Health Care Reform a Good Deal for California

More than 1 million adult Californians now without health insurance could enjoy coverage through the state's MediCal program when provisions of the new federal health care reform law take effect in 2014.

And by 2019, some 2 million children and adults could be enrolled in the program, cutting by two-thirds the ranks of the uninsured statewide, according to a new analysis of the federal Affordable Care Act, signed into law by Pres. Barack Obama last March.

The analysis by the California Budget Project, a nonpartisan policy group in Sacramento, paints a positive picture of the new health law's impact in the state, including a financial forecast that finds a relatively modest cost to California's budget for expanding MediCal.

California Budget Project executive director Jean Ross said the analysis bears out their projections of how many people could be covered. But what was more surprising was the estimate of how little the state will have to dip into its own budget to fund the MediCal expansion.

"What is stunning from the lens of California is for a state to be able to make that kind of progress compared to what we'll be spending on program," Ross said. "It's a stunning opportunity."

The federal law has several pieces that will be enacted over the next decade. The first provisions, which have already taken effect, include allowing children up to age 26 to be covered under their parents' health insurance plans and prohibiting children from being denied health coverage because of pre-existing medical conditions. A high-risk pool run by the state is being created to offer insurance to people now denied coverage by commercial insurers because of pre-existing conditions. But by 2014, the law will prohibit denial of coverage to anyone.

The analysis focused only on the role of MediCal, which was created to cover people whose incomes were below the federal poverty line (FPL). Under the new law, those with incomes as much as 138 percent of the FPL will be eligible for MediCal. Today, the FPL is $14,945 for a single person and $18,310 for a family of three. Undocumented immigrants will not be eligible for any benefits.

Ross said that the group that will benefit most from the expansion in 2014 are childless adults between 18 and 64 who have jobs but no health insurance.

"They are the people working in the taqueria or the minimart," Ross said. "The low wage workforce, the people who have jobs and are earning money, but they don't have health coverage."

One surprising finding, she said, was that only 52 percent of people who have health insurance are covered through their jobs. "The stereotype is that's the norm," Ross said, "but it's on the verge of not being the norm in California."

Janet Coffman, assistant professor in the Philip R. Lee Institute for Health Policy Studies at UCSF, said that covering 2 million uninsured people through MediCal will be a major step forward in health care reform.

"This is a big piece. It is a revolution to move beyond categories and say, if you're poor, you're eligible," Coffman said. "At a time when so many are unemployed, it's hard to see past their current situation and see benefits that aren't coming until 2014. A brief like this tells story in a succinct way."

Coffman noted that many people think that the new health care law will end up costing the state—and them—money they don't have. But she said the analysis and other research she's seen show that Californians will get a good deal. "There is lot of concern out there that health care reform is going to heap more problems on state and is something we can't afford," she said. "But their projection is that the state will draw down generous funding for a fairly modest state investment."

The California Budget Project analysis shows that the federal government will pay the full cost of covering the new MediCal enrollees up until 2016. After that, the federal share of costs will decrease to about 90 percent of costs for covering more people through MediCal after 2020.

Of course, not everyone who becomes eligible for MediCal when the new rules take effect will enroll immediately.  A public education campaign will be paramount, Ross said.

"The challenge is finding people and making sure they know," said Ross. "That is where there is lot of conversation now—the education and enrollment. How do we begin to educate the public about what the real opportunities are? From being able to keep coverage to getting kids covered, that is the educational challenge. But it's a fun one."