By Daniel Weintraub
California probably gained more than any other state from the Affordable Care Act, the federal health reform better known as Obamacare. Now, with the program facing almost certain demise, the state and its low-income residents have the most to lose.
President-elect Donald Trump and his Republican allies in Congress have pledged to repeal Obamacare and then replace it with something better. No one knows exactly what that will mean. But we do have some clues.
House Speaker Paul Ryan and his Republican members in Congress outlined their health reform proposals in a detailed document before the election.
For more than 1 million Californians who are getting subsidies to buy private insurance under Obamacare, there will be changes, but even under Ryan’s plan, many of them would still get tax credits to help them buy coverage. Older people and people with pre-existing health conditions will probably have to pay more than they do under the ACA.
The biggest losers would be the 3.5 million working poor and childless adults who gained access to health care through the Medi-Cal program. That program now serves more than 13 million Californians, more than a third of the state’s population.
The Medi-Cal expansion was funded almost entirely by federal taxpayers. For the first three years, the feds paid 100 percent of the cost. The federal share was scheduled to decline, over the next three years, to 90 percent of the cost, but that would still have been far higher than the 50 percent share that federal taxpayers contribute to the state’s costs for those who were eligible for Medi-Cal before Obamacare.
Under the Republicans’ plan, that extra funding would disappear, making it very difficult for California to maintain coverage for those people.
Ryan’s proposal would offer states two options – a per-capita grant or a block grant with very few strings attached.
The per-person grants would be based on spending in 2016, adjusted each year to reflect the general increase in the cost of living. Since health care costs almost always increase faster than general prices, that means that the value of federal aid per person in the program would decline each year.
Ryan’s plan also says that the increased federal aid that Obamacare included for those made newly eligible would decrease over time, eventually returning to the same share the state gets from federal taxpayers for the rest of its Medicaid recipients.
For California, that would mean a reduction of about $8 billion a year. It is unlikely that the state could come up with the money to continue the level of coverage now provided, and the most likely to lose it would be people who are working but in low-wage jobs for employers who don’t offer insurance.
The other alternative Republicans are mulling for the future of Medicaid – a block grant – would probably be even worse for California. The state’s federal grant would be based on a point in time and adjusted for inflation but not for need. So if more people lost their jobs and needed public assistance – which typically happens during a recession — the federal taxpayers’ share would not increase to reflect that need. And the block grant would shrink over time under a federal edict that the people who were made newly eligible by Obamacare are “transitioned” off of Medi-Cal.
Politically, Ryan’s approach would be a savvy one for Congressional Republicans and Trump. They could claim credit for giving the states more control over the program and more flexibility, while distancing themselves from the unpopular consequences – reduced health coverage or higher state taxes.
In California alone, nearly 4 million people would be at risk of losing their health insurance, but the erosion in coverage would play out over several years and likely not even begin until around 2020. By then the vote that set the whole thing in motion would be in the distant past, and the people who lose their health care might never connect that to the action taken by Congress.
Maybe that’s the idea.