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 most important 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, resembling 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 these days, Medi-Cal has discovered itself in political crosshairs.
Democrats say the most important risk to Medi-Cal is $880 billion in GOP finances cuts being mulled in Washington, D.C., which well being consultants say would require eligibility restrictions, resembling work necessities, or program cuts to yield sufficient financial savings over a decade. Republicans argue that Medicaid prices have spiked because of fraud and abuse and so they criticize state Democrats for making the profit accessible to immigrants no matter authorized standing.
In March, Gov. Gavin Newsom’s administration borrowed $3.4 billion to cowl an surprising overrun in Medi-Cal, and lawmakers in April appropriated an extra $2.8 billion for the remainder of the fiscal yr. Though the Democratic governor acknowledged a necessity for changes, he has defended the state’s efforts to get extra individuals lined. In 2022, California’s uninsured fee for residents underneath age 65 hit a file low of 6.2%, based on the California Well being Care Basis.
As lawmakers debate funding for the security internet program, right here’s what’s at stake for California’s largest well being program.
Who’s Coated?
Greater than a 3rd of Californians rely upon Medi-Cal or the intently associated Kids’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 can be a lifeline for households by permitting individuals with disabilities and seniors to remain of their houses and offering protection 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 yearly for a person individual or $44,367 for a household of 4. Whereas that’s low for a state the place the median family revenue tops $96,000, it’s much more beneficiant than Alabama’s household eligibility restrict, which is eighteen% of the federal poverty stage, or Florida’s, at 26%.
Not like Alabama or Florida, California extends protection to low-income adults with out dependents. The state additionally covers extra individuals 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.
Based on state estimates, Medi-Cal covers about 7.3 million low-income households and an extra 5 million adults, most of whom don’t have dependents. A further million individuals with disabilities depend on this system.
Medi-Cal additionally picks up the tab for 1.4 million residents 65 and older for advantages not lined by Medicare, resembling long-term care and dental, listening to, and imaginative and prescient care.
The vast majority of grownup Medi-Cal recipients underneath 65 work, based on a KFF evaluation of March 2024 census information. In California, about 42% of nondisabled adults on Medi-Cal work full time and an extra 20% work half time. These not employed have been mostly caring for a member of the family, attending faculty, or in poor health.
Simply over half of Medi-Cal recipients are Latino, about 16% white, 9% Asian or Pacific Islander, and seven% Black, based on state enrollment information. That differs from the nation as a complete, the place about 40% of individuals underneath age 65 who use Medicaid are white, 30% Hispanic, 19% Black, and 1% Indigenous individuals.
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 common 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, resembling protection to kids and low-income pregnant ladies. However it will get a 90% match for the roughly 5 million Californians it has added to rolls underneath the Medicaid growth licensed by the Reasonably priced Care Act.
The place Does It Go?
On common, Medi-Cal prices $8,000 per recipient, however prices differ extensively, based on a March evaluation by the California Legislative Analyst’s Workplace.
As an illustration, individuals 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 price to cowl seniors averages roughly $15,000. And senior enrollment, at 1.4 million, has skyrocketed, growing 40% since 2020 as lawmakers eased the foundations for what number of belongings individuals 65 and older might 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 mentioned throughout a current Meeting Price range Committee listening to.
What Might Get Reduce?
President Donald Trump in March mentioned that he wouldn’t “contact Social Safety, Medicare, Medicaid” however give attention to getting the “fraud out of there.” Nevertheless, well being consultants say Medicaid companies can be gutted if Congress follows by way of on large spending reductions to pay to increase Trump’s tax cuts.
Congressional Republicans have mentioned implementing work necessities for nondisabled adults, which might have an effect on at the very least 1 million Medicaid enrollees in California, essentially the most of any state, based on an evaluation by the City Institute.
Lawmakers additionally might roll again the Medicaid growth underneath the Reasonably priced Care Act, also referred to as Obamacare, which handed in 2010 and allowed extra individuals to qualify for Medicaid based mostly on revenue. California, 39 different states, and Washington, D.C., have chosen to undertake “Medicaid growth,” by which the federal authorities pays for 90% of protection for these enrollees.
Such a transfer would value California billions annually if it opted to proceed protection for the roughly 5 million extra enrollees who’ve gained protection underneath the growth.
Republicans might additionally make it harder for states resembling California to proceed to attract federal help by way of 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 poll initiative final fall, however the federal authorities has been complaining for years about how states levy such taxes on insurance policy and hospitals. If it restricts how states gather these taxes, it will doubtless trigger a funding hole in California.
If federal cuts happen, Newsom officers acknowledge, the state couldn’t soak up the price of present packages. 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 slicing optionally available advantages resembling dental care and optometry, trimming companies aimed toward enhancing recipients’ high 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, slicing 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 mentioned contained “the great, the dangerous, and the ugly.”
This text was produced by KFF Well being Information, which publishes California Healthline, an editorially unbiased service of the California Well being Care Basis.
