An Alternative to the “Medi-Cal as Pac-Man” Storyline

Last week, we highlighted two storylines about the state budget that are holding back California from adequately investing in broadly shared prosperity. Just a few days ago, another common storyline about state spending surfaced in the news media. This third narrative places exaggerated emphasis on the state budget impacts of rising enrollment in Medi-Cal, our state’s Medicaid program. Medi-Cal has expanded rapidly in recent years, largely due to California’s successful implementation of federal health care reform, and the program now provides affordable health care coverage to more than 12 million Californians with low or moderate incomes. The following discussion provides a more accurate and balanced perspective on the impact — and significance — of rising Medi-Cal enrollment under health care reform, a process that began with the passage of the federal Patient Protection and Affordable Care Act (ACA) in 2010 and fully took effect in California in 2014.

State Costs Related to Increased Medi-Cal Enrollment Are Much Smaller Than the Commonly Cited “Sticker Price” Suggests

The state’s cost for providing services to Californians who’ve enrolled in Medi-Cal due to health care reform is far smaller than the “sticker price” that’s often highlighted, as we noted earlier this year. For example, Governor Brown recently estimated that California would spend $969 million from the state’s General Fund in 2014-15 — the fiscal year just ended — on services for the more than 1 million Medi-Cal enrollees who (1) werealready eligible for the program prior to health care reform and (2) signed up for coverage due to new outreach efforts, simpler eligibility and enrollment rules, and other factors associated with the ACA. (The state and federal governments generally share, on a 50/50 basis, the cost of providing health care services to these enrollees.)

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