KQED: Obamacare Repeal Could Punch $15 Billion Hole in State Budget

January 9, 2017

By Marisa Lagos

When Gov. Jerry Brown unveils his 2017-18 budget Tuesday, there will be one huge question mark hanging over the proposal: What will it cost California when congressional Republicans follow through on their promise to dismantle Obamacare?

GOP lawmakers, along with President-elect Donald Trump, have vowed to repeal the landmark health care law and replace it with something. But what that something will be is still unknown — and since California wholeheartedly embraced the Affordable Care Act and insured millions of poor residents through its Medicaid program, Medi-Cal, any rollback is likely to punch a huge hole in the state budget.

Since 2014, Medi-Cal rolls have swelled from about 8 million Californians to about 14 million. One reason: the Affordable Care Act greatly expanded Medicaid eligibility for childless, low-income adults — more than 3 million new Medi-Cal enrollees have qualified because of that change since 2014. Along with the expanded eligibility came expanded federal funding for Medi-Cal, to the tune of more than $15 billion this fiscal year alone.

Now, there are huge questions for both state leaders, who have depended on that federal funding, and the millions of Californians who have benefitted from the expansion of Medi-Cal.

“(I’m) really worried,” said UC Berkeley graduate student Rebecca Fritton, who enrolled in Medi-Cal last summer when she turned 26 and could no longer get coverage from her mother’s insurance plan.

Fritton wouldn’t have been eligible to join Medi-Cal before Obamacare. But after the health care law? Fritton said enrolling was a breeze — she was even able to keep her primary care doctor at UCSF when she made the switch.

“This has proven to be such a helpful resource for me … so it’s just a little scary that it could be taken away.”

But Fritton considers herself lucky — she has another option.

“We get offered health insurance through Berkeley, but it’s pretty expensive and I already have lots of student loans out,” she said.

That’s not the case for many other Medi-Cal recipients, said state Sen. Ed Hernandez, who is an optometrist and chairs the Senate’s Health Committee. He said there’s no way California could keep those millions of new people insured if federal funding disappeared.

“If they got rid of that funding, you would have 3 million people on the streets without health insurance, and we would be dead in the water. That is my biggest concern,” he said. “I mean, we don’t have the additional dollars, so if that money is not available, patients won’t get access to health care. That’s the bottom line.”

The governor is well aware that funding could disappear, said H.D. Palmer, a spokesman for the Department of Finance. But since the Republican plan is still unclear, California can only budget based on current law, he said.

“We don’t know yet what changes are in the works specifically for the Affordable Care Act — but we know there is a very high likelihood that they will happen, so we recognize it as a broad fiscal pressure on state government,” Palmer said. “Until and unless there is a change, however, the ACA constitutes the rules of the road — those are the governing statutes that we budget by and abide by.”

He said the governor’s annual budget revision in May will offer the state an opportunity to tweak Brown’s proposal if Republicans have made any concrete decisions by then. In general, he said, Brown’s administration is trying to keep costs down because of a number of unknown factors, including potential Obamacare changes and whether California’s economy will remain strong.

“One of the things that we are doing is make sure the state doesn’t overcommit itself to ongoing levels of spending that may not be sustainable,” he said.

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