Counties all over California are cheering the state’s decision to expand Medi-Cal to more than 1.4 million low-income adults – and bracing for the $1.3 billion the state expects to take away from county health services over the next four years.

Counties should see savings on January 1, 2014, when Medi-Cal expands to include childless adults under the age of 65 with incomes less than 138 percent of the federal poverty level or $15,856 for an individual annually. The federal government will pay 100 percent of the costs for new enrollees from 2014-2016 and 90 percent in 2020 and beyond.

“On paper, you’d think there would be savings,” said David Luchini, Assistant Director of the Fresno County Department of Public Health. But the UCLA Center for Health Policy Research predicted in a Sept. 12, 2012 report that three to four million Californians would remain uninsured in 2019. Counties say it is way too early to count on savings from the ACA and to chop away at county health care safety nets.

Santa Cruz, like many counties, is scrambling to maintain some basic health-care services in the face of cuts. The state passed responsibilities and funding for indigent care to the counties in 1991, a change referred to as realignment.

The state is making its first cut of $300 million in beginning on Jan. 1, 2014, followed by cuts of $900 million in 2014 and $1.3 billion in 2015 and 2016. The funds will be redirected to local human services programs, offsetting state General Fund costs in the CalWORKS welfare program, stated Norman Williams, Deputy Communications Director, California Department of Health Care Services in an e-mail response to questions.

For Santa Cruz that means losing $1.6 million this year, which is actually a $3.2 million cut when it loses the matching federal funds. For the following year and beyond the county anticipates cuts of up to $4.9 million, said Giang Nguyen, Director of the Santa Cruz County Health Services Agency.

As a result of this year’s cuts, and in preparation for more next year, the county eliminated its chief of public health position in June and has implemented a wait list for its low income health program called MediCruz Advantage, Nguyen said. Currently that program serves more than 1,500 and enrolled more than 2,200 at one point. Her agency will be looking at other programs for areas to cut in anticipation of even less realignment funding next year.

Counties vary hugely in how they serve the medically indigent. Some own their own public hospitals and clinics, some don’t and contract with private hospitals and community clinics. And 35 small and rural counties pool together in the County Medical Services Program and contract with the state to provide indigent care.

Given those vast differences, counties and their health-care constituents negotiated with the state on Assembly Bill 85, approved by Governor Jerry Brown on June 27. The law allows counties to choose from two formulas that the state will use to calculate the Medi-Cal savings and cuts to counties.

One option is a straight 60/40 split of health funding whereby the counties keep 40 percent of that money and the state gets 60 percent. The other is an 80/20 split and relies on measuring the actual health care costs and revenues to counties.

The jury is still out on AB 85, said Farrah McDaid Ting, communications coordinator for the California State Association of Counties. “We need to see how the funding falls and what the effect will be on counties,” she said.

Counties contend that many unknowns remain. For instance, as patients of public hospitals get better broader insurance through Medi-Cal expansion and the Affordable Care Act they become much more attractive to other health-care providers, said Melissa Stafford Jones, CEO of the California Association of Public Hospitals and Health Systems. Public hospitals save and make money when those patients become paying customers under Medi-Cal expansion. Those patients, now with more options, also may go elsewhere for care, leaving an even more concentrated patient base of uninsured at public hospitals and safety net clinics, Stafford Jones said.

“I’m very concerned regardless of what option we pick,” said Giang Nguyen, Director of the Santa Cruz County Health Services Agency. “The health realignment funding has been used for both public health services and indigent health care. Whatever option we pick, it’s a cut.”

Some of the public health initiatives that counties are funding with realignment money are immunization programs, home health nursing, ambulances, disease outbreak prevention and disaster response, McDaid Ting said.

Whether or not counties do see savings as a result of the Medi-Cal expansion will depend largely on how fast they can get people signed up for Medi-Cal, which will require reaching the thousands of homeless, mentally ill and incarcerated that are eligible but don’t know it or who need help enrolling. Success will also depend on whether those who are eligible make the enrollment window and then reapply every year, Nguyen said.

Santa Cruz is partnering with the Service Employees International Union, homeless shelters and local jails to reach all of those potentially eligible for expanded Medi-Cal, she said.

“Seems to me the governor and the state thinks that come January 2014 everyone will get into Medi-Cal. That won’t happen, we know that,” Nguyen said.

Then there is the cost to counties for serving undocumented immigrants, who account for about 7 percent of the population, the Public Policy Institute of California estimated in 2010. And they don’t qualify for Medi-Cal expansion or for Covered California, the state’s marketplace for coverage under the Affordable Care Act.

How much a county saves depends on the level of commitment it has to serving the remaining uninsured.

“If a county has a very minimal view of their responsibility, only covering people up to the poverty level who are legal residents, then everyone in that category is eligible for Medi-Cal,” said Anthony Wright, Executive Director of Health Access, a health-care consumer advocacy coalition.

But the vast majority of counties, more than 50 of them, provide some level of care beyond the required emergency room access for undocumented residents, McDaid Ting said.

In Santa Cruz about 21,000 or 8 percent of the population is undocumented and not eligible for Medi-Cal, based on 2008 numbers by the Public Policy Institute of California. Santa Cruz County provides those people primary care as well as emergency care.

“It is the responsible thing to do as a health partner in this county,” Nguyen said.

Not all counties feel they can afford to provide that care. Sacramento, Contra Costa, San Diego and Merced counties don’t provide primary care to undocumented residents, Wright said.

But many counties are finding ways to provide health services for all residents.

Over the last several years low income health programs (LIHP), partially reimbursed with federal dollars, have been created to provide coverage for low income legal residents in 53 counties to help bridge them to the coverage coming with the ACA. Those programs cover about 600,000 people, Wright said. Virtually all of those people will roll into Medi-Cal coverage in January. And the programs will terminate at the end of this year.

Health Access launched a campaign to get the state to continue the programs but to roll them over to the remaining uninsured regardless of income or immigration status.

“It’s insane to let this infrastructure just disappear,” Wright said. The state opted not to adopt that plan so now it will be up to each county to decide if it should keep these programs and fund them themselves.

“In the next couple of months counties will make key decisions on how successful health reform will be and what their commitment will be to the remaining uninsured,” Wright said.

“If at the end of the day counties don’t have the funding they need, they’ve had to make some very difficult cuts in the past,” said Stafford Jones of the California Association of Public Hospitals. “We don’t want to do that when we’re on the precipice of the ACA. We want to fulfill the promise of reform.”