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Study: State Faces 'Minimal' New Costs With Medi-Cal Expansion

California Healthline, January 8, 2013


California will sustain "minimal" new costs from expanding Medi-Cal, the state's Medicare program, under the Affordable Care Act, according to a study from the UC-Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research, the Sacramento Bee's "Capitol Alert" reports (Yamamura, "Capitol Alert," Sacramento Bee, 1/7).

About the Medicaid Expansion

Under the ACA, states have the option of expanding Medicaid coverage to individuals with incomes of up to 138% of the federal poverty level (Yamamura, "Capitol Alert," Sacramento Bee, 1/7). The law's Medicaid expansion provision also would expand coverage to low-income adults who have no children.

Medi-Cal currently enrolls nearly eight million beneficiaries (California Healthline, 1/3).

Key Study Findings

The study found that California in 2014 would pay between $188 million and $453 million more to expand Medi-Cal. However, more than 75% of additional costs would be spent on individuals already eligible for the program, according to the study.

This spring, Gov. Jerry Brown (D) and lawmakers will decide whether to extend Medi-Cal to additional low-income groups, such as childless adults and parents between 100% and 138% of the federal poverty level.

According to the study, expanding coverage to such groups would not carry significant costs for the state initially because the federal government would pay for most of it.

It found that expanding Medi-Cal coverage would cost the state between $46 million and $75 million in administrative expenses in 2014. Those costs would increase to between $309 million and $381 million in 2019 when the federal government begins paying less.

In addition, the study found that new state costs for the Medi-Cal expansion could be offset by certain state tax revenues and potential health care cost savings in other state budget programs ("Capitol Alert," Sacramento Bee, 1/7).


Laurel Lucia -- lead study author and a policy analyst at the UC-Berkeley Center for Labor Research and Education -- said the Medi-Cal expansion "is a really great opportunity for California to enroll and offer coverage to over a million people at a very low cost to the state."

She noted that "federal dollars will create jobs in the health care system, and those health care workers will spend money in the community."

In a statement, Anthony Wright -- executive director of Health Access --- said, "The state should take quick action to be ready for health reform in early 2013." He added, "We must work to maximize the benefit for Californians, and bring in as much federal dollars into our health system and economy" (Aliferis, "State of Health," KQED, 1/7).

Original Article


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