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Analyst Says California Should Expand Medicaid

SACRAMENTO, Calif. (AP) -- The benefits of expanding health care for California's poor under the Affordable Care Act far outweigh the costs to the state, according to a report released Tuesday by the nonpartisan Legislative Analyst's Office.

Legislative analyst Mac Taylor urged lawmakers to adopt an optional Medicaid expansion that features an enhanced cost match from the federal government, meaning Uncle Sam will pick up most of the tab and send billions of dollars flowing into the state.

Taylor says the additional money can be used improve health care in California even though the state will take on additional costs down the road. The report estimated that by taking on new enrollees, the state could be on the hook for between $300 million and $1.3 billion a year starting in 2020.


Gov. Jerry Brown has committed to expanding Medicaid, known as Medi-Cal in California, for people who make up to 138 percent of the federal poverty line, or about $15,400 a year for an individual. The analyst estimated the expansion will bring 1.2 million new enrollees by 2017.

The program already serves about 8 million adults and children, nearly 1 of every 5 California residents.

The legislative analyst said that expanding Medi-Cal is not only good policy but improves the health of the poor.

"Despite the significant uncertainty about the long-term costs and savings associated with the expansion, on balance, 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," Taylor wrote.

Starting in 2014, California will help the uninsured gain access to health care in two key ways under the federal health care overhaul: through a new insurance marketplace -- or exchange -- that will offer subsidies and tax credits to individuals and small business; and by expanding Medicaid, the federal-state health program for low-income people.


The analyst's report is meant to guide state lawmakers as they implement the law's changes. Democrats who control the Legislature are expected to approve the expansion over the next several weeks as part of a special legislative session that started Tuesday. Democrats say the state needs to act quickly in order to be ready for open enrollment on Oct. 1 with coverage starting in 2014.

While the health insurance exchange is designed to be self-sustaining, Republicans are concerned about expanding Medi-Cal because the program already consumes 20 percent of the state's $97.6 billion general fund budget, even as the state splits roughly half the cost with the federal government.

The federal government will pay the full cost of the Medicaid expansion until 2020, when it will start paying 90 percent. The estimates of how much California will have to pay beyond that vary based on the number of people who will sign up for coverage under the expansion, how much health care they use and how many services the federal government will cover.

Republican Assemblyman Dan Logue of Linda said the Democratic-controlled Legislature should hold off on approving any expansion until later in the year because Congress could still reduce matching rates. He recommended a sunset or review clause.

"There's no protection in the bill if they change the threshold from Washington, then California is on the hook," he said. "Do we get the money from education? Law enforcement? Where do we go to get the money?"

Sen. Mark Leno, D-San Francisco and chair of the Senate budget committee, called the expansion a "rare opportunity" to enroll more than a million people, particularly low-income single men who lack health coverage. Rejecting the expansion means the state will be leaving federal "money on the table."