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AHCA Changes Could Have Cost California $24 Billion by 2027

News  |  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."

'Devastating Effect'
The proposed changes would have "a devastating and chilling effect" on provider or plan rate increases, Kent added.

"Additional costs will almost always exceed the allowed trend factors and require states to fund those additional costs at 100%."

The AHCA's proposals will increase the burden on state safety net health providers, which could potentially see uncompensated care costs increase by "hundreds of millions, if not billions," of dollars annually, the analysis stated.

ACA Repeal Could Cost CA 209,000 Jobs

The AHCA's proposed reductions in IHSS contributions, freeze in federal payments to providers that offer abortion services, and reduced allocations to hospitals through the elimination of the presumptive eligibility program would further burden the state, the analysis showed.

'Not a Viable Alternative'
The additional costs would likely increase the number of uninsured residents in California, healthcare advocates say.

"The state's analysis confirms that the AHCA will devastate the healthcare safety net and that it is not a viable replacement for the ACA," said Carmela Castellano-Garcia, president and CEO of California Health + Advocates, in a statement.

"Using new healthcare rationing funding like block grants combined with federal funding cuts that start in 2019, TrumpCare will force states to limit eligibility and care, eliminating access to care for millions of hard-working families just trying to get by."

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