SACRAMENTO, Calif. — Medi-Cal, California’s advanced, $174.6 billion Medicaid program, gives medical insurance for almost 15 million residents with low incomes and disabilities. The state enrolls twice as many individuals as New York and greater than thrice as many as Texas — the 2 states with the biggest variety of Medicaid contributors after California.
Enrollment is excessive as a result of California goes past federal eligibility necessities, opening Medi-Cal to extra low-income residents. The state additionally gives a broad vary of advantages, reminiscent of imaginative and prescient, dental, and maternity care — a few of which is essentially paid for by federal {dollars} however which additionally impacts state spending.
However recently, Medi-Cal has discovered itself in political crosshairs.
Democrats say the largest risk to Medi-Cal is $880 billion in GOP budget cuts being mulled in Washington, D.C., which well being consultants say would require eligibility restrictions, reminiscent of work necessities, or program cuts to yield sufficient financial savings over a decade. Republicans argue that Medicaid prices have spiked as a consequence of fraud and abuse they usually criticize state Democrats for making the profit obtainable to immigrants no matter authorized standing.
In March, Gov. Gavin Newsom’s administration borrowed $3.4 billion to cowl an sudden overrun in Medi-Cal, and lawmakers in April appropriated an additional $2.8 billion for the remainder of the fiscal yr. Though the Democratic governor acknowledged a need for adjustments, he has defended the state’s efforts to get extra folks coated. In 2022, California’s uninsured charge for residents below age 65 hit a record low of 6.2%, based on the California Well being Care Basis.
As lawmakers debate funding for the security web program, right here’s what’s at stake for California’s largest well being program.
Who’s Lined?
Greater than a 3rd of Californians depend upon Medi-Cal or the carefully associated Youngsters’s Well being Insurance coverage Program to see a health care provider, therapist, or dentist. They depend on this system to get drugs and entry therapy. It will also be a lifeline for households by permitting folks with disabilities and seniors to remain of their houses and offering coverage to their caregivers. It additionally funds nursing look after seniors.
The overwhelming majority of enrollees qualify as a result of they earn 138% or much less of the federal poverty stage: $21,597 annually for a person particular person or $44,367 for a household of 4. Whereas that’s low for a state the place the median household income tops $96,000, it’s way more beneficiant than Alabama’s family eligibility limit, which is eighteen% of the federal poverty stage, or Florida’s, at 26%.
In contrast to Alabama or Florida, California extends protection to low-income adults with out dependents. The state additionally covers extra folks with disabilities who work, inmates, and different residents who wouldn’t qualify for the profit program if California lawmakers hadn’t expanded this system past what the federal authorities requires.
In line with state estimates, Medi-Cal covers about 7.3 million low-income households and a further 5 million adults, most of whom don’t have dependents. A further million folks with disabilities depend on this system.
Medi-Cal additionally picks up the tab for 1.4 million residents 65 and older for advantages not coated by Medicare, reminiscent of long-term care and dental, listening to, and imaginative and prescient care.
Nearly all of grownup Medi-Cal recipients below 65 work, based on a KFF review of March 2024 census knowledge. In California, about 42% of nondisabled adults on Medi-Cal work full time and a further 20% work half time. These not employed had been mostly caring for a member of the family, attending faculty, or sick.
Simply over half of Medi-Cal recipients are Latino, about 16% white, 9% Asian or Pacific Islander, and seven% Black, based on state enrollment data. That differs from the nation as a whole, the place about 40% of individuals below age 65 who use Medicaid are white, 30% Hispanic, 19% Black, and 1% Indigenous folks.
The place Does the Cash Come From?
The federal authorities pays for about 60% of the Medi-Cal program. Of its almost $175 billion finances this fiscal yr, Washington, D.C., is predicted to contribute $107.5 billion.
A further $37.6 billion comes from the state’s normal fund. The ultimate $29.5 billion comes from different sources together with hospital charges, a managed-care group tax, tobacco tax income, and drug rebates.
California receives 50% in matching federal {dollars} for core companies, reminiscent of protection to youngsters and low-income pregnant ladies. Nevertheless it will get a 90% match for the roughly 5 million Californians it has added to rolls below the Medicaid enlargement licensed by the Reasonably priced Care Act.
The place Does It Go?
On common, Medi-Cal prices $8,000 per recipient, however prices differ broadly, based on a March analysis by the California Legislative Analyst’s Workplace.
As an example, folks with disabilities account for 7% of enrollees however 19% of Medi-Cal’s spending, with a mean annual value of $21,626.
In the meantime, the fee to cowl seniors averages roughly $15,000. And senior enrollment, at 1.4 million, has skyrocketed, rising 40% since 2020 as lawmakers eased the rules for how many assets folks 65 and older may have and nonetheless qualify for this system.
California additionally foots a lot of the invoice to cowl about 1.6 million immigrants with out authorized standing — roughly $8.4 billion of the $9.5 billion, Division of Finance program finances supervisor Guadalupe Manriquez stated throughout a recent Assembly Budget Committee hearing.
What May Get Reduce?
President Donald Trump in March stated that he wouldn’t “contact Social Safety, Medicare, Medicaid” however concentrate on getting the “fraud out of there.” Nevertheless, well being consultants say Medicaid companies can be gutted if Congress follows via on large spending reductions to pay to increase Trump’s tax cuts.
Congressional Republicans have mentioned implementing work requirements for nondisabled adults, which may have an effect on a minimum of 1 million Medicaid enrollees in California, essentially the most of any state, based on an evaluation by the City Institute.
Lawmakers additionally may roll again the Medicaid expansion below the Reasonably priced Care Act, also referred to as Obamacare, which handed in 2010 and allowed extra folks to qualify for Medicaid based mostly on revenue. California, 39 different states, and Washington, D.C., have chosen to undertake “Medicaid enlargement,” wherein the federal authorities pays for 90% of protection for these enrollees.
Such a transfer would value California billions every year if it opted to proceed protection for the roughly 5 million extra enrollees who’ve gained protection below the enlargement.
Republicans may additionally make it more durable for states reminiscent of California to proceed to attract federal help via supplier taxes such because the MCO tax, one thing the primary Trump administration proposed however later dropped. The tax on managed care plans brings in about $5 billion a yr and was endorsed by voters in a ballot initiative final fall, however the federal authorities has been complaining for years about how states levy such taxes on insurance coverage and hospitals. If it restricts how states acquire these taxes, it could likely cause a funding gap in California.
If federal cuts happen, Newsom officers acknowledge, the state couldn’t take up the price of present applications. Republicans are pressuring Democrats who management the legislature to finish Medi-Cal protection of residents with out authorized standing — one thing neither Newsom nor Democratic legislative leaders have expressed a willingness to do.
State leaders additionally might be confronted with chopping optional benefits reminiscent of dental care and optometry, trimming companies geared toward enhancing recipients’ quality of life, or lowering funds to managed care plans that cowl 94% of Medi-Cal recipients.
That’s what California lawmakers did throughout the Nice Recession, chopping reimbursement charges to suppliers and eliminating advantages together with eye and dental look after adults. The governor on the time, Republican Arnold Schwarzenegger, went a step additional, chopping $61 million from counties’ Medi-Cal funding in a finances bloodletting that he stated contained “the good, the bad, and the ugly.”
This text was produced by KFF Health News, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
