Medi-Cal Under Threat: Who’s Covered and What Could Be Cut?

SACRAMENTO, Calif. — Medi-Cal, California’s advanced, $174.6 billion Medicaid program, offers medical insurance for practically 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 members 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 offers a broad vary of advantages, akin to 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 currently, Medi-Cal has discovered itself in political crosshairs.

Democrats say the largest risk to Medi-Cal is $880 billion in GOP finances cuts being mulled in Washington, D.C., which well being specialists say would require eligibility restrictions, akin to work necessities, or program cuts to yield sufficient financial savings over a decade. Republicans argue that Medicaid prices have spiked on account of fraud and abuse and so they criticize state Democrats for making the profit out there 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 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 coated. In 2022, California’s uninsured fee for residents underneath age 65 hit a file low of 6.2%, in keeping with the California Well being Care Basis.

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.

In line with 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 coated by Medicare, akin to long-term care and dental, listening to, and imaginative and prescient care.

Nearly all of grownup Medi-Cal recipients underneath 65 work, in keeping with a KFF overview 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 had been mostly caring for a member of the family, attending college, or unwell.

Simply over half of Medi-Cal recipients are Latino, about 16% white, 9% Asian or Pacific Islander, and seven% Black, in keeping with 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 practically $175 billion finances this fiscal yr, Washington, D.C., is anticipated 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 providers, akin to 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 broadly, in keeping with a March evaluation by the California Legislative Analyst’s Workplace.

For example, individuals with disabilities account for 7% of enrollees however 19% of Medi-Cal’s spending, with a median annual price 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 principles 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 Finances Committee listening to.

What Might Get Minimize?

President Donald Trump in March mentioned that he wouldn’t “contact Social Safety, Medicare, Medicaid” however concentrate on getting the “fraud out of there.” Nevertheless, well being specialists say Medicaid providers can be gutted if Congress follows by 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 no less than 1 million Medicaid enrollees in California, essentially the most of any state, in keeping with 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 price California billions every year 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 akin to California to proceed to attract federal support by 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 coverage and hospitals. If it restricts how states accumulate these taxes, it might doubtless trigger a funding hole in California.

If federal cuts happen, Newsom officers acknowledge, the state couldn’t soak up the price of current 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 may very well be confronted with reducing optionally available advantages akin to dental care and optometry, trimming providers 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 through the Nice Recession, reducing 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.