Researchers find minimal state cost from Medicaid expansion in California

January 8, 2013 by Kathleen Maclay

(Medical Xpress)—As the California Legislature prepares to consider bills relating to implementing the Affordable Care Act (ACA) and expanding Medicaid, the state has the opportunity to significantly increase health insurance coverage at minimal cost to the state budget, according to a joint study by the University of California, Berkeley's Center for Labor Research and Education and the UCLA Center for Health Policy Research.   

According to the report, new state spending directly related to the expansion is likely to be largely offset by savings from reduced expenses in other state health programs, and state prisons.

"This is a historic juncture for California: the state has the chance to improve the health of its residents by greatly expanding at a relatively minimal cost," said Laurel Lucia, policy analyst at the UC Berkeley Center for Labor Research and Education and the study's lead author. "And this expansion also would translate into much-needed new jobs for many Californians."

The report comes as the California Legislature is about to begin a special session to consider related to implementing the ACA.  Medicaid eligibility expansion was effectively made optional for states by a U.S. Supreme Court decision last June, and California legislators have not formally approved such a change.

Under the expansion, more than 1.4 million California adults under age 65 will be newly eligible for Medi-Cal (the state's ), of which between 750,000 and 910,000 are expected to enroll by 2019. Researchers estimate new state spending on these enrollees at between $46 million and $75 million in 2014, growing to between $309 million and $381 million in 2019.

The federal government will pay all medical costs for the newly-eligible enrollees from 2014 to 2016 and no less than 90 percent in future years. The minimal state spending from 2014 to 2016 reflects the state's share of administrative expenses, which are equivalent to 2.5 percent of medical costs, according to the new report.

Another 240,000 to 510,000 Californians who are already eligible but not yet enrolled are expected to take-up Medi-Cal coverage by 2019. This is because of greater awareness of coverage options and ACA provisions that require individuals to obtain insurance coverage and require to simplify Medicaid enrollment and renewal processes, changes taking place regardless of any expansion.

Most of the new annual state Medi-Cal spending from 2014 to 2016 – projected at between $188 million and $471 million, depending on how many people sign up for health insurance – will be related to increased enrollment among Californians who are already eligible.

Billions of dollars in new federal Medi-Cal funds will pay for at least 85 percent of the total costs of the eligibility expansion and increased take-up among those already eligible through 2019.

California has been working towards implementing this Medicaid expansion since 2011 by enrolling 500,000 California adults in coverage prior to ACA implementation through county-based, Low -Income Health Programs, said the researchers, and these Californians will transition to Medi-Cal in 2014.

The report's enrollment projections were made using the California Simulation of Insurance Markets (CalSIM) model, a micro-simulation developed by researchers at the two centers with support from The California Endowment. CalSIM uses a range of official data sources, including the California Health Interview Survey, to estimate the impact of the ACA on employer decisions to offer insurance coverage and individual decisions to get coverage in California.

To estimate federal and state Medi-Cal spending, the authors calculated average per-member, per-month costs for new enrollees by analyzing data from the state Department of Health Care Services and by applying assumptions based in part on the CalSIM model.

The study was funded by The California Endowment.   

The California Legislative Analyst's Office (LAO) so far has released only very high-level estimates of the impact of state spending under the Medi-Cal expansion.

Lucia added that while the non-profit Urban Institute think tank in Washington, D.C., has issued a report on the impacts of the insurance expansion report that provides a state-by-state analysis using national data sources, the UC Berkeley/UCLA report used California-specific data sources and explores the particulars of the California budget.

Explore further: 9 out of 10 non-elderly Californians will be covered under Affordable Care Act: study

More information: Read the report: "Medi-Cal Expansion under the Affordable Care Act: Significant Increase in Coverage with Minimal Cost to the State" online.

Related Stories

9 out of 10 non-elderly Californians will be covered under Affordable Care Act: study

June 14, 2012
Nine out of 10 Californians under the age of 65 will be enrolled in health insurance programs as a result of the Patient Protection and Affordable Care Act (ACA), according to a joint study by the UC Berkeley Center for Labor ...

Two new studies describe likely beneficiaries of health care reform in California

May 10, 2011
According to two new policy briefs from the UCLA Center for Health Policy Research, the majority of state residents likely to be eligible for federally mandated health insurance coverage initiatives in California in 2014 ...

Higher proportion of California children uninsured than in US, analysis shows

November 14, 2012
Compared to the nation, a higher proportion of children in California are uninsured, one in every 10 children or more than 1.1 million in 2011. More of California's children have public health insurance and fewer through ...

Up to 220,000 California children excluded from health care reform due to immigrant status

June 30, 2011
Restrictions on eligibility for health care reform programs will result in the potential exclusion of up to 220,000 children from affordable health care coverage in California, according to a new policy brief from the UCLA ...

Policymakers should prepare for major uncertainties with Medicaid expansion

October 26, 2011
The number of low-income, uninsured Americans enrolling in Medicaid under the expanded coverage made possible by the Affordable Care Act (ACA) of 2010 could vary considerably from the levels currently projected by the Congressional ...

Recommended for you

High-fat diet in pregnancy can cause mental health problems in offspring

July 21, 2017
A high-fat diet not only creates health problems for expectant mothers, but new research in an animal model suggests it alters the development of the brain and endocrine system of their offspring and has a long-term impact ...

To combat teen smoking, health experts recommend R ratings for movies that depict tobacco use

July 21, 2017
Public health experts have an unusual suggestion for reducing teen smoking: Give just about any movie that depicts tobacco use an automatic R rating.

Why sugary drinks and protein-rich meals don't go well together

July 20, 2017
Having a sugar-sweetened drink with a high-protein meal may negatively affect energy balance, alter food preferences and cause the body to store more fat, according to a study published in the open access journal BMC Nutrition.

Opioids and obesity, not 'despair deaths,' raising mortality rates for white Americans

July 20, 2017
Drug-related deaths among middle-aged white men increased more than 25-fold between 1980 and 2014, with the bulk of that spike occurring since the mid-1990s when addictive prescription opioids became broadly available, according ...

Aging Americans enjoy longer life, better health when avoiding three risky behaviors

July 20, 2017
We've heard it before from our doctors and other health experts: Keep your weight down, don't smoke and cut back on the alcohol if you want to live longer.

Parents have critical role in preventing teen drinking

July 20, 2017
Fewer teenagers are drinking alcohol but more needs to be done to curb the drinking habits of Australian school students, based on the findings of the latest study by Adelaide researchers.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.