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AHCA Changes Could Have Cost California $24 Billion by 2027

By Doug Desjardins  
   March 27, 2017

The failed GOP proposal would have saddled the state with $18.5 billion in Medicaid cuts alone, analysis shows.

This story originally appeared in California Healthfax.

If passed, the American Health Care Act's (AHCA) proposed changes to Medicaid would result in an additional $5.8 billion in costs to California by 2020 and more than $24 billion by 2027, a state analysis estimated.

The state Department of Health Care Services (DHCS) and the Department of Finance analyzed the impact of several changes proposed under the AHCA.

Those changes include funding Medicaid on a per-capita basis, freezing Medicaid expansion in 2020, and reduce funding for programs such as In-Home Supportive Services (IHSS). House leadership withdrew the AHCA last week because the legislation lacked the votes to pass.

In a March 21 letter to California Secretary of Health & Human Services Diana Dooley, DHCS director Jennifer Kent said the analysis used current Medi-Cal spending levels to measure the impact of the spending cuts proposed under the AHCA.

Covered California Enrollment Beats Projections

The largest spending cut would result from the proposal to end new enrollment for Medicaid expansion and to shift 50% of funding for Medicaid expansion to states, down from the current federal share of 90%, according to the analysis.

California has added more than 3.8 million enrollees to Medi-Cal under Medicaid expansion.

"This change represents the most significant costs to states, especially those that have expanded their Medicaid programs," Kent wrote. "We estimate this will cost $4.8 billion in 2020 and grow to over $18.5 billion in 2027."

The DHCS did not offer proposals for how the state would be able to pay for the additional costs.

The analysis also estimates the proposal to shift more costs to states by funding Medicaid on a block grant model based on per-capita spending would add more than $5 billion in costs by 2027.

"In spite of continued efforts to run a cost-effective program, we expect Medi-Cal expenditures to exceed expenditures allowed under the proposed cap," said Kent.

"Consequently, we estimate California will be responsible for a state share of approximately $680 million in 2020, growing to $5.3 billion by 2027."

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