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Billions at stake for Calif. in health reform case

10:15 AM, Mar 28, 2012   |    comments
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The Supreme Court is expected to hear arguments today over a proposed expansion of Medicaid that will determine the fate of billions of dollars in health care funding slated for California.

One Kaiser Family Foundation estimate shows that if the law stands, California may see an additional $45 billion to $55 billion in federal funds from 2014 to 2019.

A coalition of 26 states, led by Florida, has challenged the Affordable Care Act, arguing that a broad expansion of Medicaid violates the Constitution by essentially requiring states to spend more on the program. States are expected to pay nothing at first and eventually match 10 percent of the federal windfall.

In oral arguments expected to last an hour today, the Supreme Court will consider whether Congress can coerce states to choose between following the Affordable Care Act and losing Medicaid funding.

The health reform law directs state Medicaid agencies to cover people who earn up to 133 percent of the poverty level, or about $30,500 for a family of four. The federal government will carry 90 percent or more of the cost of serving additional patients.

If the Medicaid expansion stands, it's expected to extend health care to 11.2 million Americans and 1.9 million Californians, according to data cited in a friend of the court brief filed by California Attorney General Kamala Harris and the attorneys general of 11 other states.

The Kaiser Family Foundation estimates that California will be expected to spend $3 billion to $6.5 billion from 2014 to 2019. In turn, the state is projected to get $45 billion to $55 billion in federal matching dollars. The total amount would depend on how many eligible people take advantage of the benefits, said Robin Rudowitz of the foundation.

The Lewin Group, a Washington, D.C.-based health consulting group, estimated an influx of about $44 billion to California under health reform's enhanced payment for covering low-income children and adults through 2019.

Rudowitz said the Kaiser foundation estimate does not include an increase in federal funding for primary care physicians who see Medicaid patients in 2013 and 2014.

"Ultimately, what the state of California has in this fight is money," said Michael Lighty, public policy director for the California Nurses Association and its national affiliate. The association does not favor the Affordable Care Act, Lighty said. Instead, it supports a Medicare-for-all plan.

Yesterday, the Supreme Court heard arguments on whether the individual mandate - a piece of the law requiring people to buy health insurance - is constitutional.

Christine Eibner, a health economist with the RAND Corp., said that without the mandate, the number of people expected to buy health insurance offered by state exchanges will fall by half, from 27 million to 14.5 million nationally.

Eibner, who analyzed the data, said those numbers assume that the government still will offer subsidies to lower monthly premium costs, based on the buyer's income level. The exchanges are clearinghouses that states can run to offer health plans, giving individuals the bargaining power of larger groups.

The Medicaid expansion, or lack thereof, would have by far the largest impact on California's bottom line.

In favor of upholding the Medicaid expansion, Harris argued that Congress is within its bounds to update the Medicaid program and provide financial incentives for states to incorporate the changes. Further, Harris and other attorneys general said changes have been made over the 45 years of the program, and the latest update is no different.

California already has begun to overhaul its Medi-Cal program in anticipation of the influx of new patients. The state is relying more heavily on managed care plans to reduce costs and provide comprehensive care. And the program is making changes with an eye on continual improvement, said Marian Mulkey, director of the Health Reform and Public Programs Initiative of the California HealthCare Foundation.

"A lot of investment and energy is going into trying to improve Medi-Cal, enroll people in managed care, be transparent and accountable," Mulkey said. "Those are durable regardless of what happens with the Affordable Care Act. ... Those investments will bear fruit down the road."

Christina Jewett
California Watch

California Watch

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