How Potential Medicaid Cuts Could Play Out in California

In 2017, the Republicans who managed Congress tried mightily to slash federal spending on Medicaid, the government-funded well being program protecting low-income households and people.

California, like different states, relies upon closely on federal {dollars} to offer take care of its poorest residents. Analyses on the time confirmed the GOP’s proposals would minimize Medicaid funds flowing from Washington by tens of billions of {dollars}, maybe much more, forcing state officers to rethink the scope of Medi-Cal.

However the GOP efforts led to failure — iconically crystallized by Arizona Republican Sen. John McCain, sick with terminal mind most cancers, issuing his decisive early-morning thumbs-down.

Greater than seven years later, right here we go once more.

With Donald Trump making ready to reenter the White Home, bolstered as soon as extra by Republican majorities in each homes of Congress, expectations are excessive that the GOP will rapidly resurrect its long-desired objective of chopping Medicaid.

Republicans wish to finance giant tax cuts, and the GOP platform beneath Trump pledges to not contact Social Safety or Medicare. To make certain, that’s not set in stone. However for now, as my KFF colleagues have famous, Medicaid seems to be an terrible lot like low-hanging fruit. (KFF is a well being info nonprofit that features KFF Well being Information.)

Well being officers in California and throughout the nation are on edge about the opportunity of large-scale Medicaid cuts being enacted as quickly as subsequent yr. Such cuts would have an outsize affect within the Golden State, whose 14.7 million Medi-Cal enrollees exceed your complete populations of all however three different U.S. states. Medi-Cal gives well being protection for over 40% of the state’s kids and pays for practically 40% of births. It’s a essential supply of funding for security web hospitals and group clinics.

And over 60% of its $161 billion funds this yr comes by means of Washington.

The potential for large federal cuts to Medicaid could have been a consider Democratic Gov. Gavin Newsom’s determination to name a particular session of the state legislature this week.

California may search to offset a pointy drop in federal {dollars} with larger taxes or cuts to different state packages. However each these choices may very well be politically untenable. That’s why many well being specialists assume leaders in Sacramento would virtually actually have to think about shrinking Medi-Cal.

That would imply chopping any variety of non-obligatory advantages, reminiscent of dental providers, optometry, and bodily remedy. It may additionally imply rolling again among the bold growth Medi-Cal has undertaken in recent times. That would embody some features of California Advancing and Innovating Medi-Cal, a $12 billion program of providers that handle sufferers’ social and financial wants along with their medical ones.

Some observers worry federal cuts may have an effect on the roughly 1.5 million immigrants dwelling within the U.S. with out authorization who’re enrolled in Medi-Cal at an annual value of over $6 billion, practically all of it funded by the state. However others say a extra possible route can be to scale back funds throughout the board to the managed care plans that cowl 94% of Medi-Cal enrollees, moderately than goal any particular teams of individuals.

“Medicaid is on the chopping block, and I don’t assume that’s hypothesis,” says Gerald Kominski, a senior fellow on the UCLA Middle for Well being Coverage Analysis. “It’s broadly seen by potential members of Trump’s administration as a program that’s too broad and must be introduced beneath management.”

Whether or not they can succeed this time stays to be seen. However extra on that later.

Individuals who have adopted earlier GOP efforts to downsize Medicaid say quite a lot of beforehand tried strategies is likely to be again on the desk this time. They may embody outright caps on federal Medicaid {dollars}; elimination of the core Reasonably priced Care Act coverage beneath which the feds pay 90% of the price of increasing protection to a wider swath of low-income adults; a piece requirement, which may depress enrollment; and rule adjustments meant to make it more durable for states to attract federal Medicaid {dollars} by way of using taxes on well being care insurers referred to as MCOs.

The primary Trump administration proposed however later dropped adjustments to the foundations governing such taxes. If related adjustments have been adopted this time round, they might trigger monetary complications in California, which has incessantly used MCO taxes to offset Medi-Cal spending from state coffers.

Proposition 35, just lately handed by California voters, may be in danger. The initiative requires the MCO tax to change into a everlasting fixture in 2027, pending federal approval, with the objective of financing billions of {dollars} in new Medi-Cal spending, primarily to extend funding for docs and different suppliers. A federal rule change may upend these intentions.

Termination of the federal authorities’s 90% protection of the ACA Medicaid growth would put a gaping gap within the Medi-Cal funds. Medi-Cal spent over $34 billion in fiscal yr 2023 protecting the roughly 5 million individuals who enrolled because of the growth, and practically $31 billion of that quantity was paid by the federal authorities.

If the feds’ share dropped again to its common Medi-Cal fee of fifty%, California must pony up practically $14 billion extra to maintain the growth enrollees lined — and that’s only for a yr.

A extra bold GOP push, together with each spending caps and a rollback of federal assist for the Medicaid growth, may actually ship California officers scrambling.

In 2017, the state’s Division of Well being Care Providers issued an evaluation exhibiting {that a} legislative proposal filed by a bunch of Republican U.S. senators to cap Medicaid spending and finish enhanced funding for the ACA growth, together with another cuts, would lead to practically $139 billion of misplaced federal funding to California from 2020 to 2027.

“There are virtually limitless adjustments state leaders may make to Medi-Cal if they’re pressured to do this,” says David Kane, a senior legal professional on the Western Middle on Legislation & Poverty. “And we worry that burden will virtually actually harm poor folks and immigrants probably the most.”

However huge Medicaid cuts are usually not a foregone conclusion. In spite of everything, when Trump was within the White Home in 2017, Republicans additionally had Home and Senate majorities and nonetheless didn’t obtain their objective. The political stars may very well be aligning in a different way this time, however the GOP has solely a razor-thin majority within the Home.

A decade into the ACA’s Medicaid growth, some 21 million folks throughout the nation have protection by way of it, embedding this system extra deeply within the nation’s well being care panorama. In accordance with a 2023 examine from Georgetown College, Medicaid and the associated Youngsters’s Well being Insurance coverage Program cowl a better proportion of the inhabitants in rural counties than in city ones. And as we all know, rural America leans strongly Republican.

Will GOP members of Congress, confronted with a vote on chopping Medicaid, buck their very own constituents?

Edwin Park, one of many authors of that Georgetown examine, thinks there’s an opportunity huge cuts will be averted. “Giant numbers of Individuals are both on Medicaid, have relations on Medicaid, or know any person on Medicaid,” says Park, a analysis professor at Georgetown’s McCourt College of Public Coverage. “Hopefully its reputation and its significance will win the day.”

This text was produced by KFF Well being Information, which publishes California Healthline, an editorially unbiased service of the California Well being Care Basis.