearly all of the adults enrolled in LIHP — along with many other low-income Californians — would be newly eligible for Medi-Cal under the expansion. In fact, state officials are already planning for the transition of eligible LIHP enrollees to Medi-Cal effective January 1, 2014. At that point, the federal government will pay 100 percent of the cost of coverage for this new group of Medi-Cal beneficiaries through 2016, with the state picking up a small share of the cost in subsequent years. So, for anyone wondering when the Medi-Cal expansion will begin in California, LIHP provides an answer: It’s already under way. It’s now up to state policymakers to maintain the current momentum and propel the expansion — a key component of federal health care reform — across the finish line.

— Scott Graves

Expanding Medi-Cal: The Next Step on the Road to Health Care Reform

December 14, 2012

Since President Obama signed the Affordable Care Act (ACA) in 2010, California has taken a number of steps to fulfill the promise of federal health care reform for the millions of Californians who lack access to affordable health coverage. With health care reform set to take full effect in 2014, the next big step is just around the corner: the expansion of Medi-Cal coverage to low-income adults under age 65 who currently are excluded from the program. This group includes nondisabled adults who don’t have children at home. It also includes parents who do have kids at home, but who lose access to Medi-Cal when their incomes rise more than a few percentage points above the federal poverty line – currently $19,090 for a family of three. Low-income adults under age 65 are much more likely than other Californians to lack health care coverage, as the following chart shows.

The ACA requires states to expand their Medicaid programs to cover most people with incomes at or below 138 percent of the poverty line – currently $15,415 per year for an individual or $26,344 for a family of three – beginning on January 1, 2014. The federal government will pay 100 percent of the cost of the expansion for the first three years, gradually reducing the federal share to 90 percent of the cost in 2020 and beyond. However, the Supreme Court’s landmark decision on the ACA this past June limited the federal government’s ability to compel states to implement the Medicaid expansion as envisioned in the health care reform law. As a result, some states wondered whether they could limit their expansion of Medicaid by setting a threshold below 138 percent of the poverty line and still expect the federal government to pay all of the cost from 2014 to 2016. This week, the Obama Administration provided an answer: No. As a result, a partial Medicaid expansion is not in the cards in the near term as health care reform continues to move forward in California and other states.

Governor Brown is expected to call a special session of the Legislature for early 2013 to address a number of remaining health care reform issues, potentially including the expansion of the Medi-Cal Program. We’ll have more to say about all of this in the weeks to come. But for now, it’s clear that expanding Medi-Cal can’t come soon enough for low-income adults who lack affordable health care options.

— Scott Graves

State Spending Reflects Californians’ Priorities

July 24, 2012

Public opinion polling shows that Californians strongly support state spending for education and health and human services, but are less enthusiastic about spending on state prisons, also known as corrections. Solid majorities of the state’s residents, for example, say they are willing to pay higher taxes to support public schools, higher education, and health and human services in order to help close the budget gap, according to a survey conducted by the Public Policy Institute of California in May. In contrast, only about one out of six Californians (17 percent) said they would pay higher taxes to support prisons.

The 2012-13 spending plan signed into law by Governor Brown last month reflects – for the most part – these priorities. More than 50 cents out of every General Fund dollar supports public schools, colleges, and universities, and nearly 30 cents out of every dollar goes to health and human services, including health care and cash assistance for low-income children and seniors. In other words, well over three-quarters of the state budget, roughly 81 cents out of every state dollar, goes to areas that Californians say are their top priorities.

The share of state spending allocated to corrections – just under 10 cents out of every state dollar in 2012-13 – is down compared to 2010-11, but remains higher than many Californians might prefer. Prisons’ share of the state budget, however, is projected to drop further in the coming years, to less than 8 cents out of every state dollar. This decline is due to the recent transfer, or “”realignment,” of responsibility for low-level offenders from the state to the counties, which has begun to shrink the prison population and to move the state toward compliance with a US Supreme Court order to reduce prison overcrowding.

While rarely addressed in public opinion surveys, the remainder of the budget – roughly 9 cents out of every state dollar in 2012-13 – supports veterans services, wildland fire control, environmental protection, and other key public services. This part of the budget also funds the institutions that comprise the state’s system of governance, such as the courts, the Department of Justice, and the Governor’s Office.

Overall, state spending tracks closely with Californians’ priorities and supports the key public structures and services that are necessary for a strong economy and a high quality of life.

— Scott Graves

Ensuring Affordable Access to Health Coverage

October 31, 2011

Today is the deadline to comment on a number of proposed rules implementing the Affordable Care Act. One that the CBP finds particularly noteworthy is a set of proposed regulations written by the Treasury Department that serve to determine whether job-based coverage is affordable.

How affordability is defined is crucial for determining whether families will have access to subsidized health coverage through state health insurance exchanges. As written, the Treasury Department’s proposed rule penalizes families who have access to job-based coverage through a working family member.

In an effort to preserve job-based health coverage, the ACA generally does not allow individuals to purchase coverage through state health insurance exchanges if they can get it through an employer. This applies whether an individual is the worker or a dependent of the worker. This means that workers and their dependents must accept job-based health coverage, even if that coverage is less comprehensive or more expensive than what is available through the exchange.

The ACA provides an exception if the job-based coverage is “unaffordable,” defined as costing 9.5 percent or more of household income. For a single employee, applying the rule is simple. The complication is for workers with dependents. Premium costs are higher for a family than for a single individual. Yet, the proposed rule assesses the affordability of the premium based on the cost for the worker, not the family. Therefore, if premium costs for a worker alone are less than 9.5 percent of income – even if the cost of family coverage is much higher – then the dependents of this worker would be barred from purchasing subsidized health coverage in the exchange because they would be considered to have access to affordable job-based coverage.

If the proposed rule is adopted as written, then millions of families would either have to pay large portions of their incomes toward premium costs for job-based coverage, or go without coverage altogether, contrary to the intent of the ACA. Treasury should modify the proposed rule to allow affordability of family coverage to take into account premium costs for a family – rather than a single individual. A number of organizations, including the Kaiser Family Foundation, have weighed in on the issue. Find the CBP’s comments on the issue here.

— Hanh Kim Quach

Supreme Court To Weigh In on California’s Budget

October 6, 2011

On Monday, the US Supreme Court heard arguments on three cases that will have direct implications for the state budget and more than 7 million Californians who rely on Medi-Cal coverage for access to health care. At issue are three cases filed as a result of recent state budget cuts that sought to reduce payments to providers, and whether health care providers and patients can sue the state for failing to comply with federal Medicaid laws.

In 2008 and 2009, the state reduced Medi-Cal provider payments by an amount ranging between 1 and 10 percent as part of efforts to close budget gaps. Patients and providers of Medi-Cal services both sued the state on grounds that the reductions would diminish access to care. The reductions were subsequently blocked by the courts, which ruled that the state had adopted the reductions without “provid(ing) any evidence that the (state) had considered the impact … on quality and access to care.” The issue before the US Supreme Court is not whether the state reduced payments appropriately, but whether providers and patients have a right to sue to enforce the federal law.

The lawsuit has split top Democrats. The Obama Administration has sided with the state, arguing that private lawsuits to enforce the Medicaid law should not be permitted. On the other side, Democratic leaders in Congress, including House minority leader Nancy Pelosi, filed a brief supporting the ability of private parties to sue if they felt federal Medicaid law was being violated.

California’s payments to providers are already among the lowest in the nation. In 2011-12, the state – again – adopted 10 percent Medi-Cal provider payment reductions, though those reductions are pending approval at the federal level and could be affected by the Supreme Court’s decision. Low provider payments are cited as the primary reason why physicians and other providers are discouraged from participating in the program. Patients already report difficulty finding a physician who accepts Medi-Cal. In 2008, 57 percent of all physicians were accepting new Medi-Cal patients. Reducing provider payments further would make this situation even more acute.

— Hanh Kim Quach