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ACA Replacement Plan Is 'Disaster' in the Making, CA Experts Say

News  |  By Doug Desjardins  
   March 13, 2017

Stakeholders claim the GOP proposal's freeze on Medicaid expansion and ultimate restructure would cut coverage for vulnerable Californians, but would not reduce premiums or trim spending on healthcare.

This story originally appeared in California Healthfax.

California policy experts say the GOP plan to repeal and replace the Affordable Care Act (ACA) could result in millions of state residents losing health coverage through changes to Medicaid.

The plan, unveiled in the House of Representatives last week and dubbed the American Health Care Act, would eliminate the individual mandate to purchase insurance along with penalties for not purchasing coverage.

In addition, the proposal would freeze Medicaid expansion starting in 2020 and transition Medicaid to a block grant program that allocates funding on a per-capita basis.

The plan would also allocate federal subsidies for coverage based on age instead of income and make subsidies available to people with incomes of up to $75,000 per year.

Two committees voted to advance the bill last week, but it could face opposition from conservative Republicans as well as Democrats on the House floor.

Gerald Kominski, director of the UCLA Center for Health Policy Research, described the proposed replacement as a "disaster" that would do nothing to reduce premiums or cut spending on healthcare.

'A Public Health Disaster'
"Overall, this bill is a public health disaster that will do nothing to lower premiums or increase coverage, since the only costs that will be lower will be federal costs for tax credits," said Kominski.

"However, because this bill repeals all the revenue-generating provisions of the ACA, the net cost of the bill is likely to be high, thus increasing the federal deficit. I have no idea how Republicans plan to address this problem."

The California Hospital Association (CHA) expressed concerns about provisions of the bill that would change the way Medicaid is financed and potentially reduce funding.

California Public Hospitals Could Lose $2.2B if ACA is Repealed

"The plan's proposal to restructure Medicaid will likely undo the important gains in coverage that have been made over the past few years," said CHA President and CEO C. Duane Dauner.

The CHA is also concerned about the plan's "failure to restore Medicare spending," despite its intent to roll back provisions of the ACA.

"Under the ACA, Medicare funding to California hospitals is being cut by more than $26 billion through 2026 in exchange for the promise of expanded coverage," said Dauner.

"Unless these payments are restored, California hospitals and the patients they serve will likely face a diminution of available healthcare services."

The California Medical Association (CMA) said it was pleased the bill includes expansion of health savings accounts and state innovation grants, but suggested the proposal to restructure Medicaid could have devastating effects in rural areas of the state where nearly half of all residents are enrolled in Medi-Cal.

Millions Could Lose Care
"If federal Medicaid funding is reduced through a per-capita cap or other means, this will result in millions losing healthcare while shifting the burden to the states and, ultimately, to doctors who are on the front lines caring for patients," said CMA President Ruth Haskins, MD, in a statement.

Other critics include state Insurance Commissioner Dave Jones, who said the ACA repeal bill would reverse gains California has made in reducing the uninsured population. He said the percentage of uninsured residents in California dropped from 17.2% in 2013 to 7.6% in 2016.

Medi-Cal Enrollment Tops 13.5 million

California currently receives about $16 billion in federal funding per year for Medicaid expansion—which has added 3.8 million members to Medi-Cal—and about $5 billion per year in federal subsidies for the 1.3 million state residents who purchase their plans through Covered California.

The GOP replacement plan could result in millions of newly insured individuals losing their Medicaid coverage, said Anthony Wright, executive director for advocacy group Health Access California.

"While they promised not to pull the rug out from anyone, this plan would cut at least $8 billion from Medi-Cal in 2020 and tens of billions more in the future, imperiling the coverage of more than 14 million Californians who depend on the program," said Wright.

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