Don Thompson
SACRAMENTO, Calif. — Medi-Cal, California’s complicated, $174.6 billion Medicaid program, gives 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 3 times 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 gives a broad vary of advantages, resembling imaginative and prescient, dental, and maternity care — a few of which is basically paid for by federal {dollars} however which additionally impacts state spending.
But these days, 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 specialists 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 as a consequence 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 additional $2.8 billion for the remainder of the fiscal yr. Although the Democratic governor acknowledged a need for adjustments, he has defended the state’s efforts to get extra folks lined. In 2022, California’s uninsured fee for residents underneath age 65 hit a record low of 6.2%, in keeping with the California Health Care Foundation.
As lawmakers debate funding for the protection internet program, right here’s what’s at stake for California’s largest well being program.
Who’s Covered?
More than a 3rd of Californians rely on Medi-Cal or the intently associated Children’s Health Insurance Program to see a health care provider, therapist, or dentist. They depend on this system to get medication and entry remedy. It may 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 take care of seniors.
The overwhelming majority of enrollees qualify as a result of they earn 138% or much less of the federal poverty degree: $21,597 annually for a person particular person or $44,367 for a household of 4. While that’s low for a state the place the median household income tops $96,000, it’s much more beneficiant than Alabama’s family eligibility limit, which is eighteen% of the federal poverty degree, or Florida’s, at 26%.
Unlike 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.
According to 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. An extra 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 lined by Medicare, resembling long-term care and dental, listening to, and imaginative and prescient care.
The majority of grownup Medi-Cal recipients underneath 65 work, in keeping with a KFF review of March 2024 census knowledge. In California, about 42% of nondisabled adults on Medi-Cal work full time and an extra 20% work half time. Those not employed had been mostly caring for a member of the family, attending college, or in poor health.
Just over half of Medi-Cal recipients are Latino, about 16% white, 9% Asian or Pacific Islander, and seven% Black, in keeping with state enrollment data. That differs from the nation as a whole, the place about 40% of individuals underneath age 65 who use Medicaid are white, 30% Hispanic, 19% Black, and 1% Indigenous folks.
Where Does the Money Come From?
The federal authorities pays for about 60% of the Medi-Cal program. Of its practically $175 billion price range this fiscal yr, Washington, D.C., is anticipated to contribute $107.5 billion.
An extra $37.6 billion comes from the state’s normal fund. The closing $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 girls. But it will get a 90% match for the roughly 5 million Californians it has added to rolls underneath the Medicaid growth licensed by the Affordable Care Act.
Where Does It Go?
On common, Medi-Cal prices $8,000 per recipient, however prices differ extensively, in keeping with a March analysis by the California Legislative Analyst’s Office.
For occasion, folks with disabilities account for 7% of enrollees however 19% of Medi-Cal’s spending, with a median annual price of $21,626.
Meanwhile, 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 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, Department of Finance program price range supervisor Guadalupe Manriquez mentioned throughout a recent Assembly Budget Committee hearing.
What Could Get Cut?
President Donald Trump in March mentioned that he wouldn’t “touch Social Security, Medicare, Medicaid” however deal with getting the “fraud out of there.” However, well being specialists say Medicaid companies could be gutted if Congress follows by means of on huge spending reductions to pay to increase Trump’s tax cuts.
Congressional Republicans have mentioned implementing work requirements for nondisabled adults, which might have an effect on a minimum of 1 million Medicaid enrollees in California, essentially the most of any state, in keeping with an evaluation by the Urban Institute.
Lawmakers additionally might roll again the Medicaid expansion underneath the Affordable Care Act, also called Obamacare, which handed in 2010 and allowed extra folks to qualify for Medicaid primarily based on revenue. California, 39 different states, and Washington, D.C., have chosen to undertake “Medicaid expansion,” 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 more durable for states resembling California to proceed to attract federal support by means 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 ballot 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 accumulate these taxes, it will likely cause a funding gap in California.
If federal cuts happen, Newsom officers acknowledge, the state couldn’t take 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 might be confronted with reducing optional benefits resembling dental care and optometry, trimming companies aimed 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 in the course of the Great Recession, reducing reimbursement charges to suppliers and eliminating advantages together with eye and dental take care of adults. The governor on the time, Republican Arnold Schwarzenegger, went a step additional, chopping $61 million from counties’ Medi-Cal funding in a price range bloodletting that he mentioned contained “the good, the bad, and the ugly.”
This article was produced by KFF Health News, which publishes California Healthline, an editorially unbiased service of the California Health Care Foundation.
KFF Health News is a nationwide newsroom that produces in-depth journalism about well being points and is without doubt one of the core working packages at KFF—an unbiased supply of well being coverage analysis, polling, and journalism. Learn extra about KFF.
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